CIPD Labour Market Outlook points to jobs slowdown

The latest quarterly Labour Market Outlook from the Chartered Institute of Personnel and Development (CIPD) reveals that UK employers have become much more pessimistic about employment prospects. Employment prospects for the next three months have fallen to their lowest level since the survey began two years ago, with only around a third of employers expecting their staff numbers to increase in the next three months.

And while the jobs slowdown continues, UK employers seem as keen as ever to recruit migrant workers ñ in particular from EU accession countries. UK employers intend to recruit from accession countries more than from any other region of the world. This represents a shift when compared to last yearís CIPD survey figures which showed that employers were more keen to recruit from ëold Europeí and the rest of the world than EU accession member states.

A quarter of employers intend to hire migrant workers this winter, with more than ten per cent of UK organisations saying that they will step up their efforts to recruit migrant workers in the next year. Public sector employers (26%) and employers in London (35%) are those most likely to recruit migrants.

John Philpott, the CIPDís Chief Economist comments, ìThe influx of Eastern European migrant workers shows no sign of waning and probably explains why the unemployment claimant count of people on Jobseekers Allowance has increased this year paradoxically alongside an increase in employment.

Philpott continues, ìThe CIPD survey shows that UK employers are recruiting migrant workers primarily for their skills and experience and not for cost-cutting reasons, though cost is a more important consideration when recruiting less skilled migrants. The survey also reveals that UK employers rate migrant workers relatively highly compared with other job seekers such as the long-term unemployed and people on Incapacity Benefit. Equipping core jobless claimants of Jobseekers Allowance with the employability attributes necessary to fill job vacancies must therefore be a key plank of the Governmentís welfare reform programme, alongside the much needed, and hopefully not too much further delayed, changes to Incapacity Benefit.î

The research also shows that employment prospects for the next three months have fallen to their lowest level since the survey began two years ago, with only a third of employers expecting their numbers to increase in the next three months. The corresponding CIPD survey last year showed that around a half of UK employers expected their staff numbers to increase during the winter of 2004/2005.

Philpott concludes, ìRecruitment confidence has dropped in all sectors and particularly the public sector where the effect of the Gershon efficiency drive seems to be starting to have an impact. Slow recruitment overall shows that the consumer slowdown is hitting the jobs market, but with redundancies still at a record low rate it should be stressed that employment is not set to plummet .î

Key findings:

Recruitment/pay trends
Just under 4 out of 5 employers (79%) responding to the survey intended to recruit staff in winter 2005/06 (November ñ January).

In 36% of cases recruitment will result in an increase in employment levels. This is the lowest figure for net recruitment intentions recorded by CIPD quarterly surveys since they began in spring 2004. The lowest figure previously recorded was 45% in Winter 2004/5. The latest figure compares to 52% in the Autumn 2004 survey.
More than 1 in 5 employers (22%) plan redundancies this winter.

Two thirds of employers expect pay levels to increase on average by between 2% and 4% as a result of their next pay review.

There is a 13% positive balance of employers expecting to employ more staff by autumn 2006, down from 18% in the summer CIPD quarterly survey.

Migrant workers
A quarter of employers intend to hire migrant workers this winter. Public sector employers (26%) and employers in London (35%) are those most likely to recruit migrants.

EU accession countries such as Poland have become a more popular source of migrant labour than the old European Union, commonwealth countries and the rest of the world. This represents a shift when compared with corresponding figures from last year. Last yearís figures showed that UK employers that recruit migrant labour were more keen to recruit from ëold Europeí (66%), the rest of the world (62%) than EU accession member states (52%).

13% of employers expect to target vacancies at migrants in the coming year. Only a minority of employers (8%) have been deterred from hiring migrants because of concern about issues of security.

Proficiency in English is considered important by around half of employers for both skilled and less skilled migrants.

Few employers hire migrant workers mainly to lower wage costs. However, this objective is almost five times more important for employers hiring less skilled (9%) than skilled (2%) migrants.

Almost 2 in 5 employers (39%) expect the Governmentís proposed new points system for managing migration to be a ëbureaucratic barrier to actively recruiting migrant workersí.