Todayís official figures showing falling employment and a sharp rise in unemployment in the autumn of 2005 has driven the UKís underlying level of joblessness above 3.5 million and spells difficulty for the governmentís developing welfare to work agenda, says the CIPDís Chief Economist, Dr John Philpott:
Jobs, vacancies and redundancies - reduced hiring but not more firing
Philpott comments, ìWhile data for an individual quarter should always be treated with caution, todayís figures from the Office for National Statistics show clear signs of weaker activity in the labour market. The official figures are also in line with CIPD quarterly survey data which show employers becoming generally more pessimistic about the outlook for jobs but with this showing up in reduced hiring (i.e. fewer vacancies) rather than more firing (increased redundancies). The CIPD survey data in turn suggest that net job creation in 2006 will be only around half the level enjoyed last year.î
Pay pressure and interest rates
ìUnderlying wage pressure continues to moderate. With price inflation also starting to moderate ñ especially on the RPI measure which is the main focus of pay bargaining ñ and an influx of Eastern European workers boosting the supply of labour, this should ease any residual concern that the next move in interest rates will be upward. However, in the context of low productivity and still relatively strong growth in unit labour costs it is still too soon to conclude that interest rates should be cut next month.î
Underling joblessness ñ number of jobless people who want work rises above 3.5 Million
ìPerhaps the most depressing feature of the latest figures is the sharp rise in unemployment to above 1.5 million. When combined with the number of economically inactive jobless people who say that they want a job this raises the total number of people who want to work above 3.5 million. This, together with a seemingly inexorable rise in the number of people claiming Jobseekers Allowance, is a worrying backdrop to the governmentís forthcoming Green Paper on welfare reform. At a time of economic uncertainty and weaker recruitment, persuading employers to hire more people from the Incapacity Benefit roll could prove an uphill task.î
Employers reluctance to hire poses significant challenge to welfare reform agenda
Todayís official figures showing falling employment and a sharp rise in unemployment in the autumn of 2005 has driven the UKís underlying level of joblessness above 3.5 million and spells difficulty for the governmentís developing welfare to work agenda
