Redundancies to rise sharply as recovery eludes jobs market

Redundancies look set to almost double in the first quarter of 2010 as the downturn hits the public sector before the private sector has recovered.

The Labour Market Outlook survey by KPMG and the Chartered Institute of Personnel and Development (CIPD) revealed that employers from all sectors plan to cut 6.2% of their workforce in the first quarter of 2010, compared with 3.8% in the previous quarter.

The survey of more than 700 employers revealed that the net balance between the percentage of employers expecting to recruit and those expecting to cut staff across all sectors of the economy in the first three months of 2010 was still negative, at -5%, representing a continued fall from -3% in the previous quarter.

There was no overall return to growth in sight for the jobs market, despite the UK’s emergence from the recession, the survey added.

This negative growth has been attributed to a bleak quarter ahead for the public sector, which recorded a net balance of -31%, down from -13% in the previous quarter.

The figures come as councils like Birmingham City Council – which announced that it plans up to 2,000 job cuts earlier this month – begin to take action to control their budgets.

But in the private sector the net balance was 5% as staffing numbers are set to grow for the first time since the start of the recession.

Meanwhile the private sector has predicted pay increases of 2% compared with 0.9% for the public sector at the next pay award. The average basic increase at the next pay award is predicted to be 1.5%.

John Philpott, chief economic adviser at the CIPD, said: “The UK jobs market is still on the ropes, with a public sector fall in employment now a reality as it feels the impact of the longest recession in modern times.

“Despite the jobs market proving resilient in recent months, this represents a mere pause for breath with the number of redundancies easing in the private sector and spending cuts yet to be felt by large swathes of the public sector.”

He added: “Unfortunately, there are more testing rounds ahead.”

Alan Downey, head of public sector at KPMG, said: “These figures clearly show that the starting gun for a public sector recession has been fired. It is now only a matter of time before we are faced with the deepest and most prolonged cuts in public expenditure that anyone can remember.

“Some of this can be achieved quickly, but many of the changes that are needed will require careful planning. Plans need to be made now, so that the public sector is ready to respond immediately, whenever the incoming government decides it is time for the axe to fall.”

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