The UK jobs market is set to experience a “slow, painful contraction” in the final quarter of this year, with many employers putting their hiring activity on hold due to ongoing economic uncertainty, according to the Chartered Institute of Personnel and Development (CIPD).
The CIPD’s latest Labour Market Outlook report found that employers are “hedging their bets”, with fewer organisations planning to offshore jobs and recruit overseas workers at a time of reduced recruitment and fewer redundancies. This has resulted in lower hiring intentions and redundancy compared with recent previous reports.
The CIPD predicted that deterioration in the labour market would show a successive quarterly fall and the lowest net rating recorded by the report since last winter. Furthermore, the CIPD said that medium-term prospects are similarly bleak, with the 12-month index recording a negative rating of -2.
Medium-term prospects offer little cause for optimism, with the twelve-month index also recording -2. The report’s findings suggest that the private sector will grow in the next three months but at a slower pace than in recent quarters. Meanwhile, confidence in the public sector remains low for the next three months and is even lower for the year ahead. The voluntary sector has shown no movement in employment intentions for the remainder of 2011.
Gerwyn Davies, public policy adviser at the CIPD, said: “The figures point to a slow, painful contraction in the jobs market. Many firms appear to be locked in ‘wait and see’ mode, with some companies scaling back on all employment decisions against a backdrop of increasing uncertainty as a result of the eurozone crisis and wider global economic turmoil.
“The good news resulting from this lull in business activity is that fewer employers are looking to relocate abroad or make redundancies. The downside is that recruitment intentions are falling, which will make further rises in unemployment therefore seem inevitable given that public sector job losses are outpacing the predictions made by the Office for Budget Responsibility. There is no immediate sign of UK labour market conditions improving in the short or medium term.”