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Stuart Lauchlan

Former editor of PublicTechnology.net and BusinessCloud9.com

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Redundancies expected to hit highest levels since spring 2009

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The proportion of private sector employers planning to make redundancies this quarter is at its highest level since spring 2009, with those cutting jobs expecting to axe about 4% of their total workforce.

According to a survey among more than 1,000 employers undertaken by YouGov on behalf of the Chartered Institute of Personnel and Development, just under a third of companies intend to cut headcount this quarter, up from 24% last quarter.
 
Moreover, three out of five employers do not expect to create any new jobs over the next three months. Those firms that do anticipate hiring are focusing on management and executive roles (23%), sales and marketing (21%) and business development (16%).
 
Interest is also relatively high in taking on secretaries and personal assistants, IT and accountancy and finance personnel (15% respectively) as well as engineers (13%).
 
The CIPD’s latest Labour Market Outlook report also revealed that the net employment balance, which measures the difference between the number of employers planning to hire and those expecting to let staff go, had fallen to -8 from -3 in autumn 2011 – again the worst figures since spring 2009.
 
Over the next year, the net employment balance is likewise predicted to drop to -6 from -2, with the worsening employment prospects almost entirely down to a decline in private sector confidence.
 
Hiring intentions here have halved to +10 over the last three months, further undermining hopes that industry and commerce will compensate for heavy job losses in the public sector. The net employment balance in this latter area remains at a solidly negative -49.
 
Gerwyn Davies, the CIPD’s public policy adviser, said: “Whereas employers were in ‘wait-and-see’ mode three months ago, more private sector firms, particularly among private sector service firms, have decided to push the redundancy button in response to worsening economic news.”
 
Widening chasm
 
But this situation would only exert more pressure on a jobs market already buckling under the strain of economic contraction and falling public sector employment.
 
To make matters worse, some 47% of employers believed that they had actively been prevented from creating jobs over the last two years, with 54% citing an inability to access finance being at fault and 21% complaining of skills shortages.
 
“The fear is that these existing pressures, which include a widening chasm between the employment prospects of those in the north and the south, will become greater still if business conditions do not improve in the next few months,” Davies said.
 
Although the net employment balance in the south of England has improved modestly from -1 from -4 over the last three months, London is the only region to show a positive score at +3.
 
In contrast, employment prospects in the north have fallen to -20 from -17, with the north east of England showing the biggest leap in unemployment (+2.3%) in the 12 months to November 2011, followed by the north west (+1.2%).
 
In fact, the CIPD now predicts that unemployment across the country could hit 2.85 million by the end of this year if business conditions fail to improve.
 
In news elsewhere, economic forecasters appeared to differ as to whether they thought the UK would avoid a dreaded ‘double dip’ recession or not.
 
On the one hand, the CBI forecast that growth rates would remain positive at 0.9% over the year ahead, rising to a healthy 2% next year. The employers’ lobby group attributed the boost to firms starting to invest in new equipment and finding new export markets.
 
But accountancy firm BDO was decidedly less bullish. Its evaluation of the turnover of public companies indicated that sales had fallen for the eighth month in a row. This resulted in its Output Index falling to 91.2 in January from 91.4 in December, with any figure below 95 pointing to a contraction.
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Stuart Lauchlan

Former editor of PublicTechnology.net and BusinessCloud9.com

Read more from Stuart Lauchlan
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