The forecast may be bleak – but there is a reason for optimism

August 26th, 2022

The forecast may be bleak – but there is a reason for optimism

Whilst many are desperately seeking a reason for optimism by making the most of the summer sunshine, enjoying the ability to travel and take holidays abroad, there is an undercurrent of uncertainty brewing for many.

With daily reports of rising interest rates, steep increases in the cost of borrowing, and rising fuel prices, many people are concerned for the future and will be looking to rein in their spending as household budgets become more strained. 

This bleak economic outlook will inevitably start to affect businesses who also will now be looking at how they can weather the inevitable storm.

For many firms, this will entail a wholesale review of their businesses and possible redundancies.

However, there is some reason for optimism.  A recent survey suggests that employers may be a little more reluctant to engage in the fire and rehire policies adopted by many businesses after the pandemic. This is evidenced by a sharp drop in planned redundancies between the first and second quarters of 2022. Between 1 January and 30 March 2022, there were 50,382 planned redundancies in the UK. Between 1 April and 30 June 2022, there were only 39,669. This represents a 21% decrease. 

The survey was conducted by GQ Littler and they provide an explanation for the drop, saying that ‘extreme staff shortages across the economy’ mean that businesses are ‘retaining underemployed staff rather than making them redundant’. It seems such businesses, especially those in the hospitality and care sectors, have learned valuable lessons from past mass redundancies in response to covid, which resulted in an inability to recruit in line with need once the economy began recovering.  

The survey certainly generates a valid reason for optimism, but with the ongoing conflict in Ukraine and wider economic consequences resulting from that, and other factors, we may yet see an increase in redundancies for the third and fourth quarters of 2022.

This blog was written by Kate Lea, Senior Solicitor at didlaw.

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