If the economy fails to pick up over the next year, employers will face a “make or break moment” as many are forced to axe skilled labour, sending unemployment levels soaring.
According to the Labour Market Outlook survey of more than 1,000 employers conducted by YouGov on behalf of the Chartered Institute of Personnel and Development, this situation could become a game-changer, the repercussions of which would be felt for a generation.
Despite low levels of demand for their products and services, about a third of those questioned said that they had kept staff levels higher than they needed to in order to avoid losing key skills.
But 62% of private sector respondents revealed that, if the economy failed to pick up over the next 12 months, they would feel compelled to make redundancies, reversing recent falls in unemployment in the process.
Gerwyn Davies, the CIPD’s labour market adviser, said: “This is a make-or-break moment for employers – unless growth picks up, many will find that they cannot hold onto some workers any longer.”
The tenacity with which they were currently hanging onto skilled labour reflected the high value that they placed on it and the damage that they feared would be done to their businesses if they were forced into making more redundancies.
“The spare capacity implied by the research suggests that firms are ready to increase their output quickly if demand grows. But there is only so long they can hold out for growth,” Davies said. “The labour market is approaching a game-changing phase – one that could shape Britain’s capacity to compete for a generation.”
As a result, he advised private sector employers to use any available spare capacity to train, innovate or focus staff in areas such as business development in order to “help drive the medium-term prospects of their firm and the UK economy”.
