Employers cast doubt on Government recovery prediction

The latest redundancy predictions suggest the job market's problems are far from over.

by
Last Updated: 31 Aug 2010

Today's CIPD Labour Market Outlook report makes for grim reading, not least for the Government. The survey - of a representative group of 600 employers - found that 32% of employers are planning to make redundancies in the next quarter. Now everyone knows that civil service job cuts are coming. But these aren't just public sector employers the CIPD is talking about here: 30% of private sector firms are also planning to wield the axe. That doesn't really bode well for the chances of the private sector propping up the job market over the next couple of years...
 
There's no way of disguising the fact that there are some distinctly gloomy figures in this report. The number of employers planning to shed jobs is actually only slightly up on the previous quarter (i.e. before the Budget) - from 29% to 32%. But the outlook for the job market is actually worse than this might suggest, because those planning cuts are now planning bigger cuts: they expect to lose 5.5% of their workforce, as opposed to 3.6% last time round (i.e. almost half as much again, as the CIPD dolefully points out).
 
As you'd expect, things look particularly bad for the civil service, with nearly 8% of jobs under threat. According to the CIPD, the public sector 'net employment intentions balance' (the number of employers planning to cut relative to those planning to hire) currently stands at -35. And to be honest, we're surprised it's not higher.
 
The good news is that the balance for the private sector stands at +19 - as a result of which, the overall balance is still (just about) in positive territory, at +2. The Government is banking on this being a sign of things to come: that an increase in private sector recruitment will more than compensate for the shrinking public sector, resulting in a net increase in employment. In fact, the Office for Budget Responsibility has pencilled in a 200,000 rise for next year.
 
But the CIPD isn't convinced, and you can understand why. For one thing, the outlook for the public sector is probably going to get even worse following the October spending review. And with the Government already predicting 600,000 civil service job losses, there's nothing in these figures to suggest a private sector boom that will pick up the strain. Not when 30% are still planning to make redundancies. 


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