Employers poised to make redundancies if needed

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Recent falls in unemployment have shown the labour market is on a sound footing, the Chartered Institute of Personnel and Development quarterly report.

But the Labour Market Outlook showed one in three firms were prepared to make redundancies if economic growth remained flat.

Employers are howver maintaining higher staff levels than needed to avoid losing skills.

Gerwyn Davies, labour market adviser at the CIPD, said: "This is a make or break moment for employers - unless growth picks up many will find that they cannot hold on to some workers any longer.

"The tenacity with which employers are hanging on to skilled labour is a reflection of the high value they place on it and the damage they fear will be done to their businesses if they are forced to start making more redundancies."

The report's net employment balance measured the difference between the proportion of employers intending to increase total staffing levels, and those forseeing a decrease in total staffing levels in the third quarter of 2012.

It remained positive at +5 and compared to +6 during the previous 3 months. The report also found that optimism was higher among private sector SMEs than large private sector firms, while the net score for the public sector remained negative.

Davies said: "Private sector firms should be using any spare capacity they have to train, to innovate, or to focus staff in areas such as business development to help drive the medium-term prospects of their firm and the UK economy."

The report showed pay packets would continue to be squeezed at 1.6%.

The research surveyed 1,000 employers and was conducted by YouGov.

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