The latest quarterly CIPD/KPMG Labour Market Outlook[1] survey of almost 800 employers signals that the UK's emergence out of recession is now leading to better job prospects. Yet it also reveals a stark difference between job prospects in the private and public sectors: while private sector employers are more optimistic about creating jobs in the second quarter of 2010, public sector employers are radically more pessimistic about employment intentions compared with three months ago.
Green shoots of recruitment recovery but…
The overall net balance between the percentage of employers expecting to recruit and those expecting to cut staff across all sectors of the economy is now positive (+5%) for the first time since Winter 2008. This represents an overall increase from -5% in the previous quarter. The findings show, however, that this positive growth is almost wholly down to a sharp rebound in the private sector, which recorded +29% (up from +5% in the previous quarter). The growth extends to sectors that have been badly affected by the recession, such as manufacturing (+24%).
In contrast, the net balance for the public sector is -43%, the largest negative balance since the survey began in 2004. Falls in employment are particularly widely anticipated among:
- local authorities and central government (-59%);
- in education (-45%); and
- in healthcare (-38%).
Better news in the south
The report also highlights a divide in the job growth prospects between London and south England, which are going to be the main engines of growth, and the rest of UK regions. The overall net balance for London and the south of England has risen sharply to +21% from -3%; while employment looks set to continue to fall in areas such as Scotland (-25%) and Wales (-23%).
Yes, pay rises – for some
The predicted average pay award in the private sector in the twelve months to April 2011 will be 2%, which compares with just 1% in the public sector. Almost one in five (17%) public sector employers plan to freeze pay, which compares with just 4% of private sector employers.
Not a good time to go public
Gerwyn Davies, CIPD public policy adviser and author of the report observes that these findings represent a boost to private sector workers' prospects as the majority ‘will no longer face potential overwhelming unemployment, pay freezes and lack of promotion. It also raises hopes that we may be close to a peak in unemployment.’
In contrast, he adds, ‘public sector employers will be looking to close the lid on employment, pay and promotion. This will present huge challenges to public sector managers in their attempt to keep employees engaged; particularly if the cost of living continues to rise. It will also present challenges to the employment participation rate of women and the economic development of some UK regions, which have both been boosted by record increases in public spending in the past decade.’
Alan Downey, head of public sector at KPMG, while not finding the actual change in attitudes surprising, has remarked on how fast the U turn on public sector prospects has come about: ‘The survey shows that public sector employers have woken up to the scale of the financial challenge that is coming their way. It has been clear for some time that the steady increase in public sector jobs would have to come to an end. …Just three months ago public sector employers were relatively optimistic and many were continuing to recruit. Now they are massively more pessimistic than their private sector counterparts about job prospects, with more than 40% contemplating a reduction in headcount and a significant number planning a pay freeze.’
Rise in demand for full time and migrant labour
Other key findings include:
- The upturn in the economy is increasing demand for migrant workers. The proportion of migrant employers expecting to recruit migrant labour has more than doubled over the previous three months. Fifteen per cent of employers are now planning to recruit migrant workers, up from 7% in the winter report. In addition, the proportion of employers that have recruited migrant workers in the first quarter of 2010 has increased to a quarter (25%) from around a fifth (19%) in the previous report.
- Around four fifths of new recruits (78%) will be full-time workers, which is broadly in line with the current make-up of the labour market. This may signal a return to more full-time employment following the surge in part-time employment over the past eighteen months.
- Only 14% of employers plan to hire 16 to 17-year-old school-leavers, almost a third (32%) plan to recruit school-leavers aged 18 and above and almost half (47%) of employers plan to hire graduates in the three months to July. All these figures are slightly lower than those recorded in spring 2009.
- Almost one in four employers (24%) plan to hire apprentices in the six months to September, while more than one in five employers plan to hire interns (21%). In the summer of 2009 report, almost a quarter of employers planned to hire apprentices (23%) while just thirteen per cent planned to recruit interns.
The improved conditions seem to have had a knock-on effect in the recruitment industry: According to the latest Recruitment and Employment Confederation (REC) report[2], permanent placements rose in the UK at their fastest pace in more than twelve years during March 2010, defying traditional pre-election economic uncertainty. In addition, short-term staff appointments rose at their fastest rate in nearly three years, and salaries for permanent positions climbed again.
Jon Chait, chairman and CEO of Hudson UK (recruitment consultants) commented. ‘Employers have had to weather extremely lean times, reducing their workforce and deferring new hires until the economy began showing signs of improvement. Today, the skills shortage is an acute problem for both the public and private sectors.’
[1] www.cipd.co.uk/subjects/hrpract/hrtrends/_qtrends.htm?IsSrchRes=1
[2] http://wes.wilmington.co.uk/exchweb/bin/redir.asp?URL=http://www.rec.uk.com/home