CIPD Update: Is the UK jobs market less dynamic than in the past?
Speaking at the Chartered Institute of Personnel and Development (CIPD)’s Annual Conference and Exhibition, Dr John Philpott, Chief Economic Adviser at the CIPD, commented as follows on figures published earlier today by the Office for National Statistics (ONS) showing change since 1998 in the number of people leaving jobs in the UK:
“The ONS figures on the trend in job exits since the late 1990s parallel findings from the annual CIPD labour turnover surveys, which shows a modest decline in both quit rates (i.e. workers leaving jobs voluntarily) and firing rates (including redundancies) prior to the recession in 2008, followed by a sharp fall in the quit rate and a sharp rise in the redundancy rate.
“On the basis of a comparison between 1998 and 2011, the ONS concludes that the overall decline in the exit rate from 4.5% to 2.4% suggests that the UK labour market is less dynamic than in the past. However, this comparison is slightly misleading since the period in question begins at a time when the UK economy was expanding rapidly and heading toward full employment and ends with the economy struggling to recover from a major recession. It is therefore the economy not the labour market that is less dynamic in 2011 than 1998.
“What is intriguing is that quit rates fell at all during the long boom from the late 1990s prior to the recession, especially in the private sector. The opposite might have been expected with employers competing for staff in the tight labour market conditions of the time and eager to poach talent. The apparent paradox is explained in CIPD surveys which show increasing employer emphasis on staff retention strategies during the boom, encompassing both financial and non-financial improvements in working conditions. The ONS figures would suggest that employers became gradually more successful at retaining staff as the boom progressed.”