Employment gloom starting to ease

10 August 2009

The downturn in the UK job market is easing off after a spate of job losses earlier in the year, according to a new report.

Findings from the quarterly labour market survey carried out by the Chartered Institute of Personnel and Development (CIPD) show that fewer employers in the private sector are expecting to make redundancies, and those that are planned will be smaller in scale. 

As a whole, the survey found that although 10% more employers still expect to lose staff than to take on new recruits, that figure is down from 19% last quarter. 

There’s a marked increase in optimism in the private sector with only 2% more employers expecting to lose staff than recruit, down from 30% last quarter. There are also signs that some firms are starting to hire again in sectors such as hotels, catering and retail. 

But it’s not all good news as there’s growing pessimism in the public sector with 3% more employers planning to fire than hire last quarter.

Things look particularly gloomy in the higher education and local government sectors. 

Pay-rise prospects have also worsened, with only 15% of responding employers planning a pay review this quarter, down from a third last quarter, and average increases expected to be just 1.7%. 

The survey, published today, comes ahead of Wednesday’s official jobless data announcement, which is expected to bring more bad news.

Dr John Philpott, chief economist at the CIPD, forecasts that unemployment will continue to rise, topping three million in 2010. "It is far too soon to rule out another avalanche of private sector redundancies later in the year," he warns. 

"While pay restraint or cuts in hours of work have helped save many jobs that might otherwise have been lost during the recession, holding onto staff when order books are low pushes up unit labour costs and eats into company profits. A weak economic recovery, let alone a double dip recession, might well cause many employers to reassess current staffing levels before too long."

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