Despite positive headline labour market figures, the overall picture is of a “fragile, weak recovery” that could be tipped into reverse as public sector job cuts really start to bite, experts have warned.
According to official figures from the Office for National Statistics, unemployment fell significantly by 88,000 to 2.43 million or 7.7% in the three months to April, the biggest drop since the summer of 2000.
Total employment increased by 80,000, with the number of private sector workers increasing by 104,000 compared with a 24,000 fall in the public sector – although the latter figure included significant numbers of temporary jobs created in relation to the Census.
On the other hand, the number of people claiming Jobseekers’ Allowance rose by almost 20,000 and is now just below 1.5 million.
The total number of available job vacancies also dropped again by 39,000. The current country-wide total of 456,000 unfilled vacancies is now back at late summer 2010 levels, a situation that suggests “underlying labour demand may be falling again”, according to the Institute for Employment Studies.
Finally, even though the number of individuals in employment rose, the total number of weekly hours worked dropped by 14.5 million. This meant that levels here almost returned to those recorded in late 2009 and early 2010.
Nigel Meager, the Institute’s director, said: “The next few months will be critical for the UK labour market. During this period, the effects of public spending cuts will start to show up in a major way in the employment figures.”
But it appeared that the jury was still out on whether the private sector could generate enough jobs to compensate for such cuts into the future. “The overall picture suggests a fragile, weak recovery in the labour market, which could easily be tipped into reverse as the public sector job loss continues and intensifies,” Meager warned.
John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, was likewise concerned about the scale of job losses in the public sector. Excluding the nationalised banks, public sector employment fell by 135,000 in the financial year 2010/11, many times higher than predicted by the Office for Budget Responsibility.
“If the OBR forecasts for the period to 2015 as a whole prove similarly optimistic, the impact of public sector job cuts on overall employment could be significantly worse than the government currently expects,” Philpott said.
