A third of employers plan to make redundancies

One-third of employers plan to shed jobs in the first quarter of 2009, new research has revealed.

The latest survey by the Chartered Institute of Personnel and Development (CIPD) and professional services firm KPMG found that 36% of employers said they will make redundancies by spring.

Only 27% plan to hire new staff, creating a negative balance for the first time in five years, the winter Labour Market Outlook (LMO) survey of 892 UK employers, conducted by Ipsos Mori, also found.

The news comes as official unemployment statistics out this week are likely to confirm the number of people out of work will have passed two million at the end of 2008. Last month the figures confirmed 1.92 million people were unemployed between September and November 2008.

John Philpott, chief economist at the CIPD, said: “Job prospects are deteriorating at an alarming rate. The labour market outlook is clearly even worse than expected at the turn of the year.

“Official statistics later this week will confirm that unemployment passed two million at the end of 2008. It now seems sadly inevitable that UK unemployment will top three million before the jobs market finally starts to recover”.  

Andrew Smith, chief economist at KPMG, added the speed of deterioration in the labour market is “breathtaking”.

The survey also revealed that average pay rises are shrinking to just 2.6%, nearly one percentage point lower than the 3.5% increase expected last year. As many as one in eight employers don’t intend to conduct a pay review at all in 2009, the study reported.

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