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Unemployment will not improve before 2016, says CIPD


Unemployment will peak at 2.7 million in mid-2012 but anaemic economic growth will lead to the same number of people being out of work in four year’s time as there are today, an HR body has warned.

The Chartered Institute for Personnel and Development has revised down its December 2010 forecast, in which it predicted that unemployment would top out at 9.5% in the middle of next year, to 8.7%. But it also said that it expected the joblessness total to hit 2.4 million in 2015, which is about where it stands today – a huge 800,000 higher than pre-recession levels.
The CIPD made its revision because it now anticipates that the economy will grow by 1.4% this year rather than by 1.6% as previously expected, and by 2% in 2012, down from 2.1%.
The organisation’s forecasts, outlined in its latest ‘Work Audit: The ‘jobs without growth’ conundrum’ report, remain more pessimistic than those provided by the Office for Budget Responsibility.
John Philpott, the CIPD’s chief economic adviser, indicated that, while the unemployment outlook may be “less bleak” than feared initially, the total amount of pain being inflicted on the labour market by anaemic economic growth was as severe as anticipated.
“Just as pay freezes and pay cuts protected jobs in the recession, the ongoing pay squeeze is helping our anaemic economy support employment. This is clearly preferable to a further very sharp rise in unemployment,” he said. “But a combination of falling real wages and the likelihood of unemployment well above the pre-recession level for several years to come represents an equivalent amount of labour market distress.”
The UK workforce was continuing to suffer an “implicit trade-off between jobs and real living standards”. As a result, if much weaker than expected economic growth made the trade-off even harder to bear, one could only hope that the coalition government would not “stick rigidly” to its existing ‘Plan A’ for fiscal deficit reduction, Philpott added.
Recent news of job losses in parts of the retail sector was particularly worrying because it highlighted that businesses, which were dependent on domestic consumer spending but employed relatively high numbers of people, were “entering much tougher times”, he said.