Redundancy levels are expected to jump by 50% over the next quarter dealing a blow to coalition government hopes that private sector employers will create enough jobs to offset swingeing public sector cuts.
According to the latest quarterly Labour Market Outlook published by the Chartered Institute for Personnel and Development (CIPD) and management consultancy KPMG, employers across both the public and private sector expect to make an average of 5.5% of their workforce redundant over the next three months compared with 3.6% in the spring.
Moreover, the proportion of employers intending to make such redundancies also increased for the second quarter in succession, returning to last year’s levels. Some 32% of organisations expect to cut jobs over the next three months, up from 29% in the spring quarter and 26% in the winter quarter.
Unsurprisingly, the public sector will be worst affected, with 36% of employers expecting to axe staff in a move expected to affect an average of almost 8% of the workforce. The figures compared with the 30% of private sector employers that intend to cut jobs and 24% in the third sector.
Gerwyn Davies, public policy advisor and author of the report, said: “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 50%.”
While the CIPD expected employment to remain “stable” over the next few months, the medium-term outlook was likely to be “weaker” than forecasts made by the Office for Budget Responsibility that employment would increase by 200,000 next year, he added.
The HR body believes that a rise in unemployment “remains a distinct possibility” over the next two years as the private sector recovery is offset by an anticipated 600,000 public sector job losses over the next six years.
The proportion of private sector employers that intend to increase staffing levels stands at +19, but is unlikely to be compensated for by a -35 balance among public sector organisations. Among local government bodies, the balance jumps to -74 and among public administration and defence to -64.
Recruitment levels are expected to be highest in manufacturing and production (+40) and private sector services (+15), which include IT (+42) and consultancy (+38). Overall, the balance across the market as a whole remains in the black, but has fallen back to +2 from +5 in the spring.
