The Annual Barometer report published by the CIPD last week predicts the number of people in employment in the UK to fall by 120,000 this year despite a further pay squeeze and a continued ‘productivity pause’.
Unemployment figures are estimated to reach 2.85 million (8.8%) by the end of 2012 — the highest number of unemployed since 1994 and the highest unemployment rate since 1995 when it was 8.8%. This would be the first time that unemployment will have been this high and rising since 1991, during the country’s last recession.
It is thought that Government initiatives targeted at young unemployed people and long-term welfare benefit recipients will reduce headline young unemployment to 0.92 million and contain long-term unemployment below 0.9 million, but have no effect on overall unemployment numbers for 2012.
The number of unemployed is forecasted to rise further still at the beginning of 2013, to a peak of 2.9 million, before falling back to a rate of 8.8% by the end of 2013.
The Annual Barometer also anticipates the annual rate of economic growth to remain below 2% for the next 2 years. Along with returning to faster growth in productivity, this will moderate the pace of jobs recovery and prevent unemployment from falling below 2.5 before 2015.
If the CIPD forecast is accurate, there is still a long stretch ahead before unemployment figures begin to look confidently positive.
CIPD Chief Economic Adviser Dr John Philpott has commented on the Barometer predictions:
“As long as there is a relatively benign outcome to the eurozone crisis we expect the 2012 jobs recession to be milder than that suffered in 2008-9. But unemployment in the coming year will be rising from a much higher starting point, so the UK jobs market in 2012 will be weaker than at any time since the recession of the early 1990s. The combination of worsening job shortages for people without work, mounting job insecurity and a further fall in real earnings for those in work may test the resilience and resolve of the UK workforce far more than it did in the recession of 2008-9, and foster a tetchy ‘passive-aggressive’ mood in many workplaces that could prove very hard to manage.
“The forecast is not as gloomy as it might be in a near stagnant economy since CIPD surveys of employers as yet detect no sign of an imminent widespread surge in private sector redundancies, though that remains a serious risk given the fragile state of business confidence. However, at some point private sector businesses will need to raise labour productivity back to more normal levels. If, as we currently forecast, the productivity pause isn’t brought to an end by a much higher rate of redundancies in 2012, employers will inevitably be slow to recruit staff when the economy eventually picks up. The flipside of a mild jobs recession in 2012 is a mild jobs recovery in subsequent years and a correspondingly longer wait until unemployment starts to fall.”