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Stuart Gentle Publisher at Onrec

Britain facing at least half a decade of serious jobs deficit, says CIPD

A report today from the Chartered Institute of Personnel and Development (CIPD) ñ released to coincide with the official UK unemployment figures ñ concludes that economic growth in the next few years has only to be slightly weaker than the Office for Budget Responsibilityís (OBR) current central forecast for the jobs outlook to look a lot worse than the coalition government hopes

A report today from the Chartered Institute of Personnel and Development (CIPD) – released to coincide with the official UK unemployment figures – concludes that economic growth in the next few years has only to be slightly weaker than the Office for Budget Responsibility’s (OBR) current central forecast for the jobs outlook to look a lot worse than the coalition government hopes.


Taking into consideration the different periods of jobs recovery in the past three decades, the CIPD predicts that the UK economy will need to grow by at least 2.5% per year between now and 2015 if the private sector is to create enough jobs to more than offset the employment impact of the impending squeeze in public spending. Growth even slightly less than this, between 2-2.5% per year, would seriously diminish overall jobs prospects.


The OBR’s current central economic and employment forecast shows the economy growing by well over 2.5% each year from 2012-2015. The total number of people in work starts to rise next year (2011) and continues to rise through to 2015, resulting in a net gain in employment of 1.3 million between 2010 and 2015. Unemployment meanwhile peaks at 8.1% in 2010 – close to 2.5 million on the Labour Force Survey ILO measure– and then declines to 6.1% (around 2 million). The CIPD, by contrast, on only slightly more pessimistic growth assumptions, forecasts the economy will shed 300,000 jobs by 2012 before renewed job creation boosts employment by 2015 to around 100,000 above the level in 2010 i.e. far short of the 1.3 million extra jobs the coalition government is hoping for. On the CIPD’s scenario the unemployment rate rises from 8.1% in 2010 to a peak of 9.5% (2.95 million) in 2012 before falling to 8% by 2015.


Dr John Philpott, Chief Economic Adviser at the CIPD comments:


“Against the backdrop of massive public sector job downsizing it doesn’t require anything like a double-dip recession to cause a serious prolonged jobs deficit, merely economic growth in the range of 2-2.5% per annum rather than the +2.5% (above trend) annual growth rates the OBR expects and the coalition government is hoping for.


“A slightly milder growth outcome – which many would consider a decent recovery in output given the various strong headwinds at present facing the economy – is easily as imaginable as the OBR’s central forecast and would leave unemployment still close to 2.5 million by 2015, meaning Britain faces at least half a decade of serious prolonged jobs deficit. So will, fiscal pain spur private sector jobs gain, as the coalition’s economic strategy assumes? Yes, but probably not very much and certainly not any time soon.”