More job losses to come, warns CIPD

As the majority of public-sector organisations aim to cut the size of their workforce, latest figures from the CIPD and KPMG have revealed that level of redundancies is set to rise sharply this year.

The net employment index – which measures the difference between the proportion of employers intending to increase and decrease total staffing levels – has fallen dramatically down to -3, down from +11 in the previous three months.

The survey of 750 employers found that the manufacturing sector (+20) and private sector services (+20) were most likely to generate job growth.

But in sharp contrast, a clear majority of public-sector organisations (-66) will be looking to reduce the size of their workforce in the first quarter of 2011, with 77 per cent of local government employers planning to cut staff numbers.

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The report’s twelve-month index, which gives a longer-term perspective on recruitment and redundancy intentions, has also fallen to -9 from +1.

Overall, one in three employers said they intended to employ fewer people in 2011 as a result of the Comprehensive Spending Review.

“The first quarter of 2011 was always going to be a quarter of reckoning for the jobs market, and it seems that last year’s modest recovery will be reversed by a modest relapse this year,” said Gerwyn Davies, public policy adviser at the CIPD. “Encouragingly, the private sector continues to generate new jobs, but we are some way off the jobs boom that we are all hoping for.”

Malcolm Edge, head of markets at KPMG, said the figures showed the “marked divide” between the private and public sectors in the UK jobs market, but added: “Private sector recovery is not yet fully established and therefore remains susceptible to shocks.”

“Government stimulus with the banks to increase business could provide much needed finance for growth” he continued. “Medium-sized enterprises are the lifeblood of the UK economy and this could be a very beneficial boost for them.”

The report also uncovered an expected downward pressure on wages, with basic pay expectations falling from a 1.5 per cent increase to 1.3 per cent. Average pay settlements in the public sector are expected to fall to -0.33 per cent compared with 2.3 per cent in the private sector.