By David Williams
15 November 2010
Four out of ten public sector employers are planning to make redundancies before the end of the year, while staff’s salary expectations are plummeting, a survey released today shows.
The quarterly Labour Market Outlook report, published jointly by the Chartered Institute for Personnel and Development and consultancy firm KPMG, also shows a sharp decline in confidence in the voluntary sector as a result of the public spending cuts.
According to the survey, 41% of public bodies are planning to make staff redundant this quarter – up from 36% in the previous quarter. Those planning to shed staff intend to lose 14% of their workforce on average – double the rate of three months ago.
But the picture is worsening in the voluntary sector even more rapidly, where the proportion of organisations planning to make redundancies has leapt up by more than half – from 24% in the previous quarter to 36% now.
The public sector redundancies are likely to be more expensive than the national average cost of £12,000 per employee. A typical redundancy costs £19,600 – compared with £9,350 for the private sector and £5,500 for the voluntary sector.
The gloomy outlook in the public and third sectors contrasts with a slight growth in private sector confidence – with 74% of firms planning to recruit in the next three months.
Although pay expectations have seen their sharpest rise in a year in the private sector, that confidence is not replicated in the public or third sectors.
Almost two-thirds of public sector employers are planning pay freezes, while the average pay rise for charity workers has dropped from around 3% to less than 1% in just three months.
In the public sector, the mean pay settlement is now 0.25% – down from 0.7% in the previous quarter.
The survey also questions estimates from the Office for Budget Responsibility, which state that private sector growth is likely to offset 490,000 job losses in the public sector.
‘The CIPD believes that further rises in unemployment remain a distinct possibility [due to] the cuts in public spending announced in last month’s Comprehensive Spending Review, and the rise in the standard rate of VAT to 20% due in January 2011,’ the report states.
