Employment is forecast to grow steadily throughout the rest of 2012 according to the latest CIPD Labour Market Outlook report, released today. Net employment intentions – the difference between the proportion of employers that intend to increase total staffing levels and those that intend to decrease total staffing levels – remain positive for the third quarter of 2012 at +7, compared to +5 during the previous 3 months. This is the third consecutive quarter of projected growth recorded by the CIPD’s Labour Market Outlook report, continuing the actual labour market trends recorded over the last six months.

The aggregate figures, however, include a decrease in private sector net hiring intentions – falling to +18 from +28 last quarter. The overall positive figure is accounted for by a balancing improvement in net hiring prospects in the public sector, which are noticeably less negative than in previous reports. The public sector balance has improved from -36 to -17 during the same period. Within the private sector figures, the fall in hiring intentions is particularly marked in the manufacturing sector, where the net employment balance has fallen to +13 from +32 since the last quarter.

Meanwhile, pay remains subdued. Average basic pay expectations for the next 12 months have only risen marginally – to 1.7% from 1.6% three months ago.

The report also investigates recent increases in part-time employment and temporary employment – trends which look set to continue through the remainder of the year, but as a lower proportion of overall hiring intentions. Almost a quarter of employees (24%) will be hired on part-time working arrangements according to the survey – a reduction from the recent sharp rise in part-time employment that has been noted in official statistics.

Meanwhile, more than a fifth of employers (21%) say that they will be increasing the proportion of temporary workers during the next 12 months. According to the most recent official statistics, temporary employees made up more than a third of the total rise in the number of employees in the three months to August 2012. Employers cite the uncertain economic outlook (37%), the wish to lower short-term costs (25%), and fitting in with the business cycle (30%) as the key reasons behind the shift to temporary employment.

Taken together, the results suggest that the recent sharp increase in the number of underemployed people*, which has surpassed 3 million people recently, will continue but at a slower pace. According to official data, the number of temporary employees that could not find a permanent job rose by 11% in the 12 months to August 2012. During the same period, the number of part-time employees that could not find a full-time job rose to 1.4 million, an increase of 10%.

Looking further ahead, overall business confidence levels are varied. According to the LMO, more than three in five private sector companies (61%) say they are either confident or fairly confident about the growth prospects of their organisation, while around a quarter of private sector firms report that they are not confident about the growth prospects of their firm at all in the next year.

Gerwyn Davies, Labour Market Adviser at the CIPD, said: “The shift to more part-time and temporary employment looks set to continue to drive the jobs market further along the road to recovery. However, while this may drive up employment levels to reach new heights in the coming months, it may also continue to put downward pressure on the living and working standards of an increasing proportion of employees. Employers’ focus on cost and risk will continue to squeeze wage growth for most employees, and may compel an increasing number of people to work fewer hours in less secure forms of employment.

“This may lead to even higher employee retention rates, which have also risen to recent highs; as an increasing number of employees stay put for fear of either losing their jobs or joining a firm on less generous and secure terms than the ones they currently enjoy. For most, work in some form will be better than no work at all. However, many employees and jobseekers could be forgiven for being sceptical about the strength or security of the employment market recovery while they continue to have to settle for part-time or temporary work. The sustainability of the recovery, supported by growing consumer confidence, may well depend on the extent to which firms are able to convert these part-time and temporary jobs into more full-time and permanent roles”.

* People in employment who are willing to work more hours because they either:

  • want a job additional to their current job;
  • want a different job with longer hours, or
  • want more hours in their current job