Continuing job losses and falls in average earnings mean that 2011 is likely to prove another difficult year for HR professionals, with a ‘jobs-light’ recovery the best that can be hoped for, according to an HR body.
In its annual employment Barometer report for the year ahead, the Chartered Institute of Personnel and Development (CIPD) forecast that the number of people in work will drop by 200,000 as public sector employment is cut by 120,000 and the number employed by the private sector falls by 80,000, bringing total unemployment levels to 9% or 2.7 million. Average earnings are also expected to increase by an annual below inflation rate of 2%.
John Philpott, the CIPD’s chief economic advisor, said that 2011 would be a ‘fingers crossed’ year for both the economy and jobs and, even if more positive economic predictions put forward by the Office of Budget Responsibility and some employer surveys come to pass, the year ahead will be a “worse year for jobs than 2010”.
“If all goes well and the unexpectedly strong progress made in 2010 is sustained, the jobs market will be able to cope with the impact of the coalition government’s spending cuts and tax increases without any significant rise in unemployment,” he said. “However, things only have to turn out worse than expected in the wider economy for the jobs situation to weaken, which remains the CIPD’s central forecast.”
While either situation would not mean a return to the days of deep recession experienced in late 2008 and 2009, 2011 was still likely to feel like another year in the “economic doldrums” rather than the start of a recovery, Philpott added.
The best that could be hoped for was a ‘jobs-light’ rather than a ‘jobs-loss’ or ‘jobs-standstill’ recovery, but each of these possible scenarios was more likely than a continuation of the unexpected ‘job-lined’ recovery seen last year.
“Even if 2011 turns out to be a ‘jobs-light’ rather than ‘jobs-loss’ or ‘jobs-standstill’ year, the chances are that the build of any new private sector jobs will continue to reflect the experience of 2010, with part-time and temporary jobs in the majority,” Philpott said.
Moreover, most workers would feel a squeeze in their real living standards, with pay rises still relatively modest despite higher levels of taxation and higher prices being charged for many essential products and services.
“A ‘jobs-light/pay-tight year would itself make for another challenging year for employers and HR professionals. Add in the possibility of employment disputes and social discontent arising from the fiscal squeeze and public sector job cuts and it’s not hard to conclude that 2011 could prove to be a troubled year all round,” Philpott said.