Although unemployment fell slightly last quarter due to a record increase in the number of part-time workers, a leading HR body has warned that the UK faces five long years of a serious jobs deficit.
According to the Office for National Statistics, the number of people in employment fell by 34,000 to 2.47 million in the three months to May, with those claiming JobSeeker’s Allowance dropping by 20,800 or 4.5% to 1.46 million in June. This meant that the jobless rate decreased to 7.8%, the lowest since January and 0.1% below forecasts.
By the same token, the number of people in work rose by 160,000 during the last quarter – the biggest rise since August 2006 – due to a 148,000 or 27% rise in the number of part-time workers, the highest since records began in 1992. Recruitment to full-time positions rose by a mere 12,000, however.
Wage growth, meanwhile, eased sharply during the quarter, with average weekly earnings growth dropping by 2.7% from 4.1% in the three months to April.
Brendan Barber, the general secretary of the Trades Union Congress (TUC), described the unemployment data as “flat” and “disappointing”. “The falls in headline and youth unemployment are pretty small, but the rises in long-term unemployment and involuntary part-time and temporary work show just how fragile the economy remains. There is still only one vacancy for every five jobless people,” he said.
According to TUC research published today, the number of vacancies across the economy as a whole were down 29% to 492,000 in May this year compared with 692,00 in April 2008.
The number of redundancies in the first quarter of 2010 also increased by 46% to 177,000 compared with 121,000 in the second quarter of 2008, when the UK first went into recession. The construction, science and manufacturing sectors were the worst hit in both areas.
But the Chartered Institute of Personnel and Development (CIPD) warned that economic growth over the next few years needed to be only slightly weaker than forecast by the coalition government’s new Office for Budget Responsibility for the jobs outlook to be “a lot worse” than predicted.
The OBR claims that the economy will grow by well over 2.5% each year between 2012 and 2015 and the total number of people in work will start to rise next year, resulting in a net gain in employment of 1.3 million between 2010 and 2015. This should result in unemployment peaking at 8.1% in 2010, before declining to about 6.1%, the equivalent of two million people.
But the CIPD indicated that even slightly lower economic growth of between two and 2.5% could have a big impact on job creation. If such lower growth rates come to pass, it believes that 300,000 jobs will be lost by 2012 and only 100,000 new jobs would be created above 2010 levels by 2015.
Such figures would fall “far short” of the 1.3 million hoped for by the coalition government and would mean that unemployment rates would hit a peak of 9.5% to 2.95 million by 2012, before falling back to 8% in 2015.
John Philpott, the CIPD’s chief economic advisor, said: “Against the backdrop of a 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 annum rather than the 2.5%+ (above trend) annual growth rates the OBR expects and the coalition government is hoping for.”
This meant that while “fiscal pain” would spur some job creation in the private sector, it will probably be “not very much and certainly not any time soon,” he added.
