1 in 3 UK companies expect to cut jobs in Q3

A third of employers in the UK are preparing for redundancies in the coming months, according to the results of the latest Labor Market Outlook survey by the Chartered Institute of Personnel and Development and Adecco Group. This is one and a half times the number from three months ago (22 percent). The private sector is faring far worse than the public sector: 38 percent of private companies are preparing to cut jobs, compared to 16 percent of public sector employers.

The projected job cuts will coincide with the end of the government's Coronavirus Job Retention Scheme, which was first introduced in March. While the scheme initially had the government covering up to 80 percent of the wages of employees who would otherwise have been laid off as a result of the pandemic, employers have had to bear an increasing proportion of costs since August 1, even though lockdown restrictions have been extended. Furthermore, the scheme is set to end on October 31 despite a rise in community spread suggesting that restrictions may continue still further.

“Until now, redundancies have been low—no doubt due to the Job Retention Scheme—but we expect to see more redundancies come through this autumn, especially in the private sector once the scheme closes,” said Gerwyn Davies, senior labor market adviser at the CIPD. "This will likely be accompanied by a pay squeeze for workers, which is actually to be welcomed to help preserve jobs."

While the survey also found that over 50 percent of employers are planning to hire, Davies said the current hiring projections would not offset the job cuts. “Hiring confidence is rising tentatively, but this probably won’t be enough to offset the rise in redundancies and the number of new graduates and school leavers entering the labour market over the next few months," he said.

Unsurprisingly, the survey results also reflected that hiring confidence is highest in the healthcare and public administration sectors, while lowest in hard-hit sectors such as hospitality, transport, and retail.