Nearly half of firms are looking to reduce hiring or not recruit at all over the next year, the annual survey by the Confederation of British Industry has revealed, which the body characterised as a ‘two-speed recovery’.
Although 46% of firms said they would not expand or maintain previous recruitment levels, 51% said they would. This balance of +5% compares unfavourably with last year’s +56%.
According to figures released by the Office for National Statistics this week, the unemployment rate has increased to 4.1% from 3.9% and the number of jobs in the UK has fallen by 354,000 to 35.41 million jobs between March and June 2020 – the largest fall since September 1992.
But with the furlough scheme ending on 31 October, notwithstanding pressure to keep it going in some form, many economists forecast that unemployment could double to three million by the end of the year.
CBI chief UK policy director Matthew Fell said: “The UK market has been under heavy stress since the outset of the Covid-19 crisis and, although the economy has started to re-open, pressure on firms remains acute. With ongoing social distancing, higher costs, lower demand, local lockdowns and fears of a second wave, firms are tempering their recruitment plans.”
The survey, a collaboration with recruitment company Pertemps, also found that a balance of only +7% of firms expected their workforce to be bigger in a year’s time, compared with +28% in last year’s survey. In addition, 48% plan to examine options to restructure their company and a third of companies are set to freeze pay across all roles.
Half of the 248 respondents (50%) said that they had taken steps to protect jobs. Within this group, nearly half had reduced working hours (46%) while more than two in five (43%) had reduced bonuses. One quarter of them had reduced overtime and pay premiums (26%).
When asked what approach they expect to take at their next pay round, a third (33%) of respondents stated they planned to implement a pay-freeze across all roles (up from 5% in 2019). Meanwhile, 8% were still planning above inflation increases and 29% aimed to raise pay for their employees in line with inflation (down from 14% and 54% in 2019).
In response to the rising National Living Wage, more than one in three respondent businesses (34%) affected by the minimum wage think that the Low Pay Commission should take a cautious approach. Nearly one in three respondent businesses (27%) would like a freeze for the 2021 rate.
Fell added: “We are seeing a two-speed recovery. While some firms are already looking at creating new jobs, most others are in survival mode. Young people are facing one of the most difficult jobs market in decades and supporting them through this difficult time and ensuring they have access to opportunities will be crucial. It’s encouraging to see one in ten firms looking to use the Kickstart Scheme.”
Carmen Watson, chief executive of Pertemps, said: “We have already seen signs of this during recent weeks, with August recording a definite upturn in recruitment activity as businesses started to plan their reopening.
“Flexible working arrangements will be a priority for businesses, as they continue to manage change, so it is not surprising to see nearly half of respondents putting transformation and restructuring plans as a priority. Increasing numbers of clients we are talking to are looking for recruitment services ‘on-demand,’ with the ability to expand recruiting capacity where and when it’s needed.”