Author Profile Picture

Cath Everett

Sift Media

Freelance journalist and former editor of HRZone

Read more about Cath Everett

Falling employer confidence leads to sharp hiring slowdown


The employment recovery is set to slow sharply over the year ahead as fears over the global economic outlook lead to falling confidence among private sector employers, particularly in manufacturing.

Such a situation is likely to be of concern to the coalition government, which has the stated aim of trying to rebalance the economy towards exports and investment.
But according to the Labour Market Outlook survey of more than 1,000 employers undertaken by the Chartered Institute of Personnel and Development and management consultancy KPMG, the proportion that intend to increase total staffing levels over the next three months versus those that plan to cut them fell to -1 from +3.
Long-term recruitment prospects were even worse, with the 12-month employment index dropping to -6 from +2 last quarter.
Gerwyn Davies, the CIPD’s public policy adviser, said: “Increasing uncertainty about growth prospects in both the UK and global economies is now affecting hiring intentions; particularly in those industries such as manufacturing that stand to lose most in the event of a global slowdown.”
Although the three month employment index showed that private sector hiring would continue to grow (+23), it was at a much slower rate than was previously the case (+32). The fall in confidence was especially marked in the manufacturing sector, which fell to +11 from +32 last quarter.
But because public sector redundancies were expected to affect as many as one in 20 front line workers, “the recent story of an employment revival may become one of an employment relapse”, Davies said..
To make matters worse, the fact that some regions of the country were being hit worse than others pointed to “the further development of a two-speed economy”, he added. The survey indicated that the north-south divide was worsening, with the three month net employment balance for the south of England standing at +10 across all sectors compared with -6 in the north.
Andrew Smith, KPMG’s chief economist, said that UK growth prospects were being affected by fiscal tightening and a squeeze on real incomes, the worsening debt crisis in the Eurozone and “barely stall-speed growth” in the US.
“Of particular concern is that hopes of a general rebalancing in the economy, away from consumption towards experts and investment, are being dealt a blow by sinking manufacturing confidence – undermining hopes that cuts in public sector employment will be offset by the private sector,” he added.
Author Profile Picture
Cath Everett

Freelance journalist and former editor of HRZone

Read more from Cath Everett

Get the latest from HRZone

Subscribe to expert insights on how to create a better workplace for both your business and its people.


Thank you.