Jobs market ‘slow, painful contraction’ predicted

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A report on the BBC News today reports that the UK labour market faces a “slow, painful contraction” with firms delaying recruitment of more staff, a key report suggests.

The Chartered Institute of Personnel and Development (CIPD) predicted the jobs market would worsen in the medium term amid global economic “turmoil”. Its quarterly survey of 1,000 employers found firms’ future hiring plans dwarfed by likely public sector losses.

A separate Barnardo’s report said jobless teenagers were being “ignored”. It found employers adopting a “wait and see” policy towards the economy. This involved reduced recruitment as well as fewer redundancies.

The number of UK employers planning to outsource work overseas or hire migrant workers had also fallen substantially in the last three months, the survey found.

The CIPD said the employment situation could worsen if the eurozone crisis thrust the world back into recession. CIPD public policy adviser Gerwyn Davies said: “The good news resulting from this lull in business activity is that fewer employers are looking to relocate abroad or make redundancies.

Graph showing unemployment in the UK between 1992 and 2011

“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. “There is no immediate sign of UK labour market conditions improving in the short or medium term.”

Monday’s report comes two days before the latest official unemployment figures are expected to show that jobless 16 to 24-year-olds total more than a million. Last month, the CIPD reported that the public sector had been shedding jobs at five times the rate previously predicted by the Office for Budget Responsibility (OBR).

The think tank called on the government to “call a halt to public sector job cuts while the economy and labour market remain in the current fragile condition”. But the Treasury said “risks in the global economy make it even more essential to stick to the government’s essential deficit reduction plan”. It insisted that private sector job creation would substantially outweigh the public sector cuts by 2015, according to the OBR forecast.

 

1 Comment

  1. Mandlakazi

    I agree entirely with the point riesad by Costas. Among the two priorities riesad it is the first one that needs the most urgent attention, that of refroming the judiciary. Without an efficiewnt court system all other reforms will become ineffective. The need for growth as a vehicle that would take Greece out of the current crisis is tautological. The debate about whether to remain or not in the euro zone is important, but it will remain academic unless there is a concerted effort (with the help of the EU in this case) to fight corruption. To do that most of the energy and effort has to be spent on reforming the judiciary. The rules of the game are such that whoever “screams the loudest” has better access to the media and the benefit of the judiciary system that is inherently incapable of ensuring a framework on which economic reforms can take place. Without contracts that are enforceable for all the parties involved, it will be futile to introduce reforms. The latter will be unravelled by the inability of the courts to enforce these contracts. For the new reality to become understood as something that requires new bold reforms to open up highly regulated markets and allow for productivity convergence between the public and private sectors, people need to be convinced that the rules of the game apply to all concerned. Until now as we speak, any attempt to bring individuals to justice who have either stolen public funds by not returning huge sums of collected VAT to the government, let alone the known income tax evaders, only results cases that are pushed into the future as these individuals are allowed to walk. The excuse here is that the judiciary is too overburdened to deal with these cases effectively and promptly. I am afraid that unless this government or any government deals with that aspect of the broken system, any reforms will never be implemented. To have any chance of success, let alone any chance to reach a climate for economic growth, there has to be a framework for enforcing contracts that is recognized and respected by all by imposing stiff penalties to all those who violate their side of the contract, whether public officials involved in corruption cases or entrepreneurs not returning the sums of VAT that they have collected on behalf of the government.One may counter, that Greece was growing until 2008 at reasonably healthy rates with the same judiciary and the same lack of contract enforceability system. Yet, even though we all recognize the reasons behind this consumption led growth engineered by easy credit, which led to the current crisis, it is the asymmetry between the upturn and downturn that obscured any need for reform. An expanding economic pie conferred benefits to all, even though these benefits also created “built in” destabilizers that now confront us all. I think, given the state of corruption as the result of lack of contract enforceability, the main reform that at this point that needs to take place, is the reform of the judiciary, for anything else to have any chance of success.

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