New wave of jobs losses on the horizon

The number of job losses in the UK could soar as the outlook for employment worsens and cuts spread to the public sector, a gloomy new report predicted today.

A survey of more than 700 employers also revealed a “substantial” fall in employment intentions among public sector organisations, marking a “difficult” first quarter of the year for jobs.

The Chartered Institute of Personnel and Development said the jobs market was still “on the ropes”.

More employers were planning to cut staff rather than hire new workers, and the outlook was particularly “bleak” in the public sector.

John Philpott, chief economic adviser at the institute, said: “The UK jobs market is still on the ropes, with a public sector fall in employment now a reality as it feels the impact of the longest recession in modern times.

“Despite the jobs market proving resilient in recent months, this represents a mere pause for breath with the number of redundancies easing in the private sector and spending cuts yet to be felt by large swaths of the public sector.

“Alongside the spectre of deep public spending cuts, the private sector will be dealing with ongoing concerns about productivity, wage costs and inflation.

“With many private sector companies looking to move jobs abroad in an attempt to find the right balance between skills, quality and cost reduction, the jobs market needs all the continued support and protection it is getting from the government.”

One in 10 private firms planned to contract out jobs abroad this year to countries including India and in Eastern Europe.

The report also showed that one in four employers planned to make redundancies in the first three months of this year.

Almost a third of public sector employers planned to reduce numbers in the first quarter of 2010.

Alan Downey, head of public sector at KPMG, which helped with the research, said: “These figures clearly show that the starting gun for a public sector recession has been fired. It is now only a matter of time before we are faced with the deepest and most prolonged cuts in public expenditure that anyone can remember.

“In fact, many public sector bodies have already started to feel the pain and are drawing up clear and radical plans to reduce costs. By definition that means identifying those services that are of lower priority and must be scaled back or terminated altogether.

“Reducing the pay bill, whether through a pay freeze or headcount reductions, or both, is an obvious way to cut costs quickly. Other options that need to be addressed include consolidating operations to improve efficiency and release property and other assets for disposal.”