The UK labour market is facing a steady shrinkage over the coming months, as firms delay recruitment, according to a new report from the Chartered Institute of Personnel and Development (CIPD).
Its quarterly survey of 1,000 employers has found that firms are scaling back all their employment-related operations. In effect, employers are reducing their hiring intentions but simultaneously making fewer redundancies.
Wait and see
The good news is that companies are reducing the number of migrant workers they hire and the amount of work they send abroad, meaning more jobs will stay in the UK - but they are also reluctant to hire any new workers.
"The figures point to a slow, painful contraction in the jobs market," says Gerwyn Davies, public policy advisor at the CIPD.
"Many firms appear to be locked in ‘wait and see’ mode, with some companies scaling back on all employment decisions, against a backdrop of increasing uncertainty as a result of the eurozone crisis and wider global economic turmoil."
While private companies are planning to make fewer redundancies, unemployment will increase because public sector job losses will outpace hiring in the private sector.
"There is no immediate sign of UK labour market conditions improving in the short to medium term," adds Davies.