Crystal Umbrella

The latest Labour Market Outlook from the CIPD and KPMG suggests that private sector employers are far from optimistic about hiring new permanent staff in the coming year.

The meticulous survey gives a score of zero for a stable jobs outlook, but the hiring intentions of UK employers for the next three months have fallen to minus 1. That’s not the worst of it – the score plummets to minus six when the next 12 months are considered. Paradoxically, contractors working through umbrella companies or limited companies may be the only beneficiaries. To maintain vital functions in their businesses, employers may have little option but to hire skilled contractors for time limited periods in place of permanent staff.

The quarterly survey polls 1,000 employers and had shown a general improvement in hiring intentions over the past year. Economies had been slowly reviving around the world, with especially strong growth in China and India. However, progress appears to be stalling.

According to KPMG’s Chief Economist, Andrew Smith, “economic storm clouds are gathering.” He went on to add “Fiscal tightening and the squeeze on real incomes, a worsening debt crisis in the eurozone and barely stall-speed growth in the US are all affecting prospects for growth in the UK.”

Chancellor George Osborne is coming under renewed pressure to edge back from his planned spending cut of £81 billion, although he insists that he will be sticking to the austerity measures despite the darkening economic outlook.

Both the CIPD and KPMG agree that the greatest danger is that private sector growth, especially in manufacturing, will simply be too feeble to compensate for the jobs cull in the public sector.

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