Private sector hiring will not offset public sector job cuts

A sharp increase in redundancies in the public sector as spending cuts begin to bite in the next three months will be only partially mitigated by new hiring in the private sector, research published this morning warns.

While employment levels in the UK economy were relatively resilient last year, 2011 will see a marked deterioration in the jobs market, the study from the Chartered Institute of Personnel and Development (CIPD) says.

The CIPD survey of 750 employers shows more intending to cut jobs over the coming quarter than are planning to increase payroll numbers – leaving a negative balance of minus three, compared with plus 11 in the final quarter of 2010.

In the private sector, employers in both the manufacturing and services industries plan to add staff in the first quarter. By contrast, two-thirds of public-sector employers intend to cut their workforces, the majority through redundancy programmes.

Nor is there likely to be any noticeable improvement in the jobs market over the longer term. Over the course of 2011 as a whole, one in three employers says they intend to employ fewer people, the CIPD survey shows.

"The first quarter of 2011 was always going to be a quarter of reckoning for the jobs market, and it seems that last year's modest recovery will be reversed by a modest relapse this year – encouragingly, the private sector continues to generate new jobs," Gerwyn Davies, a public policy adviser at the CIPD, said. "But we are some way off the jobs boom that we are all hoping for."

Malcolm Edge, head of markets at KPMG, said: "These figures show that there continues to be a marked divide in the UK jobs market, with the public sector still fearing the worst while the private sector shows signs of better health."