The number of planned redundancies in the UK fell by 21% in the last quarter indicating that despite rising interest rates, businesses have generally been keen to retain employees.
A bleak economic outlook, with uncertainty for many firms over supply chains and steep rises in energy costs and the cost of borrowing, would normally cause businesses to plan further redundancies, but new figures analysed by employment law firm GQ|Littler show a steep fall in the number of planned redundancies.
Between 1 April and 30 June there were 39,669 planned redundancies as opposed to 50,382 between 1 January and 30 March. Meanwhile, recruitment recently slowed to its lowest level in 16 months.
Philip Cameron, partner at GQ|Littler said: “Traditionally a squeeze on margins, such as the one being created by the spike in inflation we would see businesses reducing costs through redundancy. Given the mounting economic pressure it is very surprising that businesses have decided not to go down this route just yet.”
He added that the extreme shortage of available staff across the economy meant that many businesses were retaining underemployed staff rather than making them redundant.
These businesses, he said, were concerned that when the economic outlook started to improve they would not be able to rehire those staff. “Many employers will have learned this the hard way following the pandemic,” he added, with many businesses subsequently working hard to ensure ensure surplus staff were not let go during the so-called Great Resignation.
To get through the current economic impasse, companies in the UK knew that in order to survive the crisis relatively unscathed they were had to hang on to their valued employees, said Cameron.
He added: “A buoyant labour market is continuing to cushion job losses in many sectors. However, as uncertainty generated by the war in Ukraine and the deteriorating wider economic outlook bites, businesses will be asking themselves how much longer they can avoid making difficult decisions around redundancy.”