Jobs prospects look grim for several years, says CIPD
Share
The labour market is several years from returning to proper health, according to the latest report on UK employment prospects.
Less demand for labour and no plans among employers to increase staff pay point to a weak jobs market in the UK for several years.
But the latest Labour Market Outlook survey from the Chartered Institute of Personnel and Development and KPMG shows that although the long-term jobs outlook is bleak employment prospects will decline less slowly in Q4 than at any other time since the UK went into recession in spring 2008.
The survey of over 700 employers recorded a net balance of -3% of employers expecting to employ more staff in the three months to December compared to -19% in the previous survey.
The CIPD and KPMG say this is largely due to a fall in the proportion of employers planning to make staff redundant compared with earlier in the year.
But the survey also found that reduced working hours and modest pay rises represent a further symptom of a weak overall demand for labour.
Expectations about the next basic pay increase has fallen to a record low of 1.5%, down from 1.7% three months ago.
The survey shows that around a sixth of organisations have put in place reduced working hours’ arrangements for at least some of their staff during the past year with a similar proportion saying that they will be asking staff to work shorter hours in the year to September 2010.
Gerwyn Davies, public policy adviser at the CIPD, says: “The UK jobs market remains flat on its back.
“Things aren’t anywhere near bad as they were earlier in the year when redundancies spread through the economy like a virus.
“And with things looking up in one or two sectors there is mounting hope that the ongoing gradual decline in job prospects might run its course next year before unemployment reaches 3 million.”
But he adds: “The patient remains seriously weak, won’t recover for several years even if a return to robust economic growth provides the necessary tonic and could easily relapse if the recovery is as fragile and anaemic as many economists fear.”
Andrew Smith, chief economist at KPMG, says: “This recession has come through not only in job losses but also in greater labour market flexibility - reduced working hours, pay freezes and outright wage cuts.
“The decline in average pay settlements, expected to fall to a record low of 1.5%, suggests that underlying inflation pressures continue to weaken while the risk of deflation is rising - justifying the Monetary Policy Committee’s decision to extend its quantitative easing programme by £25bn.”
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
