The UK is likely to face a serious shortage of jobs lasting at least for the next five years, even if the country escapes a double-dip recession, a leading professional body warns on Wednesday.
In a report published to coincide with the latest unemployment figures, the Chartered Institute of Personnel and Development says economic growth has to be only slightly weaker than the Office for Budget Responsibility’s central forecast for the jobs outlook to look a lot worse than the coalition hopes.
“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 cent per annum – rather than the +2.5 per cent [above trend] annual growth rates the OBR expects,” said John Philpott of the CIPD.
“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 2.5m by 2015, meaning Britain faces at least half a decade of serious, prolonged jobs deficit.”
Economists expect Wednesday’s figures to show the headline rate of unemployment stable at 7.9 per cent of the workforce and a drop of 30,000 in the number of people claiming jobseekers’ allowance, according to a Reuters poll.
Opinions are divided, however, about whether unemployment is near its peak or whether will rise when public sector job losses start to mount in a few months’ time.
The OBR’s central forecast is for economic growth of 1.2 per cent this year and 2.3 per cent next, rising to 2.8 per cent in 2012 and staying high for three years.
It expects a net gain in employment of 1.3m between 2010 and 2015, with jobs growth in the private sector more than offsetting 600,000 state sector job losses.
The OBR predicts unemployment will peak at 8.1 per cent this year, close to 2.5m, and decline to 6.1 per cent, or about 2m, by 2015.
The CIPD forecasts, on slightly more pessimistic growth assumptions, that the economy will shed 300,000 jobs by 2012 before renewed job creation boosts employment by 2015 to about 100,000 above the current level.
It expects unemployment to rise to a peak of 9.5 per cent, or 2.95m, in 2012 before falling to 8 per cent by 2015.
The Trades Union Congress said job vacancies were down almost a third on pre-recession levels, undermining the government’s hope that private sector jobs would replace those lost through spending cuts.
It said building had experienced the biggest fall in vacancies, down 64 per cent since April 2008, followed by science with 49 per cent, manufacturing with 46 per cent and transport with 33 per cent.
Brendan Barber, TUC general secretary, said: “At best we can expect a jobless recovery and at worst a double-dip increase in the dole queues.”
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