Private sector employment shows signs of recovery

Private sector employment has started to show signs of recovery while public sector pessimism continues to grow, a labour market survey has revealed.


The quarterly Labour Market Outlook survey by the Chartered Institute of personnel and Development (CIPD) and KPMG has found net employment intentions for the coming three months were -10 – up from -19 in the previous quarter – with private sector employment intentions having risen from -30 to -2.


However, with talk of large-scale public sector cutbacks still to come, net employment intentions in this sector plummeted from -3 to -28.


Intentions to make redundancies across all sectors dropped 6% from the last quarter, from 37% to 31%, but redundancy intentions in the public sector increased by more than a third. Local government and further and higher education will be particularly hit by job cuts as 56% and 47% of employers respectively intend to make redundancies.


John Philpott, chief economist at the CIPD, said: “When it comes to the immediate jobs outlook, the best that can be said is that things are getting worse more slowly. Employment will keep falling and unemployment is still on course to top three million in 2010. And it is far too soon to rule out another avalanche of private sector redundancies later in the year.”


The survey of 900 employers found the net employment intention for the HR profession was -1, as 8% of organisations intend to recruit HR staff, while 9% intend to make HR staff redundant. The proportion of public sector employers planning to make HR professionals redundant rose by 15%.


The North East of England is expected to see the greatest increase in recruitment as 82% of employers plan to hire new staff. This was closely followed by London with 75% of employers, and Wales with 66% of employers.


The survey also revealed only 15% of businesses planned to conduct a pay review this quarter, down 17% on the previous quarter, with average pay expectations having dropped below the rate of inflation to 1.7%.


Andrew Smith, chief economist at KPMG, said: “This conservative approach [to pay] indicates that business remains unconvinced that current economic green shoots will lead to sustainable healthy growth in the near term.


“Expectations that pay increases will fall below the rate of inflation, resulting in a reduction in real earnings, will be a further concern and could stifle any consumer-led recovery.”

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