New report shows a third of employers planning redundancies

A worrying new report has shown that 32% of employers are expecting to make redundancies in the next three months.

The quarterly report from The Chartered Institute of Personnel and Development (CIPD)and accountancy giant KPMG, titled Labour Market Outlook, showed that the proportion of employers intending to make redundancies has increased for the second quarter in succession, returning to levels last seen a year ago.

The survey – based on the responses of 598 HR professionals, who are mainly drawn from the CIPD’s membership of more than 135,000 HR professionals – found 36% of public sector organisations are planning to make redundancies, compared to 30% of private sector organisations.

The difference has been put down to the prospect of substantial budget cuts in the public sector.

In a breakdown of sectors, the survey reveals redundancy intentions are highest in local government (63%) and education (45%). Manufacturing and production employers are least likely to make redundancies (23%), in line with the spring survey findings and well below the trends reported during the recession.

Geographically, redundancy intentions are highest in the north of England (35%), London (28%), the south-east of England (42%) and Scotland (38%).

The survey also found that whilst only 14% of organisations plan to recruit school-leavers aged 16, 17% intend to recruit migrant workers in the third quarter of 2010. Demand for migrant workers continues to increase, rising from the previous peak of 15% recorded three months ago.

On the subject of employers’ pay rise intentions, the survey stated that pay settlements look set to remain “subdued” in the 12 months to June 2011, which could cause those workers already struggling with debt to seek debt solutions.

The expected mean basic pay settlement (excluding bonuses) over this period is 1.5%, down slightly from 1.6% last quarter.

Commenting on these statistics, and the impact they could have on financially-squeezed Britons, debt expert and director of Atlantic Financial Management Kevin Still, said: “For many employees the threat of redundancy remains real and issues regarding use of cheaper offshore resources or migrant workers remain a very emotive.

“The likelihood of pay freezes or below inflation wage increases seems the norm, creating an ever reducing gap between take home income and essential household expenditure. These give rise to debt problems for tens of millions of employees, some requiring long-term debt solutions to deal with unsecured debts that may have mounted during the recession, notably credit card debts.”

Source:  debtmanagementtoday.co.uk