CIPD links Employment Rights Bill to low business confidence

A new CIPD study suggests that rising costs, upcoming legislation, and global uncertainty have pushed employer confidence down to a record-low.

According to the CIPD (Chartered Institute of Personnel and Development), the number of UK employers who expect to increase their headcount within the next three-month period has reached a new record low, outside of the pandemic. They are also grappling with increasing employment costs, and global uncertainty.

In the survey of 2,004 senior human resources professionals conducted between 24 March and 14 April, the net employment balance (NEB), the difference between employers who expect an increase in staff and those who expect a decrease, fell from +13 to +8. The CIPD has been collecting this data since 2014.

The figures do not take into consideration the impact of the Bank of England’s announcement of a lower interest rate or the recent trade agreements with the US and India.

The net employment balance in the public sector fell from +3 down to -4. In the private sector it has fallen from +16 up to +11 – a new record low for the period outside 2020 when the pandemic started.

Researchers reported that one in four employers (24%) planned to make redundancies within the next three-month period. The same as the previous quarter, but higher than the 21% recorded in autumn.

Retail and education were the two sectors that felt the greatest pressure. Retail NEB fell from +23 at the end of 2024 to just -19 in this quarter. Only one retail employer expected that staff levels would increase over the next three-month period, while three others predicted a decrease.

In compulsory education, the NEB also ranked -13th among employers.

In the next three-month period, 61% employers expect to hire, a decrease from 64% the previous quarter, and 67% by autumn 2024.

Personnel levels

Large private sector employers are primarily responsible for the decline in employers who expect to increase their staffing levels over the next three-month period. In the last quarter, 39% private sector employers anticipated an increase in staffing levels. This has now fallen to 32%.

According to the CIPD, the median expected pay increase is now 3% in the private, public and voluntary sectors.

The public sector was the hardest hit by the problem of vacancies. Public sector employers were hardest hit, with 44% having hard-to-fill positions.

The CIPD examined employers’ redundancy policies and payouts in the last 12 months to see where organisations made difficult decisions regarding their workforce. The CIPD found that 27% of employers conducted a redundancy program in the past 12 months.

Half (50%) of those offered enhanced redundancy packages, exceeding the legal minimum, while the other 41% offered only the minimum amount.

James Cockett is a senior economist in the CIPD and blames the increase in employer’s national insurance contributions, the minimum wage, as well as the Employment Rights Bill , which is currently being debated by the House of Lords.

Cockett stated: “The Government can alleviate employer nerves about the bill by prioritising a plan of implementation with a clearly defined timeline, along with support and guidance for smaller businesses and employers in general.”

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