The fear of losing valuable skills is leading companies to hold on to higher staff levels than needed, new research shows.
Findings from the Chartered Institute of Personnel and Development (CIPD) reveal that one in three companies have employee counts which are more than needed considering output.
The Labour Market Outlook study, compiled by survey business YouGov, presents statistics which show that the net employment balance, which looks at the difference between the proportion of employers that intend to increase total staffing levels and those that intend to decrease it, remained at a positive rate of +5 per cent for the third quarter of 2012.
The figure compares to +6 per cent for the previous three months.
Further findings suggest that the ‘precarious nature’ of the market has led to 31 per cent of private sector firms maintaining staff levels higher than needed.
The main reason for holding on to labour is to maintain the skills base within the organisation, as reported by 62 per cent of employers questioned.
However, some 62 per cent of those same firms would feel the need to cut back on labour if output or service delivery does not pick up in the next year.
Gerwyn Davies, labour market adviser at the CIPD, comments, ‘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 number of businesses planning on making job cuts in the third quarter of the year has fallen from 32 per cent three months ago to 29 per cent.
Away from hiring levels, the CIPD survey reports that pay packets will continue to be ‘squeezed’ at 1.6 per cent while public sector organisations’ predictions of average pay awards of 0.2 per cent continue to fall short of those in the private sector (2.5 per cent).
The survey is based on responses from 1,004 HR professionals, drawn from the CIPD’s membership of 135,000 professionals, and a YouGov panel of 1,500 senior HR professionals.