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Employers pessimistic about UK economy

Net job creation in the UK has almost stopped resulting in employers feeling very pessimistic about prospects for the economy, the latest quarterly Labour Market Outlook (LMO) survey by KPMG and the Chartered Institute of Personnel and Development (CIPD) has found.

The balance between the proportion of employers looking to increase staff levels over the next three months and those expecting to cut staff has fallen from +41 in autumn 2007 to +2 in autumn 2008 – the lowest figure recorded since the LMO survey began in spring 2004.

Of the 721 employers surveyed, 83 per cent anticipated that the UK’s economic condition would further deteriorate this autumn. Just one per cent thought they would see an improvement, although respondents felt more optimistic about their own organisation, with only 25 per cent believing that things would get worse.

Staff pay, excluding bonuses, is predicted to increase on average by 3.5 per cent at the time of employers’ next pay reviews, while the expected average increase, including bonuses, has risen from 3.9 per cent to 4 per cent.  

“We are now at the start of a period of contraction, with jobs being lost, new jobs hard to come by and, as this week’s official statistics are set to confirm, unemployment on an ever sharper upward rise,” said CIPD Chief Economist, John Philpott. “With pay increases at best modest for those still in work, the harsh chill of recession will make this the toughest winter for UK households for almost two decades.”       

How has the economic slump affected your business, in terms of staff morale and redundancy fears? Email PHR’s Editor, Kavitha Sivasubramaniam:

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