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Public sector woes threaten jobs market

Wednesday 14th July 2010

The threat of major public sector cuts has knocked employers' confidence, a report from Recruitment and Employment Confederation is expected to reveal.

The REC's monthly JobsOutlook survey due to be published later this week highlights the first signs of increased uncertainty in employers' hiring intentions following the announcement of the Coalition Government's austerity drive.

The easing in confidence has hit short-term demand for temporary and contract staff which had been building in recent months.

Nearly one in five (18%) of employers surveyed said their short-term use of contingent labour would increase in the next quarter, compared to 23% last month. Demand for permanent hire over the same period has remained static with 14% of employers predicting growth.

The longer-term outlook for both temporary and permanent staffing is stronger. Both workforces are set to show net gains over the next 12 months.

REC Director of Research Roger Tweedy said: "The uncertainty of the wider global economic situation and the contents of the much anticipated Emergency Budget have made it difficult for employers to be more positive about their hiring intentions at this stage. The longer term trends are encouraging but we may now have to wait until the autumn for further positive momentum to return to the labour market.

"As public spending cuts begin in earnest, we believe flexible temporary and interim staffing will be essential to the ultimate re-engineering of the sector. At the same time, the private sector will increase its reliance on the same resource to cushion it from continued economic uncertainty and to access rare skills.

"We will be using the JobsOutlook survey to monitor the impact of budget cuts to both the public and private sector. Currently 17% of public sector organisations think the cuts will have a very serious impact."

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