Number of employers expecting job cuts goes up by half

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One in three organisations expects to cut jobs in the third quarter of 2020, according to the latest Labour Market Outlook from the CIPD and Adecco Group.

Their research has shown a 50% increase in the number of employers expecting to cut jobs compared to three months ago, when 22% of employers anticipated redundancies.

More than twice as many private-sector employers (38%) think they will make redundancies, compared with 16% in the public sector.

That said, its survey of over 2,000 employers shows hiring intentions have increased, with almost half (49%) of employers expecting to take on new recruits in the next three months, compared to 40% last quarter.

This is low compared to previous years, however, with employment confidence dropping in public, private and voluntary sectors versus last year.

The LMO’s net employment balance, which measures the difference between the proportion of employers expecting to increase staff levels and those who expect to decrease staff levels, has fallen from –4 to –8 over the last three months.

This is at its lowest since February 2018, when the survey began operating under its current methodology, CIPD and Adecco Group said.

On pay, any employers that have planned a pay review over the next 12 months expect to keep any pay increase to just 1%, lower than the 2% median increase predicted this time last year.

Private sector employers expect a median increase of 0.8%, compared to zero three months ago. Some 40% plan to introduce a pay freeze over the next 12 months.

Gerwyn Davies, senior labour market adviser at the CIPD, said this was “the weakest set of data” the organisations had seen in several years.

“Until now, redundancies have been low – no doubt due to the Job Retention Scheme – but we expect to see more redundancies come through this autumn, especially in the private sector once the scheme closes,” he added.

“Hiring confidence is rising tentatively, but this probably won’t be enough to offset the rise in redundancies and the number of new graduates and school leavers entering the labour market over the next few months. As a result, this looks set to be a sombre autumn for jobs.”

The report also found there was a large variation across sectors in terms of net employment balance – with confidence the highest in healthcare and public administration.

Hard-hit sectors such as hospitality, transport and retail showed the lowest net employment balance, at -26, -24 and -23 respectively.

Recruitment confidence rose most sharply in manufacturing (up 22%) and administrative and support services (up 18%).

A number of employers are deploying measures to try and preserve jobs – 18% had implemented pay cuts, while 26% had introduced bonus cuts. Pay cuts were most prevalent in construction (44% of employers), business services (30%) and hospitality (29%).

Alex Fleming, country head and president of staffing and solutions at Adecco Group UK and Ireland, described the report’s findings as a “mixed picture” for employers.

He said: “Redundancy intentions have increased by 11% compared to the previous quarter but, more positively, nearly half of UK employers are planning to recruit over the next three months, which could be an indication that businesses are reshaping for the future.

“We’re also seeing more candidates applying for high skilled roles, which aligns with the trend of people sourcing alternate forms of education in order to upskill and expand their knowledge, during this time of uncertainty.

“As organisations continue transitioning into the new era of work, there will be ongoing shifts in working patterns not only for employees but also for those who are just starting out in their career.

“Therefore, businesses must demonstrate resilience and adopt new approaches to closing the skills gap by investing in upskilling and reskilling workforces. Creating a positive workplace culture is also integral to maintaining focus, engagement and motivation among existing employees.”