Nearly 2.7 million people, or one in 10 workers, have been made redundant in the last four years, costing UK employers a huge £28.6 billion.
According to a report by the Chartered Institute of Personnel and Development, the manufacturing and construction sectors accounted for about a third of the job losses, while public administration, education and health made up a further 11% of the total. The finance, insurance and real estate sector likewise accounted for 6% of all redundancies.
John Philpott, the CIPD’s chief economic adviser, said: “The cumulative cost of high unemployment and extensive underemployment has been massive, and without a more robust economic recovery will continue to rise. This further underlines the need for the Chancellor to set out a convincing strategy for growth and jobs in next week’s Budget.”
The cumulative loss of economic output resulting from the job losses amounts to between 6% and 10% of gross domestic product, the equivalent of between £87 billion and £135 billion, depending on different assumptions about the potential productivity of unemployed people and the extent of underemployment among people who are currently in work.
Interestingly, the report entitled ‘Counting the cost of the jobs recession’ also revealed that two thirds of people who are made redundant are paid an average of 28% less in their next job.
But they are not the only ones suffering a pay squeeze. High and rising unemployment has seen the proportion of employees receiving a pay increase falling from two thirds in 2008 to 45% last year. In cash terms, the average worker is £3,000 a year worse off than if pay had increased at pre-recession rates.
Higher inflation has also taken its toll. Private sector staff are on average earning 7% less in real terms now than they were in 2008 and public sector employees 4% less.
