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UK — 2010 will see a 'jobs light, pay tight' recovery

17 February 2010

The latest quarterly Labour Market Outlook survey of over 700 employers published by the Chartered Institute of Personnel and Development (CIPD) and KPMG, reveals that more redundancies and a substantial fall in employment intentions in the public sector mark a difficult quarter for the jobs market, despite the UK's emergence from recession.

The survey, conducted by IPSOS Mori, indicates no overall return to growth in sight for the jobs market.
Redundancies look set to almost double this quarter, compared with the final quarter of 2009, among those employers that plan to make redundancies. Those employers that plan to make redundancies expect on average to cut 6.2% of their workforce in the first quarter of 2010, compared with 3.8% in the previous quarter.

Despite signs that some private sector employers are emerging from the recession with intentions to increase staff levels, the overall net balance between the percentage of employers expecting to recruit and those expecting to cut staff across all sectors of the economy is still negative (-5%). This represents a fall from -3% in the previous quarter.

The findings show that this negative growth is almost wholly down to a bleak quarter ahead for the public sector, which recorded -31% (down from -13% in the previous quarter). The public administration and defence (-62%) sector looks set to be hit particularly hard. This compares with more positive feedback from the private sector (+5%), which will see staff numbers grow for the first time since the start of the recession. Prospects for private sector services (+12%) will continue to improve, with manufacturing and production still struggling (-4%).

This divide extends also to pay prospects, with the private sector predicting a rise of 2% compared with under 1% (0.9%) for the public sector at the next pay award. The average basic increase at the next pay award is predicted to be 1.5% on average.

John Philpott, Chief Economic Adviser at the CIPD, said "the UK jobs market is still on the ropes, with a public sector fall in employment now a reality as it feels the impact of the longest recession in modern times."

"Unfortunately, there are more punishing rounds ahead. The private sector will be dealing with ongoing concerns about productivity, wage costs and inflation alongside the spectre of deep public spending cuts. With many private sector companies looking to move jobs abroad in an attempt to find the right balance between skills, quality and cost reduction, the jobs market needs all the continued support and protection it is getting from the government."

The LMO survey also identifies outsourcing jobs abroad as a medium-term concern for the UK economy. 10% of private sector companies plan to outsource jobs abroad in 2010. Among those companies, almost half (44%) of IT companies plan to relocate jobs to other countries, while almost one in five (17%) manufacturing companies plan to outsource employment abroad. More than half plan to relocate UK jobs to India, while a third (37%) plans to shift jobs to Eastern Europe.

To read the full report please click here



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