Unemployment set to soar in 2012 as private sector plans redundancies - CIPD

Published by Julien Tremblin for 24dash.com in Housing and also in Central Government

Unemployment in the UK could reach 2.85 million by the end of 2012 as the jobs market faces its most difficult quarter since the recession, the Chartered Institute of Personnel and Development (CIPD) warns.

The Labour Market Outlook survey, conducted by Yougov for the CIPD reveals that a rising number of private sector firms surveyed plan to make redundancies.

The study shows that the number of companies set to hire is now much lower than those that warn of cuts. The difference between the two has fallen to the lowest figure since the end of the last recession in 2009.

Nearly a third of private sector services firms intend to make redundancies this quarter, up from 24% in last quarter’s report.

It is explained by a lack of confidence in the private sector over the past three months when the economy shrank by 0.2% at the end of last year.

New employment is also set to stall in the manufacturing sector while employment intentions of firms in the services sector are set to fall. However, the decline in net employment is due more to an increased number of planned redundancies than it is to lower recruitment intentions.

Gerwyn Davies, Public Policy Adviser at the CIPD, said: “Whereas employers were in ‘wait and see’ mode three months ago, more private sector firms, particularly among private sector services firms, have decided to push the redundancy button in response to worsening economic news.

“With many employers telling us that access to finance has been a big factor in preventing them from creating new jobs over the last two years, and with net private sector hiring intentions now on the slide, the labour market case for government action to increase the availability of credit to businesses is stronger than ever.”

However, the outlook for the country’s economy is not as bad as expected, according to the latest forecast by the Confederation of British Industry. It expects the country’s economy to avoid a double dip recession, with GDP growing by 0.2 per cent in the first two quarters of the year.

The latest unemployment figures released in January showed that the number of people out of work grew by 118,000 in the three months to November, reaching a 17-year high of 2.68 million.