Job market takes ‘baby steps’ towards pre-recession levels

The labour market is taking “baby steps” towards pre-recession levels as employers predict a small increase in recruitment, according to the Chartered Institute of Personnel and Development (CIPD).

The comments came as the CIPD and professional services firm KPMG published their quarterly “Labour market outlook” report, which found that the difference between the proportion of employers intending to increase staffing levels and those who intend to reduce the workforce has risen to +3 from -3 three months ago.

Gerwyn Davies, public policy adviser at the CIPD, said: “The jobs market appears to be making baby steps on the long path back towards pre-recession levels. There are many sectors, such as manufacturing, that are taking large strides forward.

“But consumer-facing industries are simply edging forward due to fears of another consumer slowdown. Together with the onset of public sector cutbacks, the risk of an employment slowdown appears finely balanced.”

There were also positive results for pay awards, with 52% of employers forecasting that they will be increasing employee pay over the coming 12 months, compared with 47% last quarter.

The average size of the predicted pay award for the next year increased from 2.3% last quarter to 2.5% but is still forecast to track below the rate of inflation.

According to the report, the main reason employers are predicting pay rises is an increase in their ability to pay, cited by 31% of organisations.

CIPD reward adviser Charles Cotton commented: “If a salary rise indicates an organisation’s confidence in the future, then, given the rise in pay predictions revealed by this research, private sector firms are becoming less wary of what the next 12 months has in hold for them. By contrast, most public sector employers do know what the future has in store for them.”

Malcom Edge, head of markets at KPMG, added: “Business confidence is growing in Europe with more than half of business leaders optimistic about growth through joint ventures, collaborations and acquisitions.

“As a result, business sectors such as UK manufacturers and exporters will continue to see growth through overseas demand. Making UK businesses resilient through cost reduction and efficient business models will help secure and prepare them for whatever may be on the horizon.”

For further information on pay trends, read XpertHR’s latest data.

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