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North/South divide splits hiring intentions

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A north/south divide over recruitment intentions has sprung up according to research by KPMG and the Chartered Institute of Personnel and Development (CIPD).

Their quarterly Labour Market Outlook report reveals particularly strong recruitment intentions in London and the east Midlands, with 49 per cent of firms planning to take on more staff in the next year. In addition, 41 per cent of firms in the south-east are planning to recruit.

But in the north-east, the north-west, and the west Midlands, only one in three businesses plan to recruit staff over and above existing numbers of staff. Significantly, one in three organisations in the north-east plan to make redundancies in the next quarter.

The report shows that recruitment intentions have improved since the trough recorded in autumn 2005, with 43 per cent of organisations planning to recruit additional staff over the summer months.

Recruitment intentions and pay are particularly healthy in the private sector, with private sector services leading the way.

Reversing the trend of recent years, only one in five public sector organisations say that they are planning to recruit staff over and above existing staff, which compares with more than half of companies in the private sector services sector. Around a third of public sector organisations will be making redundancies in the current quarter.

This trend is reflected in pay, where staff in private sector services can expect to enjoy a salary increase 0.5 per cent higher than public sector staff.

John Philpott, CIPD Chief Economist, said: “With the economy continuing to grow at a healthy rate, recruitment activity is picking up in the private sector – adding to recent increases in the number of people in work. However, owing to efforts by the government to encourage Incapacity Benefit claimants back into work and ongoing recruitment of migrant labour, this has not yet brought about lower unemployment.

“Prospects therefore remain healthy in the private sector, in contrast to the public sector where lower salary increases are expected, alongside redundancies running at a higher level.”

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Annie Hayes

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