Redundancies to soar in the next few months

A survey suggests the number of employers planning to make redundancies in the coming months has jumped sharply - despite some optimism in the private sector.

by Emma Haslett
Last Updated: 06 Nov 2012
Here’s a cheery way to start the week: the Chartered Institute of Personnel and Development says we’re going to see a big jump in redundancies in the next few months, as the Government’s spending cuts really start to bite. Happily, the private sector still sounds fairly positive on the recruitment front – but the bad news for the Government is that the CIPD’s figures suggest it won’t be enough to make up for the likely shortfall in the public sector, at least in the short term…

The CIPD’s findings are based on its quarterly Labour Market Survey, which measures the number of redundancies organisations are planning to make. Unfortunately, its index has dropped into negative territory over the past three months, falling from +11 to -3 - which essentially means that more employers are planning to make redundancies than create new jobs. In fact, a third say they’re planning to make layoffs - the highest proportion since the survey began in 2004.

The fact that the public sector looks likely to fare the worst is hardly surprising - but the figures are still stark. More than half of its employers are planning to make redundancies in the first quarter of 2011, while 66% say they want to reduce the size of their workforce (though not necessarily through redundancy). Of those organisations, 77% were local government employers, a third NHS-related organisations and half central government.

On the plus side, the situation in the private sector looks a lot better: the report shows almost 70% of businesses are planning to recruit over the next three months, with the manufacturing and private sector services both leading the way at +20 on the index. Private sector workers should also do better in terms of wages: the average rise will be 2.3%, compared to 0.33% in the public sector (although even the former is well below the current rate of inflation, obviously).

The Government hopes that over the next few years, private sector job growth can make up for the public sector shrinkage. But judging by these CIPD figures, the short-term picture looks likely to be painful as the cuts kick in. As Gerwyn Davies, the CIPD’s public policy adviser, suggests, this could be a ‘quarter of reckoning for the jobs market’.

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