UK businesses have cut staff levels significantly in the past year, a survey has revealed.
Forty-nine percent of privately-held businesses have reduced headcount over the past 12 months compared to 24.7% in the previous 12, according to the latest International Business Report (IBR) from Grant Thornton.
The percentage of businesses cutting personnel numbers exceeds the percentage which boosted recruitment by 30%, whereas in the same period between 2008 and 2009 the reverse was true by 15%.
Meanwhile, the survey results suggests that year-on-year gains in real income seen in the boom years are now grinding to a halt, although employees needn't worry excessively about a fall in real income. Of the businesses surveyed, 44% do not plan to offer a pay rise to their staff, but only 5% say they will actually reduce pay, while 39% plan to increase salaries in line with inflation.
It's still tough out there for private companies in the UK with many facing severe financial pressures that have forced them to reduce headcount to stay afloat
David Campbell, Grant Thornton
The greatest reductions in staff numbers occurred in the South West, West and Wales, with 62.5% reducing headcount, compared to the 27% reporting cuts the year before. Just over half (52.9%) of PHBs in London and the South say they reduced staff numbers over the year (24% previously), while in the Midlands, 51.4% responded similarly (28% before).
David Campbell, head of privately held businesses and regional managing partner at Grant Thornton, says: "It's still tough out there for private companies in the UK with many facing severe financial pressures that have forced them to reduce headcount to stay afloat.
"With just under half of privately held businesses across the UK reducing staff numbers over the year, there is a clear weakness in the current labour market. The significant jump in the number of businesses that have reduced their headcount is very concerning, particularly if the trend continues.
"A reduced headcount for businesses will no doubt have a knock-on effect on household incomes, slowing the country's economic recovery. With growth of just 0.1% in the fourth quarter of 2009, it is clear we have a long way to go."
