According to the CIPD/KPMG survey of employers' the jobs market in the UK is getting rapidly worse. This should not come as too much of a surprise.

It should be remembered though that this survey is now a bit historic and was undertaken in a period of particularly bad economic and financial market news. I would suggest that this news is slightly redundant (excuse the pun) and we should look to more recent indicators as a better reflection of what is going on.

The survey asks respondents their plans for recruitment and redundancies in the first quarter of 2009. It seems strange to me then that they would release this information on 9 February when we are already half way through the quarter.

"The latest quarterly CIPD/KPMG survey of employers’ recruitment and redundancy plans indicates that UK job prospects are deteriorating ‘at an alarming rate’ while the size of average pay rises is shrinking.

The winter Labour Market Outlook (LMO) survey of 892 UK employers, conducted by Ipsos Mori at the turn of the year, finds that more than one in three (36%) plan to cut jobs in the first quarter of 2009 – double the proportion expecting to make job cuts at the time of the previous LMO survey last autumn.

The LMO records a negative balance of -9 percentage points between the proportion of employers planning to cut jobs (36%) and the proportion planning to hire additional staff (27%). This is the first such negative balance recorded in the five years since the LMO survey began in 2004.

The latest LMO survey also finds that employers intend to keep a much tighter rein on pay increases in the coming months. Those who plan pay reviews expect staff pay to increase on average by 2.6%, much lower than the 3.5% average increase expected last autumn. But as many as one in eight employers don’t intend to conduct a pay review at all in 2009."

Source: www.cipd.co.uk

The British Chamber of Commerce has asked the UK government to keep the national minimum wage on hold in 2009 to help businesses to cope with the current economic downturn.

Whether the government keeps the minimum wage on hold or not will not stop wages in the private sector remaining on hold or falling in 2009.

Some businesses, particularly those in the financial sector, have already started to cut wages. In this sector salary cuts of between ten and twenty per cent throughout the company won't be too unusual.

But pay freezes and pay cuts of a smaller magnitude should be expected across all sectors apart from the public sector. Given that those in work receiving the pay cuts will be paying for these public sector pay rises, there may be increased calls for the public sector to also cut back on staff or salaries.

A pay cut may seem like a terrible burden and terribly unfair. Nevertheless, this should be seen as a good thing. In previous years when unions were stronger and labour markets less flexible a pay cut would have been unheard of. As a result some companies were either forced to cut jobs or go out of business.

The ability to cut wages instead of cutting jobs will help to keep businesses going and people in work. These people will be able to retain and grow their skills whilst at work instead of stagnating. Businesses will not have to face the costly burden of redundancy and rehiring and they will have the available staff to take advantage of opportunities that arise. The government will have less unemployment benefits to pay.

A flexible labour market is one of the greatest assets that the UK and US economies have and will be one of the things that will help to pull the economy out of recession and see higher growth over the long term.

It is best to look at this way...what would you rather a twenty per cent pay cut or no job at all?