The employment recovery is set to slow sharply, according to this summer’s Labour Market Outlook survey of over 1,000 employers from the Chartered Institute of Personnel and Development (CIPD) and KPMG. On average, growth in hiring intentions have been reported throughout the past year, but a more sombre outlook is now being driven by a fall in confidence among private sector employers, particularly in manufacturing.
The Labour Market Outlook net employment index, which measures the difference between the proportion of employers that intend to increase total staffing levels and those that intend to decrease total staffing levels in the third quarter of 2011, has fallen to -1 from +3 in the past three months. Long-term prospects are even worse, with the twelve-month employment index falling to -6 from +2 last quarter.
Figures for the three-month index show that the private sector will grow (+23), but at a less solid pace than the previous quarter (+32). The fall in confidence is particularly marked in the manufacturing sector, which has decreased to +11 from +32 three months ago. Confidence in the public sector remains at the same negative level as last quarter (-51 compared to -52). The voluntary sector remains just in the black (+7 compared to +6).
Regional differences are just as stark as those between the employment sectors, with survey findings pointing to a further widening of the north-south divide. The three-month net employment balance for the south of England is +10 across all sectors, while the balance for the north is -6.
Gerwyn Davies, Public Policy Adviser at the CIPD, said: “Increasing uncertainty about growth prospects in both the UK and global economies is now affecting hiring intentions; particularly in those industries such as manufacturing that stand to lose most in the event of a global slowdown. This will concern the government as it attempts to rebalance the economy towards exports and investment.
“Together with the public sector redundancies, which will affect one in twenty front-line workers according to our survey, the recent story of an employment revival may become one of an employment relapse. The survey evidence suggests that the relapse will hit some regions much harder than others, which points to the further development of a two-speed economy.”
Andrew Smith, Chief Economist at KPMG, said: “The economic storm clouds are gathering. Fiscal tightening and the squeeze on real incomes, a worsening debt crisis in the eurozone and barely stall-speed growth in the US are all affecting prospects for growth in the UK.
“Of particular concern is that hopes of a general rebalancing in the economy, away from consumption towards exports and investment, are being dealt a blow by sinking manufacturing confidence – undermining hopes that cuts in public sector employment will be offset by the private sector.”
- Ends -
Notes to Editors
- Gerwyn Davies, the report’s author, is available for interview
- Andrew Smith, Chief Economist at KPMG, is available for interview
- The Labour Market Outlook, the UK’s largest representative survey of employers’ recruitment, redundancy and pay intentions, will be available to download at www.cipd.co.uk/labourmarketoutlook from Monday 15 August
- For an advanced copy of the LMO please contact a member of the press office
- On behalf of CIPD, YouGov undertook this eleventh wave of the quarterly tracking study looking into the views of senior HR professionals
CIPD Press Enquiries
Robert Blevin / Gregor Ridley / Katie Breeze
Tel: 020 8612 6400
KPMG Press Enquiries
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