Half of all private businesses have axed staff in past year (From Business in Dorset)

Half of all private businesses have axed staff in past year

8:00am Thursday 18th March 2010

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Almost half of all private businesses have axed jobs in the past year, according to the International Business Report by Grant Thornton, the finance and business advisers.

The survey of 500 family and small to medium companies found that 49 per cent cut their workforces during 2009 compared to 24.7 per cent in the previous 12 months.

Firms in the South West, West and Wales saw the greatest reduction in headcount with 62.5 per cent implementing redundancies, compared to just 27 per cent the previous year.

David Campbell, head of privately held businesses and regional managing partner, said: “It’s still tough out there for private companies in the UK with many facing severe financial pressures and forced them to reduce headcount to help stay afloat. “With just under half of privately held businesses across the UK reducing staff numbers over the year, there is a clear weakness in the current labour market.

“The significant jump in the number of businesses that have reduced their headcount is very concerning, particularly if the trend continues. “A reduced headcount for businesses will no doubt have a knock-on effect on household incomes, slowing the country’s economic recovery. With growth of just 0.3 per cent in the fourth quarter of 2009, it is clear we have a long way to go.” Over the next 12 months, 44 per cent of private businesses do not plan to offer a pay rise but only five per cent say they will reduce the pay of their staff.

Thirty-nine per cent plan to increase salaries in line with inflation.

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