Why has employment risen in the past year even though the economy has been through a marked economic slowdown and barely a day passes without news of more people being made redundant?
In its first quarterly Work Audit – based on a variety of recent employer surveys and launched on July 17 ahead of the release of the latest official labour market statistics - the CIPD identifies the main factors underling this conundrum as:
- Unbalanced growth
- Short-term labour hoarding
- ‘The 3Rs effect’ – simultaneous reorganising, redundancy and recruitment within private and public sector organisations
Work Audit finds that substantial numbers of redundancies have been recorded in sectors where total employment is rising (e.g. construction, distribution, hotels and restaurants, public administration, education and health) as employers strive to improve competitiveness and performance.
John Philpott, CIPD’s Chief Economist and author of Work Audit, comments, “Our surveys show that employers have learnt from previous economic slowdowns and are trying to retain rather than layoff staff whenever possible. But on the flip side, though crude downsizing is out of fashion, employers are performing continual strategic surgery on their workforces, laying off poor performers while looking to recruit talent. Substantial numbers of people are thus potentially at risk of losing their jobs whatever the overall state of the labour market as employers face up to tougher competition and increased customer expectations. As CIPD surveys show, reorganisation to boost performance is now the primary motive for redundancy - not emergency cost-cutting.”
Looking ahead, Work Audit concludes that the way in which organisations responded to the economic slowdown in 2001 will affect the strength of employment growth in the second half of 2002 and into 2003. Employers that have hoarded labour during the slowdown will be looking to raise productivity and contain wage bills as the economy recovers, particularly given the higher National Insurance contributions that come into effect from April 2003. This will tend to limit overall recruitment levels during the coming 12 months.
| The Chartered Institute of Personnel and Development (CIPD) has over 110,000 members and is the leading professional institute for those involved in the management and development of people. For a copy of the Work Audit report contact email [email protected] For Press enquiries contact Judith Cowan / Nicola Pierce / Gerwyn Davies on 020 8263 3232/3840/3365, Mobile: 07967 369775 |