The winter CIPD/KPMG Labour Market Outlook (LMO) survey, published today, shows a sharp rise in the proportion of employers expecting to make at least some staff redundant in the coming months, suggesting that tougher economic conditions are starting to bite in the UK jobs market.
More redundancies on horizon
The survey of 1553 employers shows that almost two in five (38%) intend to make some employees redundant this quarter ñ a sharp increase on the autumn 2007 LMO survey figure of 17% and the highest quarterly figure for redundancy intentions since the LMO survey began in 2004. The average quarterly figure for redundancy intentions is 21%, which compares with a seasonal winter average of 22%.
A quarter of employers expecting to make redundancies this quarter report that at least 10 staff will lose their jobs. Thirty seven per cent expect to make fewer than 10 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%) of employers surveyed expected to make at least some staff redundant this quarter.
Redundancy intentions are highest in the East Midlands (47%), the West Midlands (45%) and the South West of England (45%). The celtic fringe looks set to be the least affected in the next three months, with around a third of organisations in Scotland (33%), Wales (35%) and Northern Ireland (36%) planning redundancies, Redundancy intentions in England are lowest in Yorkshire and Humberside (34%).
Commenting on the survey findings the CIPDís Chief Economist John Philpott said:
ìEmployersí initial reaction to talk of an economic slowdown was to hold fire and take stock of the emerging situation. But 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.
ìWith net recruitment activity still positive, signs of mounting employer pessimism shouldnít be read as evidence of a jobs market approaching meltdown. But it does suggest that the UK is entering a period of slower employment growth and somewhat greater job insecurity than in recent years.î
Recruitment difficulties worsen
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. More than half (54%) of employers surveyed anticipate recruitment difficulties this winter, up from just below half (49%) in the autumn.
Pay outlook benign
Pay expectations remain benign and have barely changed in recent LMO surveys. Almost 1 in 5 employers (19%) 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% and less than 3.5%. 1 in 5 expected increases of 4% or more. The median expected increase is 3% in all but the public services where the figure is lower (2%).
John Philpott continued:
ìThe main risk to continued pay moderation this year would seem to be increased difficulty in recruiting skilled and experienced staff. But in the context of a slowdown in demand for labour a significant increase in pay inflation seems unlikely.î
Andrew Smith, Chief Economist at KPMG, said: ìThe survey reflects the general uncertainty about the economic outlook. The number of companies expecting to make redundancies has jumped ñ but the majority still expect to employ the same or a higher number of staff in 12 months time. And although more companies report recruitment difficulties, pay expectations are broadly the same as a year ago, suggesting that wage inflation concerns are overdone.
ìOverall, the survey supports the view that the economy is on course for a soft landing ñ and that there is scope for the MPC to pave the way with further rate cuts if necessary.î
Sharp rise in expected redundancies signals jobs slowdown
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