The jobs market is set to take a significant turn for the worse in the next three months as employers put a hold on recruitment, a new study suggests.
Firms have been freezing pay and furloughing staff to protect jobs, with half of companies prepared to continue capping wages over the next year, said the Chartered Institute of Personnel and Development and the Adecco Group.
Employer hiring intentions have fallen to their lowest levels since the survey began in 2005, according to the poll of more than 2,000 employers.
Vacancies within transport, manufacturing and business services recorded the biggest drop in recruitment intentions, while jobs within healthcare and public administration remained in strong demand.
However, so far, employers have been able to avoid making wide-spread redundancies within their organisations. The proportion of employers intending to make redundancies over the next three months increased relatively modestly from the Winter survey, from 16% to 21%.
A key factor in preventing redundancies has been the introduction of the UK Government’s Job Retention Scheme. A significant proportion of LMO employers stated that they intended to use the scheme, and latest CIPD data has shown that it’s introduction has prevented around 4.2 million redundancies.
Employer initiatives in response to the crisis have also had their part to play in avoiding redundancies. In contrast to the 2008 financial crisis, today many more employers are able to transition their staff to more home and digital based working, which has allowed significant numbers to continue working. Other measures introduced by employers in response to the crisis to save costs have included freezing recruitment, deferring pay increases and cutting learning and development budgets.
Gerwyn Davies, Senior Policy Adviser at the CIPD said:
‘While hiring and pay prospects have taken a significant turn for the worse, employers have so far held off from making large-scale job cuts. The Government’s Job Retention Scheme is undoubtedly a key factor, but many employers have also succeeded in achieving a step change in homeworking which, along with other steps to reduce costs, have avoided the need for large-scale redundancies.
This quarter’s findings also found a decrease in basic pay expectations for the next year. Across all employers the figure was for a 1% increase (down from 2% last quarter). In the private sector, this figure was 0%.
‘The state of the economy will have a big impact on earnings in the next 12 months. Employees should brace themselves for pay freezes or even pay cuts in the year ahead to help preserve jobs.’