Credit crunch hits jobs

Despite many organisations' continuing preoccupation with skill shortages, the credit crunch is already beginning to make itself felt in a number of employment sectors.

According to a survey by the CBI and PricewaterhouseCoopers, jobs in the financial services sector are falling at their fastest rate for five years.  Over the past three months, the number of firms cutting jobs outnumbered those increasing headcount by a balance of 25 percentage points.  Over the next three months, this balance is expected to increase to 33 points - equating to a net loss of 11,000 jobs.  (Put another way, a quarter of financial services companies have cut jobs since the beginning of the year, and a third plan to in the current quarter.)  In addition, 90% of the firms surveyed thought it would take more than six months for ‘normal' credit conditions to resume.

The CBI's chief economic adviser, Ian McCafferty, foresees "further tough times in the financial sector," predicting slower growth for both this year and next as the impact feeds through into the wider economy.  Andrew Gray, UK banking advisory leader at PwC, said "Many banks are predicting staff levels to decline, although evidence suggests these reductions will be reasonably modest."

The retail sector also faces a potential wave of job cuts.  Urging a further cut in interest rates (with the Bank of England duly obliging on 10th April), British Retail Consortium director-general Stephen Robertson said "If the economy slows down dramatically you have got to realise that one in nine people employed in the UK is employed in retail.  There's lots of talk about job cuts at the moment.  Evert prudent retailer is looking at cost-cutting more seriously than they have done for some time."

Finally, Michael Page - something of a bellwether for the UK recruitment industry - has warned that it is taking on fewer employees itself as its clients began to apply limits to their hiring plans.  It said it had started to experience a weakening in UK growth - particularly in the banking sector - although other areas outside the UK (notably the Asia Pacific region) continued to perform strongly.