The UK jobs market faces a “slow, painful contraction” as businesses delay hiring new workers, according to the Chartered Institute of Personnel and Development (CIPD).
A poll of more than 1,000 employers by the CIPD suggests unemployment could worsen in the medium term due to the ongoing turmoil on the eurozone and wider global stages.
Employers appear to be adopting a “wait and see” approach to the economy, as they plan to take on fewer workers in the months ahead. However, they also intend to make fewer redundancies.
Gerwyn Davies, public policy adviser at the CIPD, says there is “no immediate sign” of a short- or medium-term improvement in the UK labour market.
“The good news resulting from this lull in business activity is that fewer employers are looking to relocate abroad or make redundancies,” Davies says.
“The downside is that recruitment intentions are falling, which will make further rises in unemployment therefore seem inevitable given that public sector job losses are outpacing the predictions made by the Office for Budget Responsibility.”
Last week, the Recruitment and Employment Confederation/KPMG Report on Jobs said the number of people placed into permanent roles by the country’s recruitment consultants fell for the first time in more than two years.
“Anecdotal evidence suggested the drop in placements reflected hesitancy among clients regarding the economic outlook,” according to the report.
The UK’s unemployment rate is 8.1%, according to the latest data from the Office for National Statistics. In the 16 to 24-year-old age group, this jumps to 21.3%.
Peter Lees, manager of the £96m F&C UK Alpha fund, told a recent roundtable that the high rate of youth unemployment places the UK at risk of creating a “lost generation”.
However, Lees argued that the country is “fortunate” that it has not been hit with the youth unemployment rates being suffered by European neighbours such as Spain.
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