RedundantA study by HR consultancy firm, Aon Hewitt, has found that 35% of UK employers are planning redundancies or considering job cuts this year.

The report, ‘Aon Hewitt 2013 Salary Increase Survey – Winter Update’, published on the 19th February, revealed that of the UK organisations considering redundancies, 62% were in service-based industries.

It did however discover that salary increase budgets for employers remain on target, with almost half of the respondents saying that they will set their budgets in order to remain market-competitive.

But the number of firms intending to implement a pay freeze increased from 7.3% in 2012 to 13.5% in 2013, with the highest concentration of pay freezes expected in the construction and engineering industries. No pay freezes are being considered by employers in the real estate, pharmaceutical, energy, insurance and food and beverage sectors, according to the survey.

Commenting on the survey results, Andrew Macleod, Leader of Aon Hewitt’s pay research practice in the UK, said:

“The high potential figure for redundancies may stem in part from UK organisations feeling that they continually have to adapt and reorganise to remain competitive in what is still a volatile economic environment.

“By contrast, the same organisations are signalling that increases in salary budgets are holding strong at a rate of 3% – but with marked differences between industries.

“At a sectoral level, it’s notable that while the first few weeks of 2013 have featured bad news for some traditional high street stores, more than two-thirds of retailers in our survey said they are actually planning to increase payroll spend and recruitment activity this year.”

Macleod added:

“It may be that rather than all organisations simply reflecting a uniform pattern of overall economic growth and decline, we are now beginning to see a more fundamental change in which there are big variations in both sectors and companies as they focus on the three ‘R’s – recruitment, restructuring and redundancy.”

Commenting on the findings, Workplace Law, Head of Human Resources, Suzanne McMinn, said:

“It is not the employment turn around we were all hoping for.”

When questioned, ‘does it save money in the long run or cost just as much as keeping the staff and reducing hours / wages?’ Suzanne stated:

“In the main when redundancies hit, it’s a cost cutting exercise to react to a downturn in business.”

Aon Hewitt’s study covered 44 countries and 395 organisations – 255 of which were in the UK.