Redundancy intentions among UK businesses are at the highest level in 10 years, excepting a brief period during the Covid pandemic.
One-quarter of UK employers plan to make redundancies in the next three months, according to a survey of 2,000 businesses by the Chartered Institute of Personnel and Development (CIPD).
The net employment balance – the CIPD’s index score measuring employment intentions over the next three months, where positive scores indicate an overall expectation for increased staff levels and negative scores show an expectation for decreasing staff levels – also fell significantly. Although the balance remains positive, scores fell eight points in both the public and private sectors.
Companies blamed impending increases to the cost of employment for the decline in staffing expectations. Increases to employer national insurance (NI) contributions and a 6.7% hike to the national minimum wage were announced in the autumn budget and will come into force from April. Nine in 10 employers say they expect their costs to increase as a result of these changes, with 43% saying it will increase their employment costs to a large extent.
There’s so much being asked of companies at the moment, I’m not surprised some are looking at redundancies
“These are the most significant downward changes in employer sentiment we’ve seen in the last ten years,” says Peter Cheese, chief executive at the CIPD. “Employer confidence has been impacted by planned changes to employment costs, and employment indicators are heading in the wrong direction.”
Other actions organisations plan to take to offset increases in employment costs include raising prices (42%), scaling down expansion or investment plans (24%) and cutting back on training (19%).
Bar Huberman, HR strategy and practice lead at Brightmine, an HR solutions provider, has noticed a growing number of firms seeking guidance on redundancies. “With the rise in national insurance, companies are looking at where they can make cost savings,” she says. “There’s so much being asked of them at the moment, I’m not surprised some are looking at redundancies.”
Business confidence plummets
The CIPD’s findings will likely add to the gloomy disposition of UK businesses. Business confidence fell to its lowest levels in two years in the fourth quarter of 2024, according to the Institute of Chartered Accountants in England and Wales.
Confidence is even lower among SMEs, with a quarter of small firms expecting to reduce the size of their operations in the first three months of 2025, according to the Federation of Small Businesses. Confidence in this part of the economy is also at a post-Covid low.
Making redundancies is a last resort for businesses
Kelly Allen, a director at The HR Dept, an HR services provider, likens this situation to the 2008 global financial crisis. “Making redundancies is a last resort for businesses and the significant number of SMEs taking this route is indicative of the challenges that employers face right now,” she says.
More businesses may contemplate reducing headcount as the April deadline for employers’ NI contributions and minimum wage increases approaches.
However, Allen adds: “Experience has shown that those businesses that are able to protect jobs and support their employees during testing times are more resilient and better able to take advantage of improved trading conditions.”
Companies that can protect staff numbers and find cost savings elsewhere may be better placed to emerge from the current economic challenges in a strong position.
Redundancy intentions among UK businesses are at the highest level in 10 years, excepting a brief period during the Covid pandemic.
One-quarter of UK employers plan to make redundancies in the next three months, according to a survey of 2,000 businesses by the Chartered Institute of Personnel and Development (CIPD).
The net employment balance – the CIPD’s index score measuring employment intentions over the next three months, where positive scores indicate an overall expectation for increased staff levels and negative scores show an expectation for decreasing staff levels – also fell significantly. Although the balance remains positive, scores fell eight points in both the public and private sectors.
