13.08.12

Employers Warn of Job Cuts if Economy Fails to Improve

A new report by the Chartered Institute of Personnel and Development has found many employers anticipating job losses in the next year if the economy does not pick up.

The CIPD survey, published ahead of Wednesday’s unemployment figures, found two thirds of employers reporting that they would have to make redundancies if economic growth did not improve in the next 12 months. One in three employers said that they had kept on more staff than they needed in order to maintain their skills base.

The survey of 1,000 employers also showed that public sector organisations were predicting pay rises of 0.2 per cent, compared with 2.5 per cent in private firms.

Despite unemployment falling in recent months, the CIPD has warned that the survey demonstrates how the jobs market could change

Gerwyn Davies, Labour Market Adviser at the CIPD said: “Recent falls in unemployment suggest that the labour market is on a sound footing, but a closer examination reveals that many employers are holding on to more staff than is required by the current level of demand in order to retain their skills.

“This is a make or break moment for employers - unless growth picks up many will find that they cannot hold on to some workers any longer. The tenacity with which employers are hanging on to skilled labour is a reflection of the high value they place on it and the damage they fear will be done to their businesses if they are forced to start 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.

“The labour market is approaching a game-changing phase - one that could shape Britain’s capacity to compete for a generation.”

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