Streams of job losses now being announced by UK companies may just be the tip of the iceberg, accord...
Streams of job losses now being announced by UK companies may just be the tip of the iceberg, according to a new survey which is predicting over 90,000 jobs will go next year at the UK's top 1000 quoted companies.
Plimsoll Portfolio Analysis has conducted a review of the financial performance of every company in the top 1000 quoted firms, however, the research suggests at least 271 firms may be in serious financial distress and approximately 92,114 jobs will have to go within the next 12-18 months.
Findings reveal there are far more fundamental "business" reasons for these job losses that go back long before the last few months of economic uncertainty and the cost of employing people has been increasing at a greater rate over the last three years than the industry has been able to afford.
David Plimsoll, senior analyst at Plimsoll, says 77% of companies are spending more on salaries then they were three years ago yet just over half are making more profit. The cost of salaries as a function of sales has increased 5% and already a fifth of the companies are loss-making, so further pressure for job cuts will be brought on by next year's expected salary increases.
David Pattison, Senior Analyst of Plimsoll says: "There is little doubt that managers will use the current economic and market conditions to make decisions frankly they should have made 18 months ago. Some companies are under real constraints and many have hoping for an upturn in their industry which so far hasn't happened.
"But job losses don't always come out as job cuts because, as the 2,100 Prudential job losses shows, they can be transferred between companies through, and firms are therefore able to play down just how losses would go," continues Pattison.
According to the Plimsoll report, 31% of the companies included in the analysis could not absorb next year's salary increases, as they simply cannot afford to pay. Next year's average salaries are predicted to increase from £23,734 to £24,633 - a rise of 3.8%.
The analysis provides strong evidence that at least 74% of the industry will need to shed jobs in the next 12 months, and in many cases is able to make fairly precise predictions as to how many jobs will go at each firm, particularly among the largest firms.
To highlight just how detailed the analysis is, Pattison says the 1,300 jobs losses announced by ICI on November are just part of the 8,000 staff he predicts will go next year.
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