Redundancies are set to almost double in the first quarter with nearly a third of public sector employers planning to cut jobs and the private sector unable to make up the shortfall despite signs of renewed hiring activity.
A survey undertaken among 700 organisations by market researchers IPSOS Mori indicated that the jobs market would fail to grow over the next three months, with organisations across all sectors intending to cut their workforces by about 6.2% compared with 3.8% in the previous quarter.
While the latest Chartered Institute of Personnel and Development (CIPD) and KPMG ‘Labour Market Outlook’ study found that some private sector employers aimed to increase staff numbers, the overall net balance between the percentage across all sectors that expect to recruit and those expecting to wield the axe was still negative at -5%.
Such negative growth is almost entirely down to the likelihood of a bleak quarter to come for the public sector. Employers here anticipate jobs growth of -31% compared to -13% last quarter, with public administration and defence being particularly hard hit (-62%).
The private sector, on the other hand, anticipated seeing staff numbers rise for the first time since the recession (+5%), with the services sector being particularly buoyant (+12%), although manufacturing and production will continue to struggle (-4%).
Alan Downey, head of public sector at KPMG, said: “These figures clearly show that the starting gun for a public sector recession has been fired. It is now only a matter of time before we are faced with the deepest and most prolonged cuts in public expenditure that anyone can remember.”
He added that reducing the pay bill through pay freezes or headcount reductions was an obvious way to cut costs quickly.
Pay awards in the public sector are anticipated to increase by a mere 0.9% compared with 2% in the private sector.
But there was even worse medium-term news for the UK economy, with 10% of private sector firms indicating that they planned to offshore jobs during the year ahead. About 44% of high tech companies expected to go down this route, while the figure was almost one in five for manufacturing. More than half of organisations in this category saw India as the most attractive location, while about 37% saw Eastern Europe as the most appealing.
Simon Page, strategic director for recruitment at Parity Resources said: "Now is the time for businesses to cherry pick the best talent by hiring staff on a flexible basis, or to secure those key individuals to accelerate growth in the upturn. Both the candidate and employer have had the luxury of time to make the right decision – an ideal situation for all – but with the situation set to change for candidates, organisations can no longer put off the big decisions.