One in three UK employers expect to cut jobs, but 49% anticipate recruiting

A new report shows a 50% increase in firms looking to make redundancies compared to three months ago.

Man standing at desk with office items in a cardboard box to represent redundancy


A third of organisations expect to cut jobs in the third quarter of 2020, with private sector employers more likely to be looking to make redundancies, according to new research.

The latest quarterly Labour Market Outlook report from the CIPD and the Adecco Group shows a 50% increase in the number of organisations expecting to cut jobs compared to the spring report, rising from 22% three months ago to 33% in the latest report. Twice as many private sector employers (38%) expect to make redundancies compared to the public sector (16%).

The survey of more than 2,000 employers found that overall hiring intentions have increased, with almost half (49%) of employers expecting to take on new recruits in the next three months, compared to 40% last quarter.  Recruitment confidence has risen most sharply in manufacturing (up 22%) and administrative and support services (up 18%) compared with the spring quarter.

However, the report says confidence remains well below levels seen in previous years and is clear in all three sectors of the economy – private, public and voluntary.  It found 42% of employers have implemented recruitment freezes. The proportion of organisations adopting a recruitment freeze is significantly higher for the private sector (47%) than the public sector (22%); especially in hospitality (65%), business services (54%) and IT (52%).

The survey also finds that employers across all sectors intend to keep a tight rein on pay increases over the next year. Those who plan pay reviews expect basic pay to increase by just 1%. Pay cuts (18%), bonus cuts (26%) and freezing or delaying pay increases (33%) are all tactics that employers have used in response to the current pandemic, says the report. Pay cuts are more prevalent in the construction (44%), business services (30%) and hospitality (29%) sectors.

The report also found a large variation across sectors with regard to employment confidence, with healthcare scoring highest and retail, transport and hospitality lowest.  Confidence was also higher in Wales and the North East with the lowest confidence reported in the West Midlands and Scotland.

Gerwyn Davies, Senior Labour Market Adviser at the CIPD, the professional body for HR and people development, said: “Until now, redundancies have been low – no doubt due to the Job Retention Scheme – but we expect to see more redundancies come through this autumn, especially in the private sector once the scheme closes. Hiring confidence is rising tentatively, but this probably won’t be enough to offset the rise in redundancies and the number of new graduates and school leavers entering the labour market over the next few months. As a result, this looks set to be a sombre autumn for jobs.

“This will likely be accompanied by a pay squeeze for workers, which is actually to be welcomed to help preserve jobs despite any modest fall in real wages in the private sector. This could be an important factor in limiting large-scale job cuts, as it was in the last recession. We urge organisations to do all that they can to keep employees in work and only make redundancies as a last resort, exploring all other options first. This could include freezing recruitment, reducing hours or restricting overtime, or cuts to bonuses and deferring salary increases.”

Alex Fleming, Country Head and President of Staffing and Solutions, the Adecco Group UK and Ireland, added: “We’re also seeing more candidates applying for high skilled roles, which aligns with the trend of people sourcing alternate forms of education in order to upskill and expand their knowledge, during this time of uncertainty.

“As organisations continue transitioning into the new era of work, there will be ongoing shifts in working patterns not only for employees but also for those who are just starting out in their career. Therefore, businesses must demonstrate resilience and adopt new approaches to closing the skills gap by investing in upskilling and reskilling workforces. Creating a positive workplace culture is also integral to maintaining focus, engagement and motivation among existing employees.”


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