U.K. employers more positive on immediate jobs outlook

But medium-term view more cautious: CIPD
|hrreporter.com|Last Updated: 05/14/2012

The immediate jobs outlook in the United Kingdom has turned positive for the first time in more than one year, driven largely by a decrease in redundancy intentions, according to a survey by the Chartered Institute of Personnel and Development (CIPD).

The net employment balance — 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 first quarter of 2012 — has risen to plus six from negative eight since the winter 2011/12 quarter, found CIPD’s quarterly Labour Market Outlook survey of more than 1,000 employers.

However, optimism should be tempered by employers' continued caution about the medium term which, taken together with recent weak economic data, suggests a high risk many employers may find it necessary to reassess staffing levels before the year is out, said CIPD.

The survey's 12-month balance, which gives a longer-term perspective on the net effect of recruitment and redundancy intentions, has risen to plus three from negative six.

“The jobs market is desperately seeking good news, so this latest set of positive figures is very welcome. However, any short-term jobs recovery may not be sustained because of the zigzagging economic backdrop. News of a double-dip recession may cause some employers to reassess current staffing levels, especially while labour costs are rising and productivity is falling,” said Gerwyn Davies, public policy adviser at CIPD.

“The current economic situation facing recruiters looks unusually difficult to read, which may lead to swings in confidence for the rest of the year. Overall, this may suggest greater volatility in the labour market during 2012 compared to the slow, gradual rise in unemployment recorded during the past year."

The improving overall employment prospects are being driven more by a fall in redundancy intentions in the public and private sectors than a rise in recruitment intentions. The private sector is driving much of the upturn, with the net employment balance for the private sector rising to plus 25 compared with negative 10 three months ago.

Meanwhile, the net employment balance for the public sector (negative 32) is at its least negative since the winter 2009/10 report — and compares to negative 49 last quarter, found the survey.

The continuing pressure faced by employers to cut costs is evidenced by an increase in the proportion of organizations intending to offshore jobs to other parts of the world in the 12 months to March 2013, from six per cent to eight per cent. And 79 per cent of employers cite cost-cutting as the main reason for offshoring jobs.

However, 26 per cent of the employers that have offshored jobs overseas are now looking to relocate operations back to the U.K., found CIPD.

Key findings include:
•Hiring intentions are strongest in the finance, insurance and real estate sector (74 per cent) and the voluntary and not-for-profit sectors (77 per cent).
•The proportion of employers planning to make redundancies in the three months to June 2012 has decreased to 32 per cent from 37 per cent in the previous three months.
•Of those that intend to offshore jobs, 41 per cent reported these would be in IT support and 29 per cent in productions/operations. Finance and accounts (23 per cent), call centres (21 per cent) and HR (21 per cent) are other popular functions employers plan to offshore.

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