The number of planned redundancies in the UK has increased 15% in the last quarter*, from 36,641 to 41,970 says GQ|Littler, the specialist employment law firm.
The number of employers who plan on making redundancies** has also risen 17% from 550 to 641 in the same period.
Caroline Baker, Partner at GQ|Littler, says that despite the interest rate cycle having turned upwards almost a year ago many employers have, up until now, delayed making reductions to headcount. That delayed response was partly due to fears that a skills shortage meant that businesses that made staff redundant would struggle to rehire talent should the economic downturn prove short-lived.
Financial services is a sector that has seen a significant rise in the number of planned redundancies, increasing 46% from 6,337 last quarter to 9,249 in the most recent quarter. This has been partly due to a sharp decline in M&A and corporate finance activity, causing revenues to slump at many financial services firms.
The UK’s technology sector is another that has seen significant job losses in recent months. Many tech companies that performed exceptionally well during the pandemic have seen their share value plummet. Venture capital firms are also putting pressure on investee firms that had overexpanded during the tech boom to make cuts.
So far in 2022, tech companies have announced plans to cut just under 2,200 jobs in the UK.***
Caroline Baker says: “Economic headwinds have caught up with employers who can no longer avoid making job cuts.”
“Until recently, skills shortages across many sectors meant that the main issue facing employers was finding personnel to fill roles. However, as the UK faces a prolonged downturn, many businesses are not only putting recruitment on hold but also making cuts in order to shore up their bottom line.”
“Technology is a sector that has traditionally seen high turnover of staff. Rapid growth meant that those who were made redundant were snapped up by other companies quickly, usually after receiving a generous payoff.”
“Given the negative economic outlook, tech businesses are unlikely to be in a position to offer these large severance packages. Instead businesses are likely to allocate shrinking budgets to increasing salaries of remaining staff, to help in the cost of living crisis.”
*1st August-October 31st 2022
**Of 20 or more positions
GQ|Littler is a leading specialist employment law firm and the London office of Littler, the largest global employment and labour law practice devoted exclusively to representing management. With more than 1,700 lawyers in 100 offices across 28 countries, Littler serves as the single source solution provider to the global employer community.
Offering risk-based contentious and non-contentious advice, our legal expertise includes employment, immigration, data privacy and employee tax and incentives. Our client base spans a wide range of sectors including financial services, technology, healthcare, professional services and luxury goods, in the UK and internationally.
GQ|Littler is recognised as a leader in its field by both Chambers & Partners and Legal 500. The firm is described in Legal 500 2023 as “undoubtedly the best boutique firm specialising in employment law for employers in London.” For expert insight into the pandemic’s impact on the future of the European workplace, including how employers are responding to a myriad of workplace issues and ever-changing regulations, see Littler’s European Employer Survey Report.