The number of planned redundancies in the UK increased 15% in the 1 August to 31 October quarter, from 36,641 to 41,970.
The number of employers (who employ 20-plus people) who plan on making redundancies has also risen 17% from 550 to 641 in the same period, according to research carried out by law firm GQ|Littler.
Caroline Baker, partner at GQ|Littler, said that despite the interest rate cycle having turned upwards almost a year ago many employers have, up until now, delayed making reductions to headcount. That delayed response, she said, was partly down to fears that a skills shortage meant that businesses that made staff redundant would struggle to rehire talent should the economic downturn prove short-lived.
Economic headwinds have caught up with employers who can no longer avoid making job cuts” – Caroline Baker, GQ|Littler
Financial services saw a significant rise in the number of planned redundancies, increasing 46% from 6,337 in the previous quarter to 9,249 in the most recent quarter ending on 31 October. This has been partly due to a sharp decline in mergers and acquisitions and corporate finance activity, causing revenues to slump at many financial services firms.
The UK’s technology sector is another that has seen significant job losses in recent months. Many tech companies that performed exceptionally well during the pandemic have seen their share value plummet. The research stated that venture capital firms are also putting pressure on investee firms that had overexpanded during the tech boom to make cuts.
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So far in 2022, tech companies have announced plans to cut just under 2,200 jobs in the UK, GQ|Littler found.
Baker said: “Economic headwinds have caught up with employers who can no longer avoid making job cuts. Until recently, skills shortages across many sectors meant that the main issue facing employers was finding personnel to fill roles. However, as the UK faces a prolonged downturn, many businesses are not only putting recruitment on hold but also making cuts in order to shore up their bottom line.”
She said that technology was a sector that traditionally had seen a high turnover of staff. “Rapid growth meant that those who were made redundant were snapped up by other companies quickly, usually after receiving a generous payoff,” she added.
“Given the negative economic outlook, tech businesses are unlikely to be in a position to offer these large severance packages. Instead, businesses are likely to allocate shrinking budgets to increasing salaries of remaining staff, to help in the cost of living crisis.”
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Figures from Indeed showed that the general rise in salaries since the pandemic was now slowing, despite inflation, while REC/KPMG released figures showing that there was a deceleration in the rate of recruitment.
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