CIPD warns of most difficult labour market since recession

The Chartered Institute of Personnel and Development’s (CIPD) warning is based on the findings of its latest quarterly Labour Market Outlook, which surveyed more than 1,000 employers. The CIPD says that the findings reinforce its estimate that unemployment will reach 2.85 million by the end of the year if business conditions do not improve.

The report suggests that falling confidence in the private sector during the past three months has severely dented employment prospects, and that it is less likely that private sector recruitment will offset job losses in the public sector.

The CIPD points out that the decline in employment is due more to an increased number of planned redundancies, rather than lower recruitment intentions. The proportion of respondents to the survey planning to make redundancies is at its highest level since spring 2009 and, within the overall private sector figure, 31% of private sector services firms intend to make redundancies this quarter, up from 24% in last quarter’s report.

Organisations that are planning to make redundancies expect 4% of their workforce to be made redundant on average.

The survey results also point to a further widening of a North/South jobs-market divide. The net employment balance for the South of England has improved modestly to -1 from -4 in the past three months, with London the only region in the UK to register a positive score (+3).

In contrast, employment prospects in the North have fallen to -20 from -17 over the same period. This follows the most recent official Labour Force Survey unemployment statistics, which showed that the North-East and North-West of England saw the largest unemployment increases in the 12 months to November 2011.

Gerwyn Davies, public policy adviser at the CIPD, said: “Whereas employers were in ‘wait and see’ mode three months ago, more private sector firms, particularly among private sector services firms, have decided to push the redundancy button in response to worsening economic news.

“This will exert yet more pressure on a jobs market that is buckling under the strains of contractions in economic growth and public sector employment. The fear is that these existing pressures, which include a widening chasm between the employment prospects of those in the North and the South, will become greater still if business conditions do not improve in the next few months. ”

Davies added that employers will face significant management challenges as a result of impending redundancies. He said: “With redundancies looking set to be a feature in growing numbers of firms in the months to come, business leaders need to focus attention on communicating and consulting with staff to build trust and employee engagement in these uncertain times. Employees are likely to respond more positively to change, and even to the threat of redundancies, if they feel that they have a voice in the workplace and that senior leaders listen to their views before taking decisions.”

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