The UK job market is set for a “significant turn for the worse” over the next three months, a new report from the Chartered Institute of Professional Development (CIPD) has found.
According to the research, more than half of private sector firms are preparing to freeze pay for the next 12 months, while hiring intentions have fallen to their lowest levels on record.
Just two in every five firms now say that they are planning on recruiting in the period up to July 2020, the lowest level since the survey began in 2005.
In partnership with the Adecco Group, the CIPD surveyed 2,000 firms to assess the effect the coronavirus crisis has had on UK jobs.
The research underlined just how critical the Treasury’s job retention scheme had been for employers, with those who used the initiative saying they would have had to make on average 35 per cent of their staff redundant without it.
Furthermore, the percentage of firms which expect to make redundancies in the next three months has only risen six per cent on the prior survey, to 22 per cent, again showing the significance of the scheme.
Last week chancellor Rishi Sunak announced that the scheme, which is currently covering 80 per cent of the wages of 7.5m people, would be extended to October.
Gerwyn Davies, senior labour market adviser for the CIPD, said: “While hiring and pay prospects have taken a significant turn for the worse, employers have so far held off from making large-scale job cuts.
“The government’s job retention scheme is undoubtedly a key factor, but many employers have also succeeded in achieving a step change in homeworking which, along with other steps to reduce costs, has avoided the need for large-scale redundancies”.
Of those firms surveyed, 52 per cent said they intended to make use of the scheme, and would furlough 60 per cent of their staff on average.
However, the crisis has tipped the net employment balance, the report’s measure of the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels, into the negative.
Over the three month period, the measure is set to fall 25 points, from 21 to -4, as employers prioritise measures to preserve existing jobs over hiring new staff.
Alex Fleming, country head at the Adecco Group, said: “Organisations are doing all they can to keep employees in work, from reducing working hours, freezing hiring and cutting training budgets.
“Employers must also continue to focus on creating a positive workplace culture for existing employees, to help keep them engaged and agile during this time of uncertainty.”