Epidemic of redundancies may have eased, but UK jobs market generally still flat on its back
UK employment prospects will deteriorate less slowly in the final quarter of 2009 than at any time since the start of the recession in spring 2008.
But this relative improvement is taking place against a backdrop of a much reduced pressure of demand for labour, with employers' hiring intentions well below pre-recession levels and plans for staff pay rises and changes to hours of work showing no sign that the labour market is anywhere close to returning to proper health.
This is the main conclusion from findings of the latest (autumn 2009) quarterly CIPD/KPMG Labour Market Outlook (LMO) survey of more than 700 employers, covering all sectors of the economy.
The LMO survey records a negative balance of -3% between the percentage of employers expecting to employ more staff in the three months to December 2009 and the percentage expecting to employ fewer. This represents an improvement on negative balances of -19% and -10% recorded in the spring and summer LMO surveys respectively, with the improvement due mainly to a fall in the proportion of employers planning to make staff redundant compared with earlier in the year.
In the private sector, the jobs outlook is set to further deteriorate markedly in manufacturing and production (a negative balance of -21%) but prospects are much more buoyant in private sector services (+11%). Within the public sector, employers in public administration report a negative balance of employment intentions of -18%.
The LMO survey also identifies reduced working hours and modest pay rises as a further symptom of a weak overall demand for labour. Expectations about the next basic pay increase has fallen to a record low of1.5%, down from 1.7% three months ago, with the fall in working hours this year looking set to continue in the 12 months to September 2010. The survey shows that around a sixth of organisations have put in place reduced working hours' arrangements for at least some of their staff during the past year with a similar proportion saying that they will be asking staff to work shorter hours in the next 12 months to September 2010.
Gerwyn Davies, Public Policy Adviser at the Chartered Institute of Personnel and Development (CIPD) says:
"The UK jobs market remains flat on its back. Things aren't anywhere near bad as they were earlier in the year when redundancies spread through the economy like a virus. And with things looking up in one or two sectors there is mounting hope that the ongoing gradual decline in job prospects might run its course next year before unemployment reaches 3 million. The patient remains seriously weak, won't recover for several years even if a return to robust economic growth provides the necessary tonic and could easily relapse if the recovery is as fragile and anaemic as many economists fear.”
Andrew Smith, Chief Economist at KPMG, says:
"This recession has come through not only in job losses but also in greater labour market flexibility - reduced working hours, pay freezes and outright wage cuts. The decline in average pay settlements, expected to fall to a record low of 1.5%, suggests that underlying inflation pressures continue to weaken while the risk of deflation is rising - justifying the Monetary Policy Committee's decision to extend its quantitative easing programme by £25bn."
09 November 2009
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Notes to editors
- Gerwyn Davies is available for interview
- Andrew Smith is available for interview
- For a copy of the LMO, the UK's largest representative survey of employers' recruitment, redundancy and pay intentions, please contact a member of the press office
- The Chartered Institute of Personnel and Development (CIPD) is Europe's largest HR and development professional body with over 135,000 members, supporting and developing those responsible for the management and development of people within organisations. Public Policy at CIPD promotes an agenda for Productive Workplaces to boost economic performance and improve the quality of working life
- KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 144 countries and have more than 104,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. KPMG International provides no client services. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative
CIPD Press Enquiries
Gregor Ridley / Jemma Walsh
Tel: 020 8612 6400
Email: press@cipd.co.uk
KPMG Press Enquiries
Mark Hamilton or Arti Mohan
Tel: 0207 694 2687 / 0207694 8735
Email: mark.hamilton@kpmg.co.uk / arti.mohan@kpmg.co.uk
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