Employment: Job cuts loom at twice as many firms in the UK
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The number of major employers planning staff cuts doubled in the last three months, pointing to the possibility that the biggest shake-out in the job market may still be on the horizon – something that Gauteng workers may also be facing.
This is according to Karen Geldenhuys, MD of ICT-focused recruitment company, Abacus Recruitment.
“We are facing a slew of economic pressures locally, including sky-high petrol prices, high inflation and massive Eskom increases, all of which are leading to a huge fall in business confidence. Industries like mining, insurance, textile and banking are starting to shed staff at an alarming rate.”
In the UK of the more than 200 executives questioned, six out of ten said they were about to cut costs, and more than half – 53% – are anticipating to reduce
headcount. This anticipated figure is up from 29% in March.
Thus far, it appears that the retrenchments have been restricted to sectors which are more exposed to the credit crunch – like financial services.
But the latest indicators also show that rising inflation is now unsettlingalmost all business sectors.
Nearly eight out of 10 polled said inflation would translate into higher costs for their business, seven out of 10 said it would impact negatively on their profits and 67% said staff would use it to pressurize for more pay.
Similar scenario in SA?
“With inflation rising in SA workers are also pushing for more pay, and this is also placing pressure on the economy. People cannot keep pace with rising costs, such as petrol, food, electricity and spiraling mortgage costs.”
In a recent article in the Mail on Sunday, Malcolm Edge, head of markets in the UK for KPMG - which commissioned the figures - explained why business confidence was falling.
“The clouds that were on the horizon when we first conducted this survey back in early spring are now right overhead.
“Businesses are feeling the impact of this ‘perfect storm’ of rising inflation, tightening credit controls and plummeting consumer confidence.”
Commenting further, Geldenhuys said: “One of the industries less affected by the financial pressures in South Africa is ICT. Here, because of the dire skills shortage, companies are still looking for skilled workers. But projects are certainly being placed on hold, there is less investment – and companies are generally watching their spending.”
Geldenhuys said all indications are that the Gauteng economy will only start recovering late in 2009. “But then we still have the hangover affect as consumers have to play catch-up on the debt they have accumulated. This will impact, still, on consumer spending – which will affect a number of industries, such as retail.”
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