One in four (25 percent) employers plan to make redundancies in the three months to March 2025, CIPD labour market research has found.
Redundancy intentions have risen to their highest level in the past ten years, excluding the pandemic, signalling a potential surge in the use of redundancy packages and outplacement services.
The research, with 2,019 employers, found that a quarter of all employers plan to make redundancies in the three months to March, which is a significant increase from 21 percent in the previous quarter. In the private sector, this percentage rose from 22 percent last quarter to 27 percent this quarter.
Further data showed that 32 percent of employers plan to cut headcount overall with redundancies or by reducing recruitment. In the last quarter, 11 percent of employers said they expected to see a decrease in staff levels in the next three months, but this figure is now 16 percent.
On top of this, 24 percent are cancelling or scaling back plans to invest in or expand their business, while 19 percent plan to cut back on training expenditure.
The significant drop in employer confidence is linked to the upcoming increase in national insurance and the national minimum wage in April, the CIPD said in its Winter 2024/25 Labour Market Outlook.
Peter Cheese, chief executive at the CIPD, said the data revealed “the most significant downward changes in employer sentiment we’ve seen in the last ten years, outside of the pandemic”.
He said employer confidence has been hit by planned changes to employment costs, outlined in the Autumn Budget 2024, meaning employment indicators are heading in the wrong direction.
“Businesses have had time to digest these impending changes, with many now planning to reduce headcount, raise prices and cut investment in workforce training.
“If the government’s plans are to succeed, it’s vital they set out how they will help businesses to support growth and investment. And it’s important this support is felt across the economy. Our data shows it’s the everyday economy sectors, such as retail and hospitality, which employ large numbers of people, that will be particularly affected by impending increases to employment costs.”
However, he said that the introduction of additional employment costs is focusing some employers to look at introducing automation or raising productivity in other ways, which he stressed was “activity the government should look to support”.
“The government needs to set out more clearly how it is going to work with employers to support greater business investment in the workforce skills, management capability and technology adoption across all sectors of the economy that can help boost productivity.
“This means fast-tracking consultation with employers on the design of the new Growth and Skills Levy and other changes to skills policy to help organisations upskill their workforces and to tackle technical skills shortages holding back the economy. It also means reviewing and improving support services available to smaller businesses in particular.”
