Despite the economic difficulties some employers are keeping staff on in order to maintain their company's skill set suggests a recent survey.

The latest Labour Market Outlook [1] from the Chartered Institute of Personnel and Development shows that nearly one in three employers in the private sector say they have maintained their staffing levels higher than that required for their company output so that they can keep their skill base.

But 63% of these organisations then went on to say that if the economy does not improve within the next quarter or year then it was 'likely' or 'very likely' that they would have to lay staff off.

The survey of 1004 HR professionals points to an employment market that is still positive in the near term albeit a small positive of +5, but it dwindles the further you look into the future with a figure of only +3 for 12 months time.

Even with the GDP outlook not being all that rosy firms are still holding on to their staff. The CIPD puts this down to 'a significant degree of spare capacity within companies' as well as employers taking advantage of government supported training and employment programmes, which has increased by nearly 50%.

Although ONS employment figures show that the labour market is holding up at present Gerwyn Davies, Labour Market Adviser at the CIPD, commented [2] "Recent falls in unemployment suggest that the labour market is on a sound footing, but a closer examination reveals that many employers are holding on to more staff than is required by the current level of demand in order to retain their skills. This is a make or break moment for employers – unless growth picks up many will find that they cannot hold on to some workers any longer. The tenacity with which employers are hanging on to skilled labour is a reflection of the high value they place on it and the damage they fear will be done to their businesses if they are forced to start making more redundancies.

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"The spare capacity implied by the research suggests that firms are ready to increase their output quickly if demand grows. But there is only so long they can hold out for growth. The labour market is approaching a game-changing phase – one that could shape Britain's capacity to compete for a generation. Private sector firms should be using any spare capacity they have to train, to innovate, or to focus staff in areas such as business development to help drive the medium-term prospects of their firm and the UK economy."

With inflation still above the Bank of England's 2% target the news from the CIPD survey that pay rises are overall expected to be in the 1.6% range will not come as good news for both workers and those that want to see growth. The news is better for the private sector though where rises are predicted to be about 2.5% as compared to the public sector's 0.2%.

[1] www.cipd.co.uk/binaries/5928%20LMO%20Summer%202012%20WEB.pdf

[2] www.cipd.co.uk/pressoffice/press-releases/quarterly-labour-market-outlook-explains-gravity-defying-labour-market-130812.aspx

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