CIPD Voice: Issue 26


The pace of deterioration in UK job prospects is starting to slow this autumn due to very modest improvements in planned recruitment activity and a slight decrease in employers’ redundancy intentions. This is the key finding of the latest quarterly CIPD/the Adecco Group Labour Market Outlook (LMO) survey – involving more than 1000 employers and covering all sectors of the economy. 

The survey finds that the net employment intentions figure, which measures the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels, has risen to –1 from a record low of –8 in the last quarter (July-September 2020).  

Redundancies 

Of particular significance is the slight fall in redundancy intentions, down to 30% from 33% in the summer quarter.  This is high, but perhaps not as high as one would expect with a fall in output on this scale.  This is clearly due to both the generosity of the Government’s furlough scheme - which at the time of writing, was being extended to December - and employers’ response to the downturn.

Indeed, it is also clear from the survey that employers are choosing to deal with a drop in demand for goods and services in a far more flexible way, with pay and recruitment freezes, reduced hours and redeployment particularly prevalent. What this underlines is that the HR profession is not just talking a good game in terms of its desire to preserve skills and keep the most talented workers. As well as making sense from an external reputation and employee engagement perspective, employers also recognise that redundancies are often not the optimal option from a financial point of view.  The direct cost of making redundancies and the cost of hiring new recruits when demand recovers, including any training and induction costs, are often not as cost-effective as alternatives to redundancies in the short-term. 

Skilled workers

Additionally, the survey shows that there is still a search on for the most talented people, despite the downturn. According to the survey data, this is most apparent for high-skilled jobs, with employers reporting an average (median) of 10 suitable candidates applying for each vacancy advertised compared with 7 suitable applicants in the summer. Given the media tendency to cover stories about thousands of applicants applying for the same role, this finding could provide more balance to our understanding of the extent to which labour supply has increased since the onset of the pandemic. These findings are not surprising given that we are still moving towards becoming a more skilled, knowledge-based economy; as the sharp growth in the number of skilled and highly-skilled occupations over the past few years has shown. And while recruiters may have more people to choose from, it is often more complex than that; not least because the opportunity to plug the UK skills gap with overseas workers has been stymied by the pandemic. Looking ahead, it also looks set to become more difficult and costly to hire overseas workers due to the new migration restrictions that are due to be introduced next year.  

Labour and skill shortages

To help employers deal with labour and skill shortages as well as minimise the jobs fallout as restrictions continue, the Government should expand its training and employability support. To date, its financial firepower has perhaps too narrowly focused on protecting jobs. A funding boost to current Government initiatives, especially the National Retraining Scheme, would help young people in particular, who we know have suffered most from the pandemic. Reforming the apprenticeship levy to make it more flexible so firms can use it for other forms of accredited training and skills development, including those being redeployed, working reduced hours or being made redundant, would be another useful way of boosting badly-needed adult skills investment.  

Gerwyn Davies

Gerwyn Davies, Labour Market Adviser

Gerwyn is the CIPD’s Public Policy Adviser for a wide range of labour market issues. With lead responsibility for welfare reform, migration and zero-hour contracts at the CIPD, Gerwyn has led and shaped the policy debate and achieved substantial national media coverage through various publications. These include Zero-hours contracts: myth and reality (2013) and The growth of EU labour: assessing the impact on the UK labour market (2014). In addition Gerwyn authors the institute’s high profile and influential quarterly Labour market outlook report. Gerwyn is an experienced labour market commentator, making regular appearances in the national media and on other public platforms, including several appearances before the House of Commons Work and Pensions select committee.

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