Wrapping up to beat the freeze

The media is dominated with stories about the economic downturn. But the headline stories that have grabbed most attention during the past year – the fall in house prices, the collapse of Northern Rock and job losses in the City – do not reflect a balanced picture of what has taken place within UK organisations during the past 12 months. Such a picture is provided in the Chartered Institute of Personnel Development’s annual recruitment and retention survey, a representative survey of UK employers that uniquely looks at the inter-relationships between redundancies, recruitment and labour turnover trends.

It is frightening to think that we are almost a year into the credit crunch. And while there have been some casualties, it is remarkable how well the jobs market has held up since the start of the credit crunch. As the official government job statistics to June 2008 show, employment levels are at a record high. And while redundancy and unemployment rates have risen in a consecutive manner in the last few months, they remain very low by any definition. This picture is mirrored by the remarkably strong set of figures is reflected in the key findings contained within the CIPD’s annual recruitment and retention survey – which presents employers with problems, not least with finding suitably qualified staff.

It shows that the proportion of employers experiencing recruitment difficulties remains stubbornly high; down just 3 per cent to 81 per cent of employers. As the report states, this has contributed to making the past year ‘a candidate’s market’. The reason for such difficulties becomes clearer when looking at the survey in the round. It shows that employers have responded to the largely benign economic conditions in 2007 by reducing redundancies – therefore lowering involuntary labour turnover, operating fewer recruitment freezes and gradually increasing overall recruitment – in the process raising voluntary labour turnover by providing potential job-quitters with more alternative job options to choose from.

The offsetting net combination of these recruitment and redundancy patterns was therefore to leave the overall labour turnover rate broadly unchanged, although the rate is slightly lower than 12 months ago; a signal, perhaps, that candidates might be starting to feel more nervous about quitting their current roles.

However, while on one level these figures are still very good, there is a lag between these figures and current and future activity does not tell us how UK businesses are preparing to deal with rising inflation, rising fuel and food costs and higher borrowing costs.

Snapshot

Unlike the recruitment and retention survey, the CIPD/KPMG’s quarterly Labour Market Outlook provides such a forward-looking snapshot, by highlighting net recruitment intentions among UK employers. The two most recent reports have suggested that 2008 will be a more difficult year for employers and employees alike; with the prospect of higher redundancies and less recruitment, particularly in the public sector and in London.

The long era of the candidate’s market may, therefore, be coming to an end, particularly if some of the gloomier economic forecasts come to fruition.