Recruitment rates up but gap in private and public sector grows

While hiring by private sector organisations is set to surge this spring, the public sector jobs outlook is the bleakest for six years - although overall the balance is positive for the first time since the winter of 2008.

According to the latest quarterly labour market survey of 800 employers undertaken by the Chartered Institute of Personnel and Development (CIPD) and management consultancy KPMG, there is now a “stark difference” between the attitudes to recruitment shown by employers in both the private and public sector.
 
The former was optimistic about creating jobs in the April-June quarter, with the net balance of organisations expecting to hire and those anticipating staff cuts leaping to +29% compared with only +5% over the last three months. The hard-hit manufacturing sector is likely to be one of the biggest recruiters, with a +24% rating.
 
But while employment has continued to grow in the public sector recently, the report suggests that this trend is now likely to go into reverse. It indicated that the public sector is “radically more pessimistic” than three months ago and is expecting widespread post-election job cuts.
 
The net balance for recruitment in this area is now -43% - the largest negative figure since the quarterly survey began in 2004. The number jumps to -59% in central and local government, to -45% in education and is -38% in health.
 
Some 17% of public sector organisations are now also planning pay freezes, while average pay awards are expected to top no more than 1% in the year to next April compared with 2% in the private sector.
 
The net balance across both sectors in terms of employers anticipating taking staff on and letting them go is +5%, however.
 
Alan Downey, KPMG’s head of public sector, said: “It is clear that the chill wind of recession has reached the public sector with a vengeance. What is surprising is the speed and extent of the U-turn in attitudes.”
 
The study also showed that the uptick in jobs will likely follow the traditional pattern of a north-south divide, with London and the South of England leading the recovery. While the number of employers expecting to recruit migrant workers has more than doubled over the last three months, prospects for school-leavers remain bleak. A mere 14% of organisations expect to hire 16-17 year olds, while nearly half anticipate taking on graduates.
 
Gerwyn Davies, the CIPD’s public policy advisor, said that the figures raised hopes that unemployment, which currently stands at 2.5 million or 8% of the workforce, could be close to peaking.
 
But economic consultancy Capital Economics put potential public sector job losses at 730,000, 230,000 higher than the number forecast by the CIPD. It estimated that a 15% cut in public spending over the next Parliament would require a £24 billion cut to the public sector wage bill. This could see job losses of 12% to bring the workforce down to 5.1 million staff from 5.9 million now, helping to push unemployment to more than 3 million next year.