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Employment rate to slow in early 2014

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Employment levels will grow sharply in the first quarter of 2014 but at a slower rate than at the end of 2013, a survey suggests.

The Chartered Institute of Personnel and Development’s (CIPD) quarterly survey of employers found the number of employers who planned to increase staff levels before March 2014 was lower than the number in autumn 2013.

The CIPD’s measure – the net employment balance – showed the level had decreased from 24% in the autumn to 16% for this year’s first quarter. 

A total of 935 employers took part in the survey. About a quarter said they would maintain staffing levels if the UK economy grew by 2.5% in 2014.

Slightly more (28%) said economic growth would prompt them to increasing staff levels, while 5% said they planned to make redundancies.

Respondents also revealed higher basic pay expectations for 2014 – up to 2% from 1.6% in the previous quarter.

Seven out of ten employers said they would award pay increases of 2% or less in the 12 months to December 2014. 

CIPD labour market adviser Gerwyn Davies said employers’ intentions to lower employment were unsurprising, as they needed to “tackle the major productivity hangover affecting the UK economy”.

“Weak productivity partly explains why a majority of employers expect to continue awarding below inflation pay rises for their workforce,” he said.

“Sustainable increases in real wages can only be delivered if organisations can boost productivity, for example through smart investment in the training, development and management of their staff.

“The challenge for managers will be to find ways to continue motivating employees who find their pay lagging behind inflation, and in many cases are struggling to pay bills and mortgages.”

Consumer Price Index inflation rose by 2%, according to Government statistics for December 2013.