The continued steady creep of the unemployment figures towards the one million mark ñ up 7,700 over the last month and 106,300 over the last year ñ is disappointing, but should not be any cause for alarm, according to Dr John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD).
Dr Philpott said:
ìEmployers did not respond to last yearís slight slowing of the economy with job cuts. Fears over difficulties in recruiting again once they knew which way the wind was blowing played a large part in their hesitations. Now confidence is returning, employers are responding by trying to raise productivity amongst the existing workforce, and balancing new recruitment with redundancies elsewhere in the business.
ìThe result is a modest cyclical increase in unemployment, but no evidence of any underlying structural elements to the rising claimant count. These increases clearly create challenges for the new team at the Department of Work and Pensions, and they may want to take a particular look at the continued disproportionate impact of rising unemployment on female workers. However, overall they need not panic. If the Government keeps doing what it has been doing, all the evidence suggests unemployment will fall back again when the economy is back up to full speed.î
The quarterly CIPD/KPMG Labour Market Outlook, published this week, showed:
Employer confidence rising, with a 12% positive balance of employers expecting to be employing more staff in one yearís time (34%) over those expecting to be employing fewer (22%); the remaining 43% expect the total number of employees to be about the same in a yearís time.
Employers expecting to make redundancies in the next quarter, as follows:
Private sector services ñ 22%
Manufacturing and production ñ 27%
Voluntary sector ñ 28%
Public services ñ 34%
All employers ñ 27%
The figure of 27% for all employers expecting to make redundancies in the next quarter represents a notable increase ñ up from 25% in the last quarter and an average of 22% recorded during 2005. The figure of 34% of public sector employers expecting redundancies compares to 26% when the same question was asked this time last year.
Dr Philpott concluded:
ìDespite rising employer confidence, unemployment is likely to rise further before falling back as the economy recovers. Last yearís slump in UK productivity made this an inevitable employer reaction in the face of a steadily improving economy.î
Rise in unemployment disappointing ñ but presents no cause for panic
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