| Sharp rise in expected redundancies |
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| Monday, 11 February 2008 | |
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The winter CIPD/KPMG Labour Market Outlook (LMO) survey shows a sharp rise in the proportion of employers expecting to make at least some staff redundant in the coming months. This suggests that tougher economic conditions are starting to bite in the UK jobs market. The survey of 1553 employers shows that almost two in five (38 per cent) intend to make some employees redundant this quarter. This is a sharp increase on the autumn 2007 LMO survey figure of 17 per cent and the highest quarterly figure for redundancy intentions since the LMO survey began in 2004. Strongest in public services The average quarterly figure for redundancy intentions is 21 per cent, which compares with a seasonal winter average of 22 per cent. A quarter of employers expecting to make redundancies this quarter report that at least ten staff will lose their jobs. Thirty seven per cent expect to make fewer than ten people redundant, with the remainder uncertain of the numbers likely to be involved. Redundancy intentions have increased in all sectors since the autumn 2007 survey and are strongest in the public services where almost half (48 per cent) of employers surveyed expected to make at least some staff redundant this quarter. Redundancy intentions are highest in the East Midlands (47 per cent), the West Midlands (45 per cent) and the South West of England (45 per cent). The celtic fringe looks set to be the least affected in the next three months, with around a third of organisations in Scotland (33 per cent), Wales (35 per cent) and Northern Ireland (36 per cent) planning redundancies. Redundancy intentions in England are lowest in Yorkshire and Humberside (34 per cent). Greater job insecurity The CIPD’s Chief Economist John Philpott said that employers’ initial reaction to talk of an economic slowdown was to hold fire and take stock of the emerging situation. He is convinced that a substantial number now expect to trim their workforces, in the private sector because squeezed by a combination of tougher trading conditions and higher costs and in the public sector because being required to make further efficiency savings and cope with tighter budget settlements. “With net recruitment activity still positive, signs of mounting employer pessimism shouldn’t be read as evidence of a jobs market approaching meltdown. It does suggest, however, that the UK is entering a period of slower employment growth and somewhat greater job insecurity than in recent years,” Philpott added. Despite the economic slowdown and greater availability of migrant workers the winter LMO survey finds employers even more dissatisfied with the pool of labour available to them. Pay review More than half (54 per cent) of employers surveyed anticipate recruitment difficulties this winter, up from just below half (49 per cent) in the autumn. Pay expectations remain benign and have barely changed in recent LMO surveys. Almost one in five employers (19 per cent) surveyed planned to conduct a pay review in the winter quarter. Thirty per cent of employers conducting a review expected the pay of their staff to increase on average by between 3 per cent and less than 3.5 per cent. One in five expected increases of 4 per cent or more. The average expected increase is 3 per cent in all but the public services where the figure is lower (2 per cent). Philpott said that the main risk to continued pay moderation this year would seem to be increased difficulty in recruiting skilled and experienced staff. “In the context of a slowdown in demand for labour, however, a significant increase in pay inflation seems unlikely,” he concluded. Wage inflation concerns Andrew Smith, chief economist at KPMG, said that the survey reflected the general uncertainty about the economic outlook. He explained that the number of companies expecting to make redundancies had jumped, but that the majority still expected to employ the same or a higher number of staff in 12 months time. Smith said that although more companies reported recruitment difficulties, pay expectations were broadly the same as a year ago, suggesting that wage inflation concerns are overdone. “Overall, the survey supports the view that the economy is on course for a soft landing. There is scope for the Monetary Policy Committee to pave the way with further rate cuts if necessary,” Smith concluded. Related articles
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