Jobs recovery looks set to stall

9 August 2010

The private as well as the public sector could be hit by job losses in the future.

According to the latest labour market outlook survey from the Chartered Institute of Personnel and Development (CIPD), growing numbers of private sector firms are planning to reduce the size of their workforces.

The survey, which measures the difference between the proportion of employers that intend to increase total staffing levels and those that intend to decrease total staffing levels in the third quarter of 2010, found that employment plans among firms and organisations have fallen slightly, down to +2 from +5 compared with the previous report.

Differences between the pubic and private sectors were, however, pronounced.

Employment intentions for the private sector came in at +19; for the public sector it was -35.

A third of employers (32 per cent) across both private and public sectors expect to cut jobs during the next three months, up from 29 per cent in the first quarter of the year and up from 26 per cent in the final quarter of last year.

Job losses are most likely in the public sector, with 36 per cent of employers planning to shed jobs.

The picture in the private sector is not that much brighter, though, with some 30 per cent of employers anticipating staff cuts.

The survey revealed an overall slight increase in redundancy intentions, but the CIPD said this disguised the effect on job losses, with organisations that are planning to make redundancies expecting to make more of their workforce redundant this quarter - 5.5 per cent on average, up from 3.6 per cent in the previous survey, the equivalent of a 50 per cent jump in the past three months.

Gerwyn Davies, the CIPD's policy advisor, said: "The employment situation looks like a case of the good, the bad and the ugly. Most striking this time is that, while the number of employers planning to make redundancies is similar to that in the Spring report, this trend masks the true extent of forthcoming job losses in the third quarter of the year; as the proportion of the workforce that will be affected by these redundancy programmes has jumped by fifty per cent.

"On balance, the CIPD, like the Office for Budget Responsibility (OBR), expects employment to remain stable in the coming months. However, the medium-term employment outlook is likely to be weaker than the forecasts made by the OBR, where expectations are that employment is to increase by 200,000 next year. The CIPD believes that a rise in unemployment in the next two years remains a distinct possibility as the private sector recovery is offset by the 600,000 public sector job losses the government expects over the next five years."