In its annual employment Barometer report for 2011, published today, the Chartered Institute of Personnel and Development (CIPD) forecasts that the coming year will be worse for jobs than 2010, with a small rise in unemployment and a further period of below inflation pay rises the best that can realistically be expected.
The CIPD’s central economic forecast is that the number of people in work will fall by 200,000 in 2011, with public sector employment falling by 120,000 and private sector employment falling by 80,000. Unemployment is forecast to rise to 9% (2.7 million), while average earnings are expected to increase by an annual (below inflation) rate of 2%. The CIPD accepts as plausible the possibility of more optimistic scenarios – in line with the Office for Budget Responsibility’s (OBR) current central economic forecast and that indicated by employer surveys – but notes that even these suggest 2011 will overall be a worse year for jobs than 2010.
Commenting on the forecast, Dr John Philpott, Chief Economic Adviser to the CIPD, said: “2011 will be a ‘fingers crossed’ year for the economy and jobs. If all goes well and the unexpectedly strong progress made in 2010 is sustained, the jobs market will be able to cope with the impact of the coalition government's spending cuts and tax increases without any significant rise in unemployment. However, things only have to turn out a bit worse than expected in the wider economy for the jobs situation to weaken, which remains the CIPD's central forecast. Either way, this doesn't mean that we are facing a return to the dire recession days of late 2008 and 2009, but nonetheless 2011 will probably feel like another year in the economic doldrums, rather than the start of a return to prosperity.”
The CIPD sets out three recovery scenarios for 2011 – a ‘jobs light recovery’, a ‘jobs loss recovery’, and a ‘jobs standstill recovery’ – each of which is considered more likely than a continuation of the unexpectedly ‘jobs lined recovery’ witnessed in 2010.
Dr Philpott continues: “Even if 2011 turns out to be a ‘jobs-light’, rather than ‘jobs-loss’ or ‘jobs standstill’ year, the chances are that the bulk of any new private sector jobs will continue to reflect the experience of 2010, with part-time and temporary jobs in the majority. Moreover, most workers will feel a squeeze in their real living standards, with pay rises still relatively modest against a backdrop of higher prices for many essential products and services and higher taxes. A ‘Jobs-light/pay-tight’ year would itself make for another challenging year for employers and HR professionals. Add in the possibility of employment disputes and social discontent arising from the fiscal squeeze and public sector job cuts, and it's not hard to conclude that 2011 could prove to be a troubled year all round.”
