Job market begins to crumble

11/08/2008

Recruitment activity among employers has been at its lowest level during the last three months than at any other time since 2004, a report has found.

Just 30% of employers expect to increase their number of staff, compared to 37% in the last quarter, according to the Labour Market Outlook (LMO) survey by the Chartered Institute of Personnel Development (CIPD) and accountancy firm KPMG.

Employers carrying out staff pay reviews have increased salaries by an average of just 3.7%, while the number of employers planning to cut their number of staff has risen from 22% to 27%.

John Philpott, the CIPD’s chief economist, said the jobs market is facing an increasingly uncertain outlook.

“The absence of any sign of an emerging wage-price spiral at least offers greater hope that the Bank of England might soon be able to cut interest rates to head off the threat of recession.”

Andrew Smith, chief economist at KPMG, added: “It looks as if employment costs, the main area over which businesses retain control, are taking the strain with employers seeking both to keep a lid on pay settlements and, in increasing numbers, planning for redundancies. The labour market is suddenly looking a lot less resilient.”