Employers face 'make-or-break' time, says CIPD

Employers are facing a "make-or-break moment" as many will have to make job cuts if the economy does not pick up, according to a report.

The survey by the Chartered Institute of Personnel and Development (CIPD) showed that a third of private sector employers had kept on more staff than they needed to avoid losing skills.

But almost two-thirds said they would have to cut back if economic growth did not pick up in the next year.

Unemployment has been falling in 2012.

Figures from the Office for National Statistics (ONS) showed that unemployment fell to 2.58 million in the three months to May. It had been as high as 2.68 million in November last year.

But the CIPD said the recent trajectory of the jobs market could change course if the economy does not start growing again.

The ONS is due to publish its latest data for the labour market on Wednesday.

"Recent falls in unemployment suggest that the labour market is on a sound footing, but a closer examination reveals that many employers are holding on to more staff than is required by the current level of demand in order to retain their skills," said report author Gerwyn Davies.

"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 CIPD's survey of 1,000 employers also showed that public sector organisations were predicting average pay rises of 0.2%, compared with 2.5% in the private sector.