Employment Unlikely to Rise Significantly in Medium Term

Posted on 13 November, 2013 by Kirsten Kennedy

As business confidence continues to rise amidst a favourable market, industry experts have voiced hopes that this boom in production will lead to further drops in the unemployment rate. However, a new study by the Chartered Institute of Personnel and Development (CIPD) has cast a shadow on these hopes, indicating that this much needed boom in hiring may not materialise in the medium term.

Although the CIPD did find that many employers are looking to take on additional staff in the coming weeks to help cope with the Christmas rush, this is not forecast to last much longer than the end of the present year. Of the 1,000 plus employers who participated in the survey, only 17 per cent are planning on increasing their workforce by more than 2 per cent over the medium term despite their wish to hire proactively during the remainder of the fourth quarter.

Instead, come January, companies will begin to examine ways in which the productivity of their existing workforces can be maximised before reassessing further staffing needs.

With this in mind, less than one in five firms surveyed expressed a desire to significantly increase the levels of staff even if the UK rate of growth picks up further.

Part of the reasoning behind this reluctance could be, once again, due to the legacy left by four years of recession. During this period, businesses were forced to cut costs and implement austerity measures in order to build capital essential for survival – a habit which has proven hard to break even as positive growth figures continue to roll in.

CIPD labour market adviser, Gerwyn Davies, believes that while the findings of the survey do not paint a positive picture for the unemployed, the issue of underemployment may be tackled in a positive way given the new perspective of employers.

He says; “Our data on medium term recruitment intentions suggests that stronger economic growth in the next few years will not be accompanied by big rises in employment.

“Instead, many employers tell us they are focused on the need to raise productivity.

“The prospects of better economic conditions might therefore persuade them to invest more in the business and make more intensive use of existing staff, for example, by increasing working hours.”

Should investment and expansion be natural by-products of economic growth, there is a good chance that these employers will change their attitudes towards hiring in the future. However, this survey truly highlights the issues still facing unemployed workers in the UK today – with employers reluctant to take on staff in the medium term, it may well be that the unemployment rate remains stuck at 7.7 per cent for some time yet.




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