More stability in sight for employment but three in ten employers still planning redundancies

The pace of deterioration in UK job prospects is starting to slow this autumn due to very modest improvements in planned recruitment activity and a slight decrease in employers’ intentions to make redundancies. This is according to the latest quarterly CIPD/the Adecco Group Labour Market Outlook (LMO) survey – involving more than 1000 employers and covering all sectors of the economy.

The survey claims that the net employment intentions figure, which measures the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels, has risen to –1 from a record low of –8 in the last quarter (July-September 2020). The relative improvement is marked in the private sector where the negative balance is -5, up from -13 in the summer.

Recruitment intentions, while lagging well below pre-pandemic levels, have edged up for the second consecutive quarter. More than half (53 percent) of employers plan to recruit in the three months to December 2020, which is up four percentage points on the summer (49 percent) but down 16 percentage points on the same quarter last year (69 percent). In the private sector, recruitment intentions have improved from 44 percent to 49 percent since the last quarter.

The survey also claims that three in ten (30 percent) employers plan to make redundancies this quarter – a marginal shift from 33 percent in the summer. Despite this modest fall, there continues to be a large amount of uncertainty around redundancy intentions, with almost one in five employers (17 percent) reporting that they couldn’t say whether they would be making redundancies in the next three months.

Weaker employment growth over the past six months has also led to a noticeable increase in the number of applicants for vacancies across all skill levels. This is most apparent for low-skilled jobs, with employers reporting an average (median) of 25 candidates applying for each vacancy advertised compared with 20 applicants in the summer. During the same period, medium-skilled roles have seen an increase from 10 to 15 applicants, while high-skilled roles have seen an increase from 7 to 10 applicants.

[perfectpullquote align=”right” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]”Employers have continued to adopt a variety of tactics in order to reduce redundancies”[/perfectpullquote]

Gerwyn Davies, Senior Labour Market Adviser for the CIPD, comments: “When it comes to the immediate jobs outlook, the best that can be said is that the situation is getting worse more slowly. Employment looks set to keep falling and the relatively weak demand for labour means that it is going to be a long and hard winter, affecting young jobseekers in particular. The survey evidence shows that while recruitment freezes, pay restraint or cuts in hours of work via government schemes have helped save many jobs that might otherwise have been lost; holding onto staff when order books are far from healthy eats into company profits. Despite the furlough scheme recently being extended, more employers might look to reassess staffing levels early in the new year as they plan for what their workforce will look like medium to long-term.

“To help minimise the jobs fallout as restrictions continue, the Government should expand its training and employability support. Reforms to the apprenticeship levy are needed to make it more flexible so firms can use it for other forms of accredited training and skills development, including for those workers being redeployed, working reduced hours or being made redundant. This would be an immediate way to boost badly needed adult skills investment.

“There is also a need to significantly increase bespoke, sector-based training and to increase investment in the National Retraining Scheme to equip workers who do lose their jobs with the skills to find work in parts of the economy that continue to grow.”

Alex Fleming, Country Head and President of Staffing and Solutions,?the Adecco Group UK and Ireland, comments: “Despite the jobs market remaining uncertain, it’s positive to see a slowing of downward trends, with redundancy intentions decreasing modestly compared to the summer Labour Market Outlook report and more than half of UK employers planning to recruit in Q4.

“Employers have continued to adopt a variety of tactics in order to reduce redundancies, including the furlough scheme and redeployment. However, with a new month-long lockdown now in place, it’s more important than ever that as much support as possible continues to be provided by the Government and organisations to help minimise the jobs fallout.

“Providing upskilling and reskilling opportunities is a key way to do this, as it will not only help to boost redeployment efforts, but also help career starters who are looking to enter into the workforce for the first time against a backdrop of increased labour supply.

“There is also continued demand to maintain morale and engagement at this unprecedented time, so focus should remain on building positive workplace cultures and strengthening the resilience of companies and workforces alike.”

Key findings:

• The net employment balance – an indicator of employer confidence – is +14 for the public sector, compared to +11 for the voluntary sector and –5 for the private sector.

• Employers are using a variety of methods to limit the impact of Coronavirus including temporary layoffs/furloughing staff (41 percent), redeployment (37 percent), recruitment freezes (32 percent), freezing or delaying wage increases (29 percent), cutting bonuses (29 percent) and terminating temporary worker or agency worker contracts (27 percent). In terms of future plans, freezing or delaying wage increases (14 percent), short-time working (12 percent) and redeployment (12 percent) are the some of the measures cited.

• Basic pay expectations among employers for the 12 months to September 2021 remain unchanged from the last quarter at 1 percent. This is partly due to a relatively large proportion (51 percent) of private sector employers planning to freeze wages during this period. Pay expectations in the private sector are 0 percent, compared with 0.8 percent three months earlier.

Image by Free-Photos