Rise in private sector redundancy intentions

The first quarter of 2012 will be the most difficult quarter for the jobs market since the recession, as the number of private sector firms surveyed planning to make redundancies increases.

This is the main finding of the latest Chartered Institute of Personnel and Development (CIPD) quarterly Labour Market Outlook (LMO) survey of more than 1,000 employers, conducted by YouGov. The survey results also point to a further widening of a north-south jobs market divide.

The survey’s findings are consistent with the consensus of economic forecasts, and reinforce the CIPD’s prediction that unemployment could reach 2.85 million by the end of 2012 if business conditions do not improve.

The report’s net employment balance, which measures the difference between the proportion of LMO employers that intend to increase total staffing levels and those that intend to decrease total staffing levels in the first quarter of 2012, has fallen to -8 from -3 since the autumn 2011 quarter. This is the report’s worst figure since spring 2009. The survey’s twelve-month balance, which gives a longer-term perspective on the net effect of recruitment and redundancy intentions, has also fallen to -6 from -2.

The Labour Market Outlook Winter 2011-2012 report shows that worsening overall employment prospects are almost entirely accounted for by a drop in confidence in the private sector during the past three months.

Although net private sector employment intentions remain in positive territory, they have fallen from +20 to a much more subdued +10 in the past three months – further undermining hopes that private sector recruitment will compensate for reductions in public sector employment. The net employment balance in the public sector, unsurprisingly, remains at a solidly negative -49.

In reviewing the past two years, almost half (47%) of employers feel that they have been prevented from creating new roles over and above existing levels. Among those employers who feel they have encountered barriers to hiring, the main barriers highlighted are access to finance (54%) and skill shortages (21%).