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More firms planning job cuts

Employers expect a gloomy time ahead in the jobs market, with a rise in redundancies accompanied by a downturn in recruitment, a survey suggests.

It shows there has been a large drop in the number of employers anticipating hiring new staff in the next few months. Of the 1,200 firms questioned, just 29% expected to increase staff levels, compared with 37% earlier this year and 58% when the survey began in 2004. The number of employers planning redundancies increased from 22% to 27% between the second and third quarters of this year.

Average pay rises are expected to rise by 3.7% in the coming months, in line with recent settlements, the study by the Chartered Institute of Personnel and Development (CIPD) found.

The slump in employment plans is “particularly worrying”, the report said, because the third quarter is usually buoyant on the back of the wave of recruitment typically seen in September.

John Philpott, chief economist at the CIPD, said: “The jobs market has been one of the few bright spots in the UK economy, but cracks are appearing in the face of an increasingly uncertain economic outlook. “Even if we avoid the scale of jobs fallout suffered in previous downturns, the era of the candidate’s recruitment market is already over, with people in work becoming increasingly anxious that their P45 might soon be on its way.”

Andrew Smith, chief economist at KPMG, which helped with the research, added: “Companies are now reacting to deteriorating market conditions. With sales slowing and input costs rising, but scope to raise prices limited by weakening demand, finances are under pressure.

“It looks as if employment costs, the main area over which businesses retain control, are taking the strain with employers seeking both to keep a lid on pay settlements and, in increasing numbers, planning for redundancies.

“The labour market is suddenly looking a lot less resilient.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .