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Almost two thirds of UK employers plan to hire in second quarter

The number of private and public sector firms planning redundancies has fallen, finds CIPD.

In an online study of 1,006 senior human resource (HR) professionals in the UK – conducted by YouGov for the Chartered Institute of Personnel and Development (CIPD) – almost two thirds (65 per cent) of them plan to hire employees in the second quarter of 2012.

Some 74 per cent in the finance, insurance and real estate sector said hiring intentions are strong, as do 77 per cent in the voluntary and not-for-profit sectors.

The survey, carried out between 28 February and 26 March 2012, found that the immediate jobs outlook has turned positive for the first time in more than a year, driven largely by a decrease in redundancy intentions.

Eight out of ten (79 per cent) employers cite cost cutting as the main reason for offshoring jobs. However, the survey also highlights the potential risks of offshoring, with 26 per cent of employers that have offshored jobs overseas now looking to relocate operations back to the UK.

The survey also found that proportion of employers planning to make redundancies in the three months to June 2012 has decreased to 32 per cent from 37 per cent in the previous 3 months. The number of private sector firms planning redundancies has fallen from 31 per cent to 25 per cent during the past three months. The number of public sector operations planning redundancies has fallen to 45 per cent from 49 per cent during the same period.

Since the Autumn 2011 report, employer intentions to offshore UK jobs to other parts of the world in the 12 months to March 2013 has increased from 6 per cent to 8 per cent. Thirteen per cent of respondents said the manufacturing and production sectors and 17 per cent said consultancy services sectors are most likely to offshore jobs during the same period.

India (52 per cent) and Eastern Europe (25 per cent) remain the most popular destinations for offshoring jobs, the survey respondents said.

Of those who intend to offshore jobs, 41 per cent of respondents said these would be in IT support and 29 per cent in productions/operations. Finance and accounts (23 per cent), call centres (21 per cent) and HR (21 per cent) are other popular functions employers plan to offshore.

Gerwyn Davies, the report author and public policy adviser at the CIPD, said:

The jobs market is desperately seeking good news, so this latest set of positive figures is very welcome. However, any short-term jobs recovery may not be sustained because of the zigzagging economic backdrop. News of a double-dip recession may cause some employers to reassess current staffing levels, especially while labour costs are rising and productivity is falling.

The current economic situation facing recruiters looks unusually difficult to read, which may lead to swings in confidence for the rest of the year. Overall, this may suggest greater volatility in the labour market during 2012 compared to the slow, gradual rise in unemployment recorded during the past year.

The continuing pressure on employers to cut costs is highlighted by the increase in employer intentions to offshore UK jobs to other parts of the world. However, the survey also highlights the dangers facing employers that focus too narrowly on costs at the expense of quality when offshoring, with around a quarter of employers now planning to relocate jobs back to the UK. Employers need to weigh up the wider impacts when considering offshoring decisions, such as the potential adverse impact on customer service or employer brand.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.