Ninety-four per cent of UK employers are operating with limited capacity to take on more work, according to the latest JobsOutlook survey by the Recruitment and Employment Confederation (REC).

With three quarters of employers (76%) signalling that economic conditions are improving, and almost half (47%) saying that confidence in hiring and investment decisions are ‘getting better’, businesses are actively looking to take on more staff.

Eight in ten businesses (80%) plan to hire permanent staff in the next three months, and three quarters (76%) plan to increase headcount in the medium term.

The regular monthly survey of 600 employers found that:

More than two thirds (67%) have either increased pay or headcount in the last year.

Eight in ten (79%) take on agency workers in order to access key strategic skills.

Six in ten (59%) have made at least one temporary worker permanent in the last year.

Ninety-four per cent say that agency workers are paid more or the same than if they were permanent.

A shortage of candidates is expected for permanent managerial roles (13%), driving and distribution roles (13%), and blue collar roles (11%).

A shortage of agency workers is expected for technical/engineering roles (16%), construction roles (11%) and driving/distribution roles (11%).

REC chief executive Kevin Green says: “Employers are finding it extremely difficult to fill vacancies and need to find creative solutions to overcome staffing challenges. Pay is on the rise as businesses react to the need to keep hold of the staff they already have. In areas where permanent roles are particularly hard to fill, employers are turning to temporary workers in order to access key strategic skills.

“The demand for skilled people is especially acute in construction and engineering as a result of newly announced housebuilding and infrastructure projects. A reported shortage of people to fill driving and distribution roles is also concerning and could cause major problems as retailers and logistics firms seek to take on staff to meet increased demand over the Christmas period.”