With the Comprehensive Spending Review imminent, managers are questioning whether the recession is really over, according to a new report from Lord John Eatwell, published by the Chartered Management Institute (CMI) today.
CMI’s Economic Outlook report, which tracks business confidence amongst the UK’s senior executives, confirms anecdotal fears that the UK faces a depressing and uncertain future. The majority of managers (82 per cent) say that the recession is still negatively impacting on their organisations, and the report also shows that pay and recruitment freezes are also on the increase.
Although many feel they continue to be hampered by the recession, managers working with small to medium size enterprises (SMEs) seem to be faring better than their counterparts in larger organisations. According to the data, 47 per cent of SME managers viewing the forthcoming spending review as a threat to their operations, but this rises to 60 per cent of managers within organisations employing 250 staff or more. Interestingly, just eight per cent of SME managers say they feel very insecure in their roles, compared to 42 per cent of managers working at larger companies.
Despite these differences, when it comes to morale and general business optimism the report makes it clear that managers within organisations of all sizes are feeling the pinch. 80 per cent of managers within larger firms agree that morale is much worse now than it was six months ago, with managers from SMEs close behind on 58 per cent. Levels of optimism for the next six months are also worse than ever, dropping by 13 percent within SMEs and 23 percent amongst large organisations*.
As a result of the findings, CMI is calling on the Government to take immediate action to increase the support on offer to UK managers by giving them greater control over how they choose to spend what little funding is available. Financial aid in the form of tax breaks for skills development and measures to improve bank lending to businesses, both of which are popular with the majority of UK managers, (79 per cent and 76 per cent respectively), should also be high on the Government agenda.
Lord John Eatwell, chief economic adviser to CMI says: “A persistent theme of this year’s report is the collapse of nearly all measures of economic health, particularly when it comes to optimism for the future and levels of morale. With the threat of immediate and major cuts on the horizon, widespread instability looks likely to remain a characteristic feature of the economic outlook for some months to come. Of course, it is unrealistic for employers to anticipate the flow of investment from Government to improve significantly in the short term. However, if Government policy on deficit reduction and public sector reforms is to succeed, then highly skilled and capable managers will be needed. To enable investment in these skills, and to support business growth, the Government must do more to stimulate a reliable flow of bank lending. Bolstering confidence in management skills will always be an important part of securing finance and improving the quality of management will help the successful evaluation of lending proposals.”
The data also shows that managers expect all forms of investment to be cut even further – something which has already taken its toll. More than half of all small and medium sized organisations (55 per cent) have kept pay freezes in place, rising to 71 per cent for larger businesses. 69 per cent of larger organisations have closed the door to new recruits; SMEs fare slightly better with 40 per cent operating under a recruitment freeze.
Regardless of business size, all employers feel concerned about how this frugality may affect their staff; 59 per cent of managers within large firms and 25 per cent of those working for SMEs see the potential for employment disputes as a significant concern. In addition, more than half of managers within large organisations (51 per cent) think skills shortages will have a damaging impact upon their staff, compared to 31 per cent of those within SMEs.
Ruth Spellman, chief executive of CMI added: “Ultimately, the key to recovery is ensuring that managers feel confident and optimistic about the future. It’s painfully clear that this just isn’t the case at present. Of course, managers and leaders must take some responsibility for developing the skills needed for success, but they are crying out for more support. They are willing to accept that an increase in available finance is unlikely to be forthcoming, but still believe that the Government can do more to help them turn things around. The Government needs to answer their call by ensuring that what available credit there is, is used in the right way.”