The latest quarterly CIPD/KPMG Labour Market Outlook survey finds a surprising degree of optimism amongst employers about short and medium employment prospects.

This suggests that recruitment and redundancy expectations are at present more strongly influenced by the recent strength of the UK economy than by forecasts of an economic slowdown next year.

Eighty-six per cent of employers responding to the survey intend to recruit staff this autumn, in line with the 86 per cent and 85 per cent recorded in the spring and summer Labour Market Outlook surveys respectively.

Forty-six per cent of employers surveyed intend to recruit additional staff this quarter, a sharp increase from the summer survey figure of 39 per cent and the highest recorded since spring 2005. Forty one per cent of employers intended to recruit additional staff during the corresponding quarter last year.

Difficulties

Recruitment intentions remain buoyant in private sector services, where 59 per cent of employers intend to recruit additional staff. However, only 25 per cent of employers in public services expect to recruit additional staff.

Forty-nine per cent of employers surveyed anticipate recruitment difficulties this quarter, unchanged from the spring quarter.

The proportion of employers intending to make some staff redundant has fallen from 20 per cent to 17 per cent since the summer survey. In 49 per cent of cases, ten or more employees will be made redundant.

The CIPD’s Chief Economist, John Philpott, commented that it remains likely that the demand for labour will ease during the course of 2008. This is despite the evident optimism in this quarter’s survey, as the impact of recent interest rates rises and the aftermath of the credit crunch is felt throughout the economy.

He said that if recent experience is anything to go by, employers will adjust to weaker economic conditions by cutting back on recruitment rather than increase redundancies. This would imply a hiatus in recruitment next year and a recurrence of the ‘labour hoarding’ which resulted in a slump in growth in productivity when the economy last cooled in 2005.

“This outcome depends crucially on the precise magnitude of the slowdown, expectations as to how long it might persist, and the willingness or ability of employers to hoard staff. A sharp or persistent downturn would increase the pressure on employers to make greater efforts to improve productivity and cut wage costs. This would obviously increase the risk of adding redundancies to reduced recruitment activity with more severe consequences for jobs,” Philpott added.

Related links

• KPMG
• CIPD  
  
• CIPD/KPMG Labour Market Outlook     

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