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Road to recovery hinges on UK's flexible labour market, says CIPD Chief Executive

  6th December 2012      
 CIPD, Company News

In response to the Chancellor’s Autumn Statement, Peter Cheese, Chief Executive of the Chartered Institute of Personnel and Development (CIPD), said: “Today’s statement underlines that the road to recovery hinges on the continued ability of the UK’s flexible labour market to support employment growth in tough economic conditions.

“It also depends on the efforts of employers to improve employee engagement, innovation and productivity against a backdrop of prolonged fiscal consolidation and a squeeze on business and household finances. Tough, volatile and uncertain conditions are the new normal – and the key to boosting national productivity and competitiveness lies in building the people management capabilities and skills needed to ensure firms innovate, create and respond with agility.”

Mark Beatson, CIPD Chief Economist, added: “The forecasts released by the independent Office for Budget Responsibility show that the labour market has out-performed expectations in maintaining employment given the depth of the recession. Indeed, 2012 will end with higher employment and lower unemployment than forecast in March even though the economy has not grown at all over the year.

“Growth will be subdued in 2013 and lower than previously expected for the foreseeable future. Even if the uncertainties over the US budget are resolved speedily, those surrounding the Euro Zone will remain. Most economists would agree with the Chancellor’s decision to spare the economy further pain by rolling forward the timetable for removing the structural deficit and abandoning the target of reducing the net debt by 2014-15.

“Long-term unemployment may continue to rise for a while and youth unemployment needs to fall so it will be important for the labour market to continue delivering jobs growth. Meanwhile, for those in work, 2013 will be the fourth year where average earnings do not keep pace with inflation.”

Peter Cheese continued: “What the last year has shown is that employers are learning the lessons of the past and are investing in the skills of their people in order to retain the capability to innovate and compete.

“Government policy on education reform, employer ownership of skills, and on improving the vocational education system will support the development of more high skills, high value workplaces – and we particularly welcome the extra money for the Employer Ownership of Skills pilot – taking the total pot to £340 million.

“This area of policy has much greater capacity to deliver what employers need than the government’s desire to further deregulate our already flexible labour market, for example by pushing ahead with their ‘shares for employment rights’ agenda. In common with the widespread sentiment amongst employers, we remain clear that this is at best a niche interest idea, and at worst undermines the kind of high trust, high engagement workplaces that will truly leverage higher skills to deliver better business performance”.

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