Tag Archive | "cipd"

Resigning accountants receive huge counter-offers

Contractor accountants may be interested to hear that the results of Robert Walters’ annual survey into accountants pay showed that those who did get a bonus this year, received increases in excess of 10%.

Marks Sattin, a leading accountancy recruiter, said a lot of companies are worried about losing key employees and are making counter offers to those who are considering resigning. In some cases they are offered up to 20% more than their current salary.

Accountants are obviously highly valued in the UK and 50% of them receive a counter offer when they hand in their resignation.

Companies in the banking, energy, FMCG and media sectors are all struggling to find qualified, experienced accountants and are leading the counter offer trend. Retail and investment banks are offering the largest salary increases in a bid to retain their key talent, according to Marks Sattin’s MD, Dave Way. Nearly 70% of employees have received salary increases to entice them to remain loyal to their current employer, he said. This trend is also increasing in Amsterdam, Dubai, Paris and Zurich. Way concluded by saying 2011 is the year of the counter-offer.

A report by CIPD/KPMG this summer found that a lot of employers are having difficulties finding staff and this was especially true when it came to filling accountancy roles. PWC, for example, grew by 6% this year and has been running a big recruitment drive to hire 3,200 new employees.

Young jobseekers may want to bear this in mind when they think about their future career options. It is not essential to undertake a degree course to become an accountant. There are various routes into the profession, including in-house courses and distance learning.

The UK urgently needs more young people to enter the accountancy profession otherwise we could end up with a massive skills shortage.

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Should contractor accountants be prepared for a decade of low salary increases?

Employees, including contractor accountants, should be prepared to see their salaries increase at a much slower rate over the next decade than they did in the noughties, according to the CIPD’s chief economic adviser, John Philpott.

ONS data shows that the average annual earnings for a full-time employee in April last year was £25,879. This represented a 37% increase on 2000’s figure, or if you take CPI inflation into account, a real terms increase of 16%.

Mr Philpott explained that we saw strong economic growth throughout much of the 2000s. Inflation and unemployment were low and this enabled earnings to improve. However, those conditions are unlikely to reappear until at least 2015 and in the meantime employees could feel frustrated by their pay packets.

Philpott predicts that the first half of this decade will see the tougher conditions we have experienced since the onset of the credit crisis continue to bite. Rising unemployment puts downward pressure on pay settlements and average earnings are unlikely to rise above about 2% a year.

If this situation persisted until 2020, average salaries would rise to just £30,000 and inflation would cancel out the increase. But Philpott said that is a worst case scenario and he hopes to see growth picking up during the second half of the decade. If that happens, average earnings growth for the decade should be around 3%, meaning a median salary of £34,000 in 2020.

Earnings capacity will be influenced by a number of factors, including skills and experience, and employers will pay a premium for people with skills that are in high demand.

Meanwhile, the Department for Business, Innovation and Skills has launched a consultation into proposals to make it easier for investors to understand company reporting and to encourage more detailed data to be published about the pay rates of executives.

The consultation will also consider whether companies should follow the guidance of the Women on Boards report and publish data showing how many women are board members.

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Home workers have an increased sense of honesty

A new study by the Ethisphere Institute and Jones Lang LaSalle has discovered that businesses that allow staff to work from home will benefit from increased employee honesty.

The two companies researched more than 200 firms, including contractor accountants, and 68% of them said they did allow employees to work remotely. When it comes to breaking rules, 11% of home workers were found to have been guilty, but this rose to 36% of office-based employees.

Mark Ohringer, the executive VP of Jones Lang LaSalle, said it’s easy to see why home based workers do not get embroiled in some of the distractions that cause trouble in the workplace.

It has been suggested that the responsibility that comes with working from home leads many people to become more security conscious and maintain a higher standard of honesty and discretion.

The CIPD’s employee relations adviser, Mike Emmott, recently said that working from home can bring many benefits to firms and provide them with a competitive edge.

However, XpertHR has warned that small businesses that let employees work from home must still take heed of their health and safety obligations.

Bar Huberman, the employment law editor for XpertHR, explained that it was a myth that companies are not responsible for the health and safety of their home-based employees. People working from home have nearly the same protection by law as those who work in an employers’ premises. Employers still need to ensure that the home workplace complies with health and safety regulations.

Huberman made her comments after it was disclosed that tens of thousands of workers in London will work from home when the Olympics are in progress to avoid congesting the transport network.

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Civil Service wastes millions on ineffectual training

The National Audit Office recently published a report stating that £275 million worth of taxpayers’ money was wasted by the Civil Service last year on ineffectual training courses.

The NAO estimates that hundreds of millions of pounds are wasted every year as the Civil Service puts employees on expensive courses that don’t work. Less than 50% of the public sector employees questioned thought that the training they had received in the last year helped them do their work better.

Kevin Beales, the MD of the North-East based Test Factory, said these figures were probably just the tip of the iceberg of a UK culture of poor staff development. Organisations in both sectors know they need to offer staff regular opportunities for personal development if they are to get the best out of them, but they give little thought to what the needs of their staff actually are.

In order to provide suitable training, employers, including accountants for contractors, should analyse staff training needs so that they can make an informed decision on appropriate training. Employees should also be given the opportunity to identify areas where they feel they could improve leading to personalised training plans to aid their development.

Research from the CIPD suggests that workplace coaching drive business success and helps employers manage change effectively. Dr John McGurk, said companies should ne maximising the value they get from their employees and this can be best achieved by aligning coaching to business objectives.

The CIPD’s adviser for learning and talent went on to explain that about 80% of UK businesses use coaching to improve staff performance levels and maximise their employees’ potential.

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Are any contractor accountants getting pay rises?

26% of employers do not intend to increase salaries this year as sluggish private sector growth and public sector austerity measures impact companies’ capacity to reward their employees.

The latest annual Reward Survey from the CIPD shows that while 99% of employers will not be cutting pay this year, only 65% will actually be increasing it. A further 9% have delayed their review of salaries.

60% of respondents said market rates were the most important factor when it came to determining salary levels and 61% link pay to individual performance, at least in part.

67% of organisations operate reward schemes that are performance-related and the most common options are pay rises based on merit and individual bonuses. 29% also operate non-monetary awards for individual clerical and manual members of staff.

The CIPD’s performance and reward adviser, Charles Cotton, said it’s not surprising that some companies are not able to award salary increases this year. The survey results also show that employers are focusing more on linking pay and bonuses to performance.

Meanwhile, private sector pay edged up by 3% in the first quarter of this year. Inflation is hovering around 4.5% so the rise doesn’t fully compensate but it is an increase which is something public sector workers currently yearn for.

The increase in private sector pay has been led by the automotive and utilities sectors. 3% is still well below the CPI rate and when you factor in the freeze in public sector pay, the average comes out at 2.5%.

Experts are now predicting that the Bank of England will hold the base rate at its historic low of 0.5% until at least November. With inflation rising faster than wages, take-home pay will continue to shrink for a while yet.

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24% of employees are seeking out new horizons

The latest ‘Employee Outlook’ survey from the CIPD suggests that UK workers are feeling increasingly insecure about their jobs.

21% of employees now think it is likely that they will be made redundant as a result of the recession, a rise of one percentage point on the previous quarter.

Not surprisingly, the highest level of concern is found in the public sector, with 30% of employees believing they are likely to lose their job. 27% of those in voluntary sector share the same sentiment but only 19% of private sector workers express concern.

Job satisfaction fell five points during the quarter to +34. Employees in the voluntary sector are most satisfied whilst those in the private sector are least satisfied.

The survey also discovered that 24% of respondents were looking for a new position with a new company, up from 19% in the previous quarter.

Research from staffbay.com suggests that figure could be even higher. It claims that since the two consecutive bank holidays, there are now four times the normal level of people looking for new employment.

The founder of the online recruitment platform explained that bank holidays give us the chance to reflect on our career path and back to work blues hit people strongly enough to encourage them to apply for new positions.

However, according to the latest Reed Job index, there was a 2% drop in vacancy numbers last month. Since December 2009, 25% more job opportunities have been created in the private sector and year on year demand is 22% higher.

Demand in banking and leisure and tourism fell back last month whilst customer service, engineering, IT and manufacturing were among the sectors to record an increased job demand.

The bank holidays may have played a part in the drop in demand as UK businesses experienced a disjointed period with the two long weekends, suggested the MD of reed.co.uk, Martin Warnes.

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Could contractor accountants try out flexible working?

The CIPD has backed the coalition’s plans to hold an early consultation into extending the right to request flexible working to cover all employees.

The Institute expressed disappointment that parents of older children were not to be given the right to request flexible working but said it was a positive sign that the issue is to stay on the political agenda.

The government has scrapped its plans to allow a wider range of employees to request flexible working for fear that it would lead to increased costs for businesses which in turn could hamper the economic recovery.

Ben Willmott, the senior policy adviser at the Institute, said he was heartened that the coalition has committed to an early consultation on the issue. However, the CIPD will continue to urge government to extend the flexible working right to all employees at the earliest possible opportunity.

He added that flexible working should not be seen as a regulatory burden and additional cost as many employers have already discovered that it actually makes sound business sense.

Millions of UK workers already enjoy flexible working because their employers recognise that a flexible workforce is more diverse, engaged and effective. This is likely to become even more salient as the economic recovery progresses and competition for top talent increases.

Regardless of government legislation, many companies will continue to build a flexible, family-friendly culture in their organisation and will be in a better place to attract and retain the skilled, experienced workers they need.

Willmott ended by saying that it was a sensible motivation and retention strategy to accommodate the wishes of employees wherever possible as it boosts organisational performance.

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Employers want the employment tribunal system reformed

A new survey conducted by the CIPD has discovered that more than 50% of employers want to see changes in the law so that it is easier for them to sack members of staff.

69% also believe that employers are not protected against unjustifiable employment tribunal claims. 60% said an employee had claimed against them for unfair dismissal and added a claim for discrimination in the hope that they would get more compensation.

The employee relations adviser at the CIPD, Mike Emmott, said that a large number of employers feel the tribunal system has broken down. There have been many attempts to find a solution in recent years but the volume of claims continues to increase.

The survey also found that plans to increase the minimum period employees work before they are allowed to claim unfair dismissal to 2 years is not likely to dramatically reduce the number of claims. Currently an employee can claim unfair dismissal after 12 months. Many of the claims that come before the tribunal are linked to discrimination and that claim can be made as soon as a person starts a job.

An increasing amount of employers are making compromise agreements, whereby they pay compensation in return for the employee not taking the case to a tribunal. The BCC published research earlier this year showing that the average compensation was £5,400 whereas the average tribunal award was £8,500.

The TUC has warned the government over reforming the tribunal system saying any change must make it more effective for the thousands of employees who are wronged at work to receive justice. Employer groups complain about the costs of tribunals but if they treat staff properly, employees would not need to seek redress.

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Lack of new opportunities for middle aged Britons in 2010

There are nearly 11 million workers aged between 35 and 49 in the UK and yet they have missed out on the 350,000 new job opportunities created in 2010.

There are now 2.9% fewer Britons in this age bracket who are in work compared to the start of the credit crisis in the spring of 2008, according to recently published figures from the CIPD.

Dr John Philpott, who authored the report, said it was unclear why this group has been bypassed and it could simply be that they have received less support from the people who make the policies. However, this demographic group still has reasonably high employment rates and therefore is not a cause for social concern. Another possibility is that this middle age group is at the pinnacle of their career earnings and therefore employers may find their salary expectations less appealing than workers who expect less salary.

The Work Audit from the CIPD also found that, out of the 350,000 new jobs created between quarter one and quarter three, 63% went to employees, 30% were created by the self-employed and freelancers, 6% were accounted for by unpaid workers in family businesses and 1% by government job schemes.

However, 95% of those additional workers in employment are working in part-time roles and around 33% of roles are on a temporary basis only. Permanent full-time jobs for employees have not experienced a recovery this year. Women have not really benefited from the additional jobs as 289,000 of all the newly created jobs went to men! This could be because more women than men work in the public sector and it increased in size slightly during the recession whilst the private sector was making redundancies.

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What does 2011 have in store?

Contractors could be amongst those set to benefit from internal skills shortages at UK firms as we go into 2011.

The Chartered Management Institute recently said that 43% of managers in the UK think they cannot fulfil their objectives for next year with the staff they currently have. As a direct result, 48% are expecting to make further redundancies in 2011. This could lead to openings for highly-skilled limited company contractors as companies look to complete tasks without increasing the size of their permanent workforce.

The CMI’s chief executive, Ruth Spellman, said that 2010 has been a very difficult year for managers and in many cases they have had to deal with the difficult conditions without a suitable team.

There are also conflicting reports on the state of the UK economy and its jobs market. The latest figures from the ONS show that unemployment reached 29.13 million in the quarter to October. 33,000 of the 35,000 job losses were in the public sector which is to be expected considering the government’s austerity measures.

The CIPD says the figures bring no joy to jobseekers and its chief economic advisor, Dr John Philpott, said the data was far worse than expected. He believes the jobs market has run out of steam which does not bode well for prospects in 2011.

The British Chamber of Commerce, on the other hand, said that whilst the figures were disappointing, they gave no cause for despondency and longer-term trends point to a strong labour market.

The REC was also disappointed by the latest figures. Kevin Green said that employers are still cautious about hiring new employees but he still believes growth will return to the jobs market in the New Year. However, contractors, temporary staff and interim workers are likely to play an important role in helping businesses meet increased customer demand.

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Freelancers on the whole are an enterprising bunch

Contractor accountants and other freelancers are becoming more enterprising and creating opportunities for themselves according to figures released by the CIPD.

Data from the Institute shows that an extra 350,000 jobs have been created this year and 30% of these can be attributed to the self-employed. Two thirds of these new jobs went to people in the under 35 age group and the remaining third to people over 50.

However, this job creation seems to have completely bypassed those aged between 35 and 50. The author of the report, Dr John Philpott, said that it is easy to see why many people are still unconvinced that the economy is recovering when a core element of the workforce has not benefited from the recovery in the jobs market.

Once more permanent full-time opportunities become available, the middle age group should start to feel the benefits but this could take time as growth is likely to slow down somewhat in 2011.

The government is keen to encourage people to set up their own business. Mark Prisk, the business and enterprise minister, recently laid out measures to encourage micro-lending to small enterprises and called on Brits to display their spirit of entrepreneurship.

The Enterprise Finance Guarantee Scheme is to be reformed to increase community development finance institutions access to funding. Prisk said that he wanted to encourage everybody to start their own enterprise, regardless of their previous background and CDFIs give vital support to businesses in depressed communities.

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Are you ready for the VAT increase?

11% of businesses have still not prepared for the VAT increase which comes into force on January 4th next year, according to the results of research conducted by Sage.

In November, the software provider conducted a survey of 1,500 of its customers about the impending change. Over two thirds (68%) of the respondents said they were prepared, but 11% had not yet considered the implications of the increase.

Adapting systems to cope with a different VAT rate should not be so daunting this time around. A couple of years ago, the rate was temporarily reduced to 15% before returning to 17.5% at the beginning of this year.

The main problem, at least as far as SMEs are concerned, is whether to pass the increase on to customers. Dr Philpott from the CIPD says that smaller-sized retailers will be most affected by the change and yet the government is banking on such businesses to create employment and help drive economic growth.

However, a spokesman for the British Retail Consortium has said that online retailers are in a better position to absorb the increase than their high street counterparts, due to lower business overheads. eBay’s Online Business Index seems to confirm that view showing that 63% of online retailers are not expecting to pass the full increase onto their customers.

Contractor accountants may also find more people contacting them for help completing quarterly VAT returns. As the rate rises on the 4th of January rather than the first, some companies will need to file a return which incorporates both the 17.5% and 20% standard VAT rates.

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Private sector can absorb public sector fallout

In what seems to be a contradiction of other recent reports, the latest quarterly job survey from the CIPD and KPMG claims that public sector redundancies will be more than offset by new private sector jobs.

The latest Labour Market Outlook recorded a figure of +11. This figure is a based on the number of employers planning to increase their workforce compared to those who plan a decrease. Whilst the public sector recorded a negative figure of -44, the private sector registered +39. In the summer the balance was +2 and we have now seen three consecutive quarters with a positive balance.

The chief economic adviser for the CIPD, Dr John Philpott, said there are now encouraging signs of increased buoyancy in the private sector job market. However, he did point out that it remains to be seen whether this will continue after the pre-festive season jobs surge and he didn’t go as far as to rule out a rise in unemployment next year.

Sectors that expect to increase recruitment levels during the final quarter of the year include manufacturing (+51), IT private sector services (+71) and consultancy (+44). Decreases are expected in central and local government (-95 and -65 respectively) and transport and communications (-39).

41% of public sector bodies will be making redundancies before the end of 2010 and these are expected to affect 14% of their employees. Whilst the average cost of making an employee redundant is £12,000, in the public sector it is £19,600 as opposed to £9,350 in the private sector.

Obviously everybody hopes that the latest LMO data is concrete evidence that we are witnessing a sustained improvement that will enable the private sector to absorb the public sector fallout.

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Will the UK Visa cap cause more functions to be outsourced?

There’s been a lot said recently about clamping down on the amount of migrant workers allowed to enter the UK. Despite this, the latest CIPD/KPMG Labour Market Outlook report suggests that as the UK labour market improves, so does the employment demand for migrant workers.

600 employers took part in the survey and 45% of them said they have experienced difficulties in recruitment. Engineering, IT and accountancy positions are hardest to fill and consequently 17% of employers intend to hire migrant workers during Q3. 21% have recruited migrant workers in the last 3 months and of those workers, 37% came from outside the EEA.

Offshore outsourcing also seems to be making a comeback with 9% of private sector enterprises intending to offshore jobs over the coming 12 months. India is still the most common offshoring location, followed by China and Eastern Europe. Call centres, IT and finance are amongst the most likely functions to be outsourced abroad.

The public policy adviser from the CIPD, Gerwyn Davies, pointed out that it will take time to train British workers to fill the positions currently being occupied by skilled migrant workers. He believes that the proposed migration cap should be phased in gradually so as not to harm our competitiveness.

There is currently a temporary visa cap on all new Tier 1 applicants and applications for Tier 2 visas are limited by the issuance of Employer Sponsorship Licences. The permanent cap on UK visas will be introduced next April.

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