Quarterly survey points to even bigger jobs cull
The latest quarterly CIPD/KPMG survey of employers’ recruitment and redundancy plans indicates that UK job prospects are deteriorating ‘at an alarming rate’ while the size of average pay rises is shrinking.
The winter Labour Market Outlook (LMO) survey of 892 UK employers, conducted by Ipsos Mori at the turn of the year, finds that more than one in three (36 per cent) plan to cut jobs in the first quarter of 2009 – double the proportion expecting to make job cuts at the time of the previous LMO survey last autumn.
The LMO records a negative balance of -9 percentage points between the proportion of employers planning to cut jobs (36 per cent) and the proportion planning to hire additional staff (27 per cent). This is the first such negative balance recorded in the five years since the LMO survey began in 2004.
The latest LMO survey also finds that employers intend to keep a much tighter rein on pay increases in the coming months. Those who plan pay reviews expect staff pay to increase on average by 2.6 per cent, much lower than the 3.5 per cent average increase expected last autumn. But as many as one in eight employers don’t intend to conduct a pay review at all in 2009
John Philpott, chief economist at the Chartered Institute of Personnel and Development said: “These latest LMO figures suggest that job prospects are deteriorating at an alarming rate. The labour market outlook is clearly even worse than expected at the turn of the year. Official statistics later this week will confirm that unemployment passed two million at the end of 2008. It now seems sadly inevitable that UK unemployment will top three million before the jobs market finally starts to recover.”
Andrew Smith, chief economist at KPMG, commented: “The speed of deterioration in the labour market is breath-taking. Higher unemployment will weaken demand which in turn will lead to higher unemployment. With interest rate policy running out of room, this latest survey underlines the urgent need for alternative monetary policy measures - so-called quantative easing - to ameliorate the risk of a downward spiral becoming entrenched and turning what already looks like a grim recession into something even worse.”