Four in five companies (82%) intend to recruit staff over the next quarter with over half that figure (42%) doing so to add to their workforce rather than just replace people who have moved on.

Research by the CIPD suggests that a buoyant economy means more companies are hiring this quarter than the last but almost half (46%) expect to encounter difficulties finding the right person, a rise on the corresponding figure last autumn (44%).

There was also a 17% positive balance of employers expecting to employ more staff over those expecting to employ fewer in a year‘s time. This was an improvement on the positive balance of 13 reported in autumn 2006 and slightly above the 16% last summer.

As a result of the need to attract staff and keep hold of existing employees, the CIPD claims one in five employees is keeping open the possibility of raising pay by over 3.5%. The survey added that 58% of employers expect pay rises of less than 3.5%, with around a third (32%) expecting pay to rise on average by between 3% and 3.5%. Only 13% expect pay to rise on average by 4% or above.

“A growing proportion of employers report difficulty in finding recruits with the attributes they are looking for,” said Dr John Philpott, Chief Economist at the CIPD. “Lack of quality in the available labour supply might mean that the market is tighter and potential wage pressure higher than measures of the amount of labour available suggest.

“While our survey overall still suggests that the winter pay round will prove benign for interest rates and jobs, we are as yet far from being able to breath a sigh of relief,” he added.

There was also an increase in the proportion of employers intending to make some staff redundant, up from 20% to 23% since the autumn survey. The increase is evident in all broad sectors of the economy, but especially in the public services where 30% of companies plan to lay off staff.