Job losses set to rise sharply as cuts bite, says CIPD

Job losses are set to rise sharply in the first quarter of 2011 as the full force of government cuts is felt, according to the Chartered Institute of Personnel and Development (CIPD).

Results from the CIPD’s latest Labour Market Outlook suggest that employment levels will fall significantly this year, with one-third of the 750 employers surveyed saying that they will be looking to employ fewer people as a result of the Comprehensive Spending Review. More than half (52%) of public sector employers say that they plan to make redundancies in the first three months of 2011.

In addition to this, two-thirds (66%) of public sector organisations said that they will be looking to reduce their workforces in the same period. The area likely to be hardest hit is local government, with 77% of employers planning to make cuts to their workforce.

The private sector offers a more positive outlook, boosted by activity in sectors such as manufacturing and services, both of which are forecast to see jobs growth of 20%.

Gerwyn Davies, public policy adviser at the CIPD, said that the figures increased the need for the Government to stimulate jobs growth in the private sector: “The first quarter of 2011 was always going to be a quarter of reckoning for the jobs market, and it seems that last year’s modest recovery will be reversed by a modest relapse this year. Encouragingly, the private sector continues to generate new jobs, but we are some way off the jobs boom that we are all hoping for.

“While private sector jobs generation is encouraging, it’s more important than ever that the Government continues its growth efforts in the private sector so as to offset the jobs gloom in the public sector.”

In addition to the gloomy jobs outlook, the CIPD’s survey also suggests that downward pressure is expected on wages. Basic pay increase expectations have fallen to 1.3% from 1.5% during the past three months, and average pay settlements in the public sector are expected to fall to -0.33%, compared with 2.3% in the private sector.

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