Employers keep on more staff than needed but warn of lay-offs if the economy does not return to growth

A new study has found that one in three employers currently keep on more staff than necessary, in a bid to help them maintain their skills base and ensure they are able to meet demand when the economy returns to growth.

The survey of 1,000 employers by the Chartered Institute of Personnel and Development (CIPD) also found that most bosses expect wages to rise, with public sector organisations predicting a 0.2% pay rise and private companies expecting a 2.5% increase.

The CIPD report was released ahead of the latest unemployment figures, which have been falling over the past few months and showed another drop of 46,000 to a total of 2.56 million between April and June.

However, the survey also found that nearly two-thirds of employers could be forced to cut down their workforce if the economic situation does not improve in the next 12 months.

The authors of the study concluded that UK employers are facing a "make or break" moment, as the jobs market shows signs of recovery but the country continues to be stuck in a double dip recession following three consecutive quarters of negative growth.

Gerwyn Davies of the CIPD commented: "Recent falls in unemployment suggest that the labour market is on a sound footing, but a closer examination reveals that many employers are holding on to more staff than is required by the current level of demand in order to retain their skills.

"This is a make or break moment for employers - unless growth picks up many will find that they cannot hold on to some workers any longer."

He added: "The tenacity with which employers are hanging on to skilled labour is a reflection of the high value they place on it and the damage they fear will be done to their businesses if they are forced to start making more redundancies.

"The spare capacity implied by the research suggests that firms are ready to increase their output quickly if demand grows, but there is only so long they can hold out for growth.

"The labour market is approaching a game-changing phase - one that could shape Britain's capacity to compete for a generation."

Copyright Press Association 2012