Gloomy Outlook For Pay And Jobs

December 29 2008 - The CIPD's annual Barometer Report forecasts that 2009 is likely to be the worst year for jobs in two decades. The report predicts a total of 600,000 job losses in 2009 and highlights the poor pay expectations of British employees for the year ahead.

2,604 employees were questioned about Pay Attitudes for the Barometer Survey. More than half (55%) of the respondents (56%) expected to receive either less than they did last year, no pay rise or, for a few, a pay cut in 2009.

Main findings were:

• 28% of respondents thought they would not receive a pay increase in 2009
• 26% believed that they would get a pay rise, but that it would be lower than the one they received in 2008
• 23% thought they would get the same pay rise as in 2008
• 11% anticipated a higher pay increase
• 2% predicted a cut in their salary

CIPD Reward Adviser, Charles Cotton, said:

"With job cuts seemingly lurking around every corner and trading conditions tight, employees are realistic about their pay prospects for the year ahead. Against this backdrop, employers will need to work hard to find new ways to motivate their employees to perform. Targeting pay increases to reward superior performance, making intelligent use of non-financial rewards, and targeted investment in training and development are all ways of making limited budgets go further in efforts to weather the storm, and emerge ready to capitalise fully on the recovery.

"More than ever, this is a time where organisations need to engage in an open and straightforward communication with staff, clearly explaining the reasons for any difficult measures that will affect them. This will help preserve staff loyalty and engagement even during times when unpopular decisions need to be made."

The Barometer Report was compiled by John Philpott, Chief Economist at the CIPD. Commenting more generally on the job market outlook for 2009, he said:

"This time last year, in the face of some scepticism, the CIPD warned that 2008 would be the UK's worst year for jobs in a decade. It was. But in retrospect it will be seen as merely the slow motion prelude to what will be the worst year for jobs in almost two decades.

"The CIPD's annual barometer forecast is that the UK economy will shed at least 600,000 jobs in 2009. Overall the 18 month period from the start of the recession in mid-2008 until the end of 2009 will witness the loss of around three quarters of a million jobs, equivalent to the total net rise in employment in the preceding three years. Assuming the economy bottoms out in the second half of 2009, job losses are likely to continue into 2010, in all probability taking the final toll of lost jobs to around 1 million.

"Our current expectation, based on available survey evidence and employer soundings, is that the number of redundancies will jump sharply in the early months of 2009, once employers take stock of the economic outlook. The period between New Year and Easter is likely to be the worst for redundancies since 1991.

"Similarly, the CIPD's baseline forecast is that by the end of 2009 the number of people unemployed and actively seeking work will have increased to 2.8 million, 1 million above the autumn 2008 figure.

"In many workplaces in 2009, HR is therefore going to feel more like ER or Casualty - leastways the sweat and tears - as managers attempt to perform the organisational equivalent of emergency triage to staff traumatised by news of colleagues losing jobs, anxious that they might be next, or simply feeling hard done by because their pay and perks are being scaled back.

"Successful organisations will be those that have built the trust and engagement of their people over time, and who maintain this through open and honest communication through these difficult times, while also basing any tough decisions on staff cuts and pay restraint on individual employee performance rather than according to arbitrary criteria such as age or job title. They will be organisations that have a plan to retain genuine talent and don't rashly cut back on investment in skills. These will also be the organisations best able to weather the storm of recession and be ready to prosper once the deluge has subsided."

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