Downturn takes further toll on UK employment


New research reveals that the blunted rate of employment growth in UK manufacturing is expected to spread to the service sector in the next six months.

Further, UK employers’ predicted increases in recruitment activity in the service sector are at their lowest in two years whilst figures for manufacturing are even worse - indicating that for most employers in this sector recruitment will decrease.

The responses on employment levels shows a negative figure in manufacturing. The findings are contained in the latest Recruitment Confidence Index, a quarterly survey of UK directors’ and managers’ expectations of changes in recruitment activity and business conditions in the next six months. The RCI is produced by Cranfield School of Management and The Daily Telegraph in association with People Management magazine.

Other key findings include:

  • The expectations of a downturn that emerged in last quarter’s RCI are more pronounced in the latest responses about the state of the labour market and recruitment.
  • The majority of organisations surveyed in the service sector expect unfilled vacancies and staff turnover to drop in the next six months. In manufacturing, whilst unfilled vacancies will drop, staff turnover will increase, reflecting the likelihood of redundancies. The number of organisations expecting unfilled vacancies and staff turnover to increase have virtually halved since Winter 2000/01.
  • Problems in finding suitable applicants for vacancies are expected to remain the same, or decrease, depending on particular job functions and levels.
  • Commenting on the findings, Professor Shaun Tyson of Cranfield School of Management said: “The RCI indicates that the shift in the labour market first predicted by our March survey, is now being experienced, with predictions of job losses in manufacturing and a slow down in the service sector. However, as we are at the point of change, there are still many areas and job functions where recruitment difficulties are continuing. This may be because of the time lag between the anticipated and the actual reduction in the demand for a product or service in the organisations’ surveyed."

    The Recruitment Confidence Index for all staff now stands at 112, compared to 125 in the previous quarter. Values larger than 100 imply an expected increase in recruitment activity. Values less than 100 imply that recruitment activity will fall. When the RCI indices obtain values close to 100, recruitment activity is expected to remain stable.

    The RCI for the service sector (all staff) is 114, compared to 131 in the previous quarter, and 96 for manufacturing, compared to 99 in the previous quarter.

    Nick Hill Recruitment Sales Manager at the Daily Telegraph said that there is a marked recruitment downturn. “There are vacancies but many companies are holding back to see if they can cope without recruiting. HR people know they will have to recruit for many of the vacancies but they have learnt lessons from the last major recession and are holding fire until it’s critical,” he said.

    The current report is based on over 4,600 responses from a representative sample of UK organisations with at least 25 employees. Respondents include HR directors and managers, finance directors, managing directors and recruitment specialists.

    For further information or a copy of the report contact:
    Margaret Kubicek, Press & PR Officer, Cranfield School of Management.
    Tel: 01234 754348
    e-mail: [email protected]