Employer survey finds four year low in demand for staff but no sign of imminent jobs slide

The latest quarterly CIPD/KPMG Labour Market Outlook (LMO) survey of UK employers, finds hiring expectations little changed between the winter and spring quarters, following the marked softening in employer sentiment that occurred between the autumn and winter. Pay rises meanwhile remain modest and there is no sign of higher living costs inflating pay deals.

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The spring LMO survey findings indicate that although the overall demand for staff has weakened since the end of last year - and is weaker than in any of the spring surveys since the LMO series began in spring 2004 - there is no sign that conditions in the jobs market have yet deteriorated dramatically in response to the emerging economic slowdown. Instead employers seem to be adopting a cautious ëwait and seeí approach to their staffing requirements rather than taking drastic action to cut jobs.

According to the LMO survey 37% of the 735 employers questioned by Ipsos MORI expected to increase staff levels in the spring quarter (March-May 2008). This is slightly higher than the 34% recorded in the winter quarter (December 2007-January 2008) but well down on the autumn quarter (September-November 2007) figure of 46%. The spring 2008 figure is also lower than that recorded in spring 2007 (39%), spring 2006 (41%), spring 2005 (49%) and spring 2004 (53%).

Almost 2 in 5 employers surveyed intended to carry out a staff pay review in the spring quarter. Of these a quarter expected to be awarding average pay increases of 2% and almost a third (32%) increases of 3%.

Dr John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD) says: ìConditions in the UK labour market are clearly softer than six months ago and softer than at this time of year for several years. But net hiring (recruitment minus redundancies) remains strongly positive which suggests that while the labour market is currently experiencing a period of relative slowdown ñ which should in due course show up in official statistics, possibly in those being released later today by the Office for National Statistics ñ the market is far from approaching a state of meltdown.

ìHowever, with employers in ëwait and seeí mode it remains possible that falling confidence in the outlook for the economy might still trigger a wave of job cuts. If so the tipping point in confidence could result in a sudden avalanche of redundancies and quickly transform the current relatively benign jobs scene. A further early cut in interest rates would be advisable to limit the chances of this outcome.î