Hiring freeze killing growth, claims CIPD

UK businesses have gone into 'wait and see' mode, says the Chartered Institute of Personnel and Development. Recruitment has stalled. The result: a 'slow, painful contraction'.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
What an ugly phrase. If our economy is a beast in the throes of childbirth, employment, the squalling progeny, is simply refusing to be born. Or, put simply: the private sector has stopped hiring.

The CIPD’s quarterly survey of 1,000 employers has found that there has been a marked downturn in recruitment. This is very bad news. The public sector is haemorrhaging jobs and the private sector is only mopping up a small fraction of the newly unemployed.

Why the freeze? ‘Many firms appear to be locked in ‘wait and see’ mode,’ says Gerwyn Davies, Public Policy Adviser at the CIPD. ‘Some companies are scaling back on all employment decisions against a backdrop of increasing uncertainty as a result of the eurozone crisis and wider global economic turmoil.’

And the troubles in euroland show no signs of going away any time soon. A gloomy fact reflected in the report’s employment conclusions: 'There is no immediate sign of UK labour market conditions improving in the short or medium term.'

Last month’s unemployment figures showed 2.57m people out of work. Employment minister Chris Grayling may have been touting his Work Programme all over town, but these grim findings prove that these initiatives are just a sticking plaster over the gaping job deficit. No wonder the CIPD urged government to stop cutting public-sector jobs 'while the economy and labour market remain in the current fragile condition' last month.

The good news – yes there is some – is that while firms are not hiring, they don’t seem to be firing either. They’ve learned from the disastrous recession of the nineties, which saw businesses shed staff to save cash, only to find themselves up the creek once the upturn arrived, scrambling to re-hire. This time around, firms are being more savvy, hanging on to good people until times improve.

However, new unemployment data is being released in two days’ time. If you’re hoping for a cheerful Wednesday, consider staying in bed.

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