One in three employers expect to make redundancies by September

A third of companies are planning redundancies.

The research by the Chartered Institute of Personnel and Development and recruiter Adecco shows a 50 per cent increase in the number of employers expecting to cut jobs compared to three months ago.

Twice as many private sector employers expect to make redundancies compared to the public sector. The report’s net employment balance, which measures the difference between the proportion of employers who expect 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 the lowest figure since the survey began in 2013.

Gerwyn Davies, senior labour market adviser at the CIPD, the professional body for HR and people development, said: “This is the weakest set of data we’ve seen for 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. 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.

“This will likely be accompanied by a pay squeeze for workers, which is actually to be welcomed to help preserve jobs despite any modest fall in real wages in the private sector. This could be an important factor in limiting large-scale job cuts, as it was in the last recession. We urge organisations to do all that they can to keep employees in work and only make redundancies as a last resort, exploring all other options first. This could include freezing recruitment, reducing hours or restricting overtime, or cuts to bonuses and deferring salary increases.”

Alex Fleming, country head and president of staffing and solutions at the Adecco Group, said: “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.”

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