Unemployment will keep rising in 2012 and will hit 8.8 per cent by the end of the year, according to the Chartered Institute of Personnel and Development.
In its Annual Barometer report, the institute forecasted that the number of people in work in the UK will fall by 120,000 in 2012, with unemployment rising to 2.85 million.
It says public sector job cuts will account for the lion’s share of job losses with private sector job creation failing to offset them. GDP growth is forecast to be barely positive – just 0.4 per cent over the year – but the figures would represent a ‘mild’ rather than a ‘major’ jobs recession, says the institute.
“As long as there is a relatively benign outcome to the eurozone crisis we expect the 2012 jobs recession to be milder than that suffered in 2008-9,” says the CIPD’s chief economist John Philpott. “But unemployment in the coming year will be rising from a much higher starting point, so the UK jobs market in 2012 will be weaker than at any time since the recession of the early 1990s. The combination of worsening job shortages for people without work, mounting job insecurity and a further fall in real earnings for those in work may test the resilience and resolve of the UK workforce far more than it did in the recession of 2008-9, and foster a tetchy ‘passive-aggressive’ mood in many workplaces that could prove very hard to manage.”
The good news, says the CIPD, is that there is no imminent sign of a renewed surge in private sector redundancies, although Philpott alludes to a continued ‘productivity pause’ which needs to be addressed by businesses.
“At some point private sector businesses will need to raise labour productivity back to more normal levels. If, as we currently forecast, the productivity pause isn’t brought to an end by a much higher rate of redundancies in 2012, employers will inevitably be slow to recruit staff when the economy eventually picks up. The flipside of a mild jobs recession in 2012 is a mild jobs recovery in subsequent years and a correspondingly longer wait until unemployment starts to fall.”