Three in 10 planning job cuts before 2021

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Cleaners protest against job cuts outside Facebook’s London office Shutterstock

Three in 10 employers were planning redundacies in the final quarter of this year, according to research undertaken before the latest lockdown restrictions and the revival of the furlough scheme.

Thirty per cent of firms polled as part of the quarterly CIPD and Adecco Group Labour Market Outlook series said they were expecting job losses in the three months to December 2020 – a marginal reduction on the 33% who said the same in the summer.

When it comes to the immediate jobs outlook, the best that can be said is that the situation is getting worse more slowly” – Gerwyn Davies, CIPD

However, there remained significant uncertainty around whether redundancies would be necessary at 17% of organisations, who could not say whether they would need to slash jobs in Q4.

The survey of 1,006 senior HR decision makers was undertaken in September – at a time when the Coronavirus Job Retention Scheme looked set to close at the end of October. Yesterday, chancellor Rishi Sunak announced that the scheme would stay in place until March 2021, with wage subsidies returning to 80% of employees’ normal pay.

“When it comes to the immediate jobs outlook, the best that can be said is that the situation is getting worse more slowly. Employment looks set to keep falling and the relatively weak demand for labour means that it is going to be a long and hard winter, affecting young jobseekers in particular,” CIPD’s senior labour market analyst Gerwyn Davies said.

“The survey evidence shows that while recruitment freezes, pay restraint or cuts in hours of work via government schemes have helped save many jobs that might otherwise have been lost; holding onto staff when order books are far from healthy eats into company profits. Despite the furlough scheme recently being extended, more employers might look to reassess staffing levels early in the new year as they plan for what their workforce will look like medium to long-term.”

Employers had been using a variety of methods to limit the impact of the pandemic, including temporary layoffs/furloughing staff (41%), redeployment (37%), recruitment freezes (32%), freezing or delaying wage increases (29%), cutting bonuses (29%) and terminating temporary or agency worker contracts (27%).

Fourteen percent planned to freeze pay or delay wage increases in future, while 12% were considering implementing short-time working and 12% expected to see some redeployment.

The survey identified a net employment intentions figure of -1, up from a record low of -8 in the previous quarter. This suggests the proportion of employers who wanted to reduce their headcount was higher than those that wanted to increase it, but the gap between the two was not as large as the previous survey’s findings.

More than half (53%) of firms planned to recruit in the three months to December 2020, up from 49% who said they planned to hire in the summer months. This was significantly lower than the proportion who intended to hire in Q4 last year (69%).

Employers had seen an increase in interest for vacancies across the board, but this was particularly pertinent among low skilled roles. A median 25 candidates were applying for each low-skilled vacancy, compared with 20 applicants in the summer.

“To help minimise the jobs fallout as restrictions continue, the government should expand its training and employability support,” said Davies.

“Reforms to the apprenticeship levy are needed to make it more flexible so firms can use it for other forms of accredited training and skills development, including for those workers being redeployed, working reduced hours or being made redundant. This would be an immediate way to boost badly needed adult skills investment.

Alex Fleming, country head and president of staffing and solutions at the Adecco Group UK and Ireland, said: “With a new month-long lockdown now in place, it’s more important than ever that as much support as possible continues to be provided by the government and organisations to help minimise the jobs fallout.

“Providing upskilling and reskilling opportunities is a key way to do this, as it will not only help to boost redeployment efforts, but also help career starters who are looking to enter into the workforce for the first time against a backdrop of increased labour supply.

“There is also continued demand to maintain morale and engagement at this unprecedented time, so focus should remain on building positive workplace cultures and strengthening the resilience of companies and workforces alike.”