CIPD Press releases - CIPD jobs market updates

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UK jobs market figures show impact of first phase of credit crunch, but second phase impact will be harder still - 12 November 2008

UK jobs market being crunched 'woeful winter to follow awful autumn' - 15 October 2008

Worrying surge in redundancy enquiries strengthens case for interest rate cut - 08 October 2008

Slump in productivity and rising unit wage costs spells bad news for jobs - 1 October 2008

CIPD jobs market update - Rise in Bank interest rate would trigger autumn jobs cull - 09 July 2008

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UK jobs market figures show impact of first phase of credit crunch, but second phase impact will be harder still

12 November 2008

Official labour market figures published earlier today by the Office for National Statistics (ONS) provide further evidence of the strength of the lagged effect of the first phase of the credit crunch. But John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD) says the shockwave from the second phase of the crunch this autumn is yet to show up fully and will be stronger still.

Dr Philpott comments: "The UK just waved goodbye to a decade long flirtation with full employment. Today's jobs figures would be considered dire if it were not for the fact that last month's figures were even worse. But these figures, which take unemployment to an 11 year high, are bad enough and will sadly be followed by further bad news in the coming months.

"We saw the first phase of the credit crunch emerge in autumn 2007 but it has taken time for the shockwave to hit the jobs market. Worryingly, just as the impact was being felt, this autumn saw the second phase detonate with even greater negative effect on employer and consumer confidence. The shockwave from this second phase lies ahead and is likely to be stronger still.

"Today's figures show the extent of the underlying deterioration in labour market conditions, with vacancies down and redundancies up as well as evidence of falling employment and rising unemployment. Of particular concern is that unemployment is now being driven up by a combination of people joining the dole queue and fewer leaving - demonstrating that firms are sharply cutting back on recruitment as well as sending more people away with their P45s.

More people in work are feeling insecure, and more people already without work are experiencing the pain of long-term joblessness. As a result today's separate good news from the DWP on numbers of people leaving welfare benefits in the year to May could prove to be short-lived.

"All but a handful of regions suffered a fall in employment in the latest quarter while all have seen a rise in unemployment. Employment has fallen for all age groups except those above state pension age for whom the strong employment growth of recent times has slowed to a near standstill.

"Claimant unemployment above 1 million by Christmas is now a dead cert, as is unemployment at least above 2.25 million on the government's preferred survey based measure by next spring at the latest. It is still the CIPD's expectation that, depressing as today's news is, the jobless total will eventually peak at somewhat below the near 3 million mark reached in the 1990s recession. But too many more sets of figures like today's, plus the likelihood of many more job cuts to come, and even relative optimism will start to evaporate.

"In view of the worsening jobs crisis it is time for policy makers to 'throw everything but the kitchen sink' at the problem. We need more coordinated international policy action and further cuts in interest rates. We also need UK politicians to stop quibbling over which party has the best tax and spending plans and agree on a package of measures combining elements of cuts in income tax, reductions in taxes on spending, and financial incentives to encourage employers to recruit and retain staff."

Source: CIPD**

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UK jobs market being crunched 'woeful winter to follow awful autumn'

15 October 2008

Official labour market figures published earlier today by the Office for National Statistics (ONS) are far worse than expected. John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD), says the winter will be woeful for jobs and that the Government's hard earned credibility for restoring full employment could be blown away in a matter of months:

Dr Philpott commented as follows:

"It's been an awful autumn so far for the economy and the jobs market is now being crunched. Today's official figures are dire - the 122,000 quarterly drop in the number of people in work and the 164,000 quarterly rise in unemployment underline the severity of the emerging jobs crisis. With a recession now almost certainly already underway we face the prospect of a woeful winter. If today's figures are a guide to what happens next, claimant unemployment will probably top 1 million by Christmas with unemployment on the government's preferred survey based measure heading for 2.25 million by next Easter at the latest. And that's likely to be the best we can hope for.

"According to the latest official figures, vacancies have fallen and more people are being made redundant. The number of people in full-time employment has fallen particularly sharply. Overall, young people aged 35 and under have borne the brunt of the most recent fall in employment. But there are signs that older people are starting to leave the jobs market too as employment prospects weaken.

"A real pay squeeze is adding to the jobs crunch. Pay rises have fallen back just as price inflation has surged. The combination of mounting job losses, heightened job insecurity and shrinking real incomes means people are hardly likely to be rushing out to spend - for the time being intensifying recessionary pressure in the economy. This adds weight to the case for further substantial cuts in interest rates even though the rate of inflation is well above the Government's target.

"The worsening jobs crunch presents the Government with a stiff test to its hard earned record on jobs. A decade of building credibility for restoring full employment could be blown away in a matter of months. To prevent this, ministers should consider measures to help people at risk of leaving work for welfare as well as beefing up measures targeted at those already jobless. In this context, yesterday's joint DWP and DIUS announcement of an extra £100 million to help retrain and develop the skills of people made redundant or already looking for work is welcome. It is essential for the future recovery prospects of businesses and the UK economy that skills development does not come to a halt."

Source: CIPD**

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Worrying surge in redundancy enquiries strengthens case for interest rate cut

08 October 2008

Figures released today by the Chartered Institute of Personnel and Development (CIPD) indicate that an increasing number of employers are preparing to make staff redundant.

.Analysis of calls to the CIPD's legal helpline - which deals with enquiries from human resources managers - shows a 28% monthly increase in September in enquiries related to redundancy. Of 2051 calls to the helpline line last month 303 were related to redundancy - up from 236 in August and more than double the 142 calls recorded in September 2007. In the past year the proportion of calls to the helpline each month related to redundancy has increased from 9.7% to 14.8%.

The CIPD's Chief Economist, Dr John Philpott, says that the helpline statistics are another worrying sign that the credit crunch is set to take a bigger toll on jobs:

"A sombre September awash with bad economic news has caused more employers to take steps toward cutting staff levels. A significant decline in the demand for labour this winter now seems clear, which strengthens the case for the Bank of England's Monetary Policy Committee not only to cut interest rates tomorrow at the end of its monthly meeting but to cut big."

Source: CIPD**

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1 October 2008

Slump in productivity and rising unit wage costs spells bad news for jobs

Figures on UK productivity and unit wage costs published today by the Office for National Statistics (ONS) underline the deterioration in the economy and point to mounting pressure on employers to cut jobs, says John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD).

Dr Philpott comments: Productivity measured by output per worker has slumped. Each UK worker is now producing less than in the last sharp productivity downturn in 2005 when employers hoarded staff during what was a short and mild economic slowdown. At that time, with little inflationary pressure in the economy, employers were prepared to absorb rising unit wage costs and take a short-run hit on profits rather than cut jobs. But this time around, as the economy moves into recession and with non-labour costs like fuel and energy and borrowing charges high, many employers will be feeling the squeeze.

"Today's figures indicate that employers have responded by working staff harder with the result that output per hour improved slightly in the second quarter, although still well below what was being achieved in 2006 and 2007. Modest pay rises have also helped contain what would otherwise have been an even sharper rise in unit wage costs. However, scope for adjusting to the emerging economic downturn without cutting jobs is becoming increasingly limited.

"Even without the impact of the latest global financial market turmoil this makes a late autumn and winter shake-out of jobs all the more likely - and means that the Bank of England should make an immediate and substantial cut in interest rates."

Source: CIPD**

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09 July 2008

CIPD jobs market update - Rise in Bank interest rate would trigger autumn jobs cull.

In its mid-year update on the state of the UK jobs market the Chartered Institute of Personnel and Development (CIPD) finds the outlook for employment and pay to be in line with its start of year forecast but warns that a rise in interest rates would put a brake on recruitment and risks leading to an avalanche of redundancies.

Commenting ahead of the Bank of England's latest interest rate decision the CIPD's Chief Economist John Philpott said:

"Last December the CIPD forecast that 2008 would be the UK's worst year for jobs in a decade and that pay pressure would remain subdued despite the impact of rising fuel and food prices. We predicted some growth in employment - though only a third of that enjoyed in 2006 and 2007 and not enough to present a rise in unemployment - resulting from a squeeze on recruitment and a limited increase in redundancies confined to certain sectors.

"Although this forecast was initially considered pessimistic it is in line with labour market outcomes and if anything now looks relatively optimistic in comparison with the prevailing mood of economic doom and gloom, widespread reports of a significant slowdown in recruitment and a growing number of large scale redundancies

"However, our initial forecast was based on the assumption that UK interest rates would fall in the second half of 2008. This now seems unlikely, increasing the risk that the outlook for employment and unemployment will be worse than originally expected. Moreover, the CIPD now also expects limited if any growth in employment in 2009 with the number of people unemployed and in receipt of Jobseekers' Allowance rising back above 1 million.

"This more subdued forecast assumes that Bank interest rate remains unchanged throughout the remainder of 2008. A rate cut or cuts would increase our optimism but a rate hike would be a cause of major concern. Our indications are that an increasing number of employers are in 'wait and see' mode and have made contingency plans for redundancies if the economic situation were to deteriorate in the coming months.

"Many employers have their finger on the redundancy trigger. They are not yet ready to start firing but a rise in interest rates would probably be enough to cause a substantial jobs cull come the autumn. And once this starts the economy could witness a sudden 'avalanche' of redundancies." Back to top

Source: CIPD**

**The Chartered Institute of Personnel and Development (CIPD) is the United Kingdom's leading professional body for those involved in the management and development. They have 130,000 individual members and their objectives are to lead in the development and promotion of good practice in the field of the management and development of people, for application both by professional members and by their organisational colleagues.

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