The CIPD’s Labour Market Outlook report
19 May 2020
The Chartered Institute of Personnel and Development (CIPD), in conjunction with the Adecco Group, have published their latest quarterly Labour Market Outlook report, which confirms that hiring activity and pay increases have been temporarily frozen due to the outbreak of coronavirus, but that the Coronavirus Job Retention Scheme (CJRS) has ensured that many jobs that would have otherwise been cut, have been protected.
The survey polls over 2,000 employers, and results highlighted that over 50% of private sector companies are planning to freeze pay over the next year. Whilst there was a 2% overall increase in median basic pay expectations last quarter, a lower 1% increase has been reported this quarter. In the private sector, the increase expectations are zero, as opposed to the 2% reported just three months ago. Within the public sector and the voluntary sector, pay increase expectations remain the same, at 1.5% and 2% respectively.
Hiring intentions have also decreased to the lowest levels reported since the survey was introduced back in 2005. Only 40% of employers plan to recruit in the three months to July 2020, highlighting a significant decrease from the 66% who reported that they planned to recruit in Winter 2019-20.
The number of redundancies is expected to increase, but by significantly less than those that would have happened if the CJRS had not been introduced. Approximately 22% of respondents confirmed that they expect to make redundancies in the three months up to July 2020. This has grown by six percentage points on the previous quarter. The report confirms that roughly 4.2 million jobs have been saved from redundancy due to the CJRS. Respondents confirmed that they would have made, on average, 35% of their workforce redundant if the CJRS hadn’t been established.
Businesses are employing a variety of tactics to stave off redundancies, including allowing employees to work from home, adopting flexible working arrangements and freezing recruitment and pay.
As expected, the jobs market and the economy will be negatively impacted over the next three months. Employment is also set to suffer because of the coronavirus crisis. The report’s net employment balance (the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels) has dropped 25 points from 21 to -4. The hospitality, transport and business services sectors have witnessed employment growth decrease the most significantly, whilst employment levels appear to be robust within healthcare and public administration.
The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.