Economists warn on job losses

The Guardian reports that, “the Chartered Institute of Personnel and Development, says unemployment will rise to a peak of 2.95 million in the second half of 2012 and remain near that level until 2015, the entire period of the coalition government.” The CIPD suggests that a majority of the staff likely to lose their jobs will be women in part-time work or on low wages, who make up a large proportion of the public sector workforce. TUC general secretary, Brendan Barber, said: “The risk of a double-dip recession across the UK as a whole is growing – and is now a near certainty in those regions that were worst hit by the recession. The net result could well be that the deficit is hardly dented as tax receipts fall and benefit spending grows.” Covering the same report, The Times reports that, “725,000 public sector jobs face axe, economist warns”. The Financial Times outlines that, “Until recently the institute had estimated that unemployment, currently 2.51m or 8 per cent of the workforce, would peak at just over 2.65m this year. Now it forecasts the total will rise to 2.95m in the second half of 2012 and remain close to that until 2015.”

John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, has revised up his unemployment forecast as a result of the emphasis on spending cuts rather than tax rises.

“Although tough fiscal medicine is unavoidable and may boost the UK’s long-run economic growth and job prospects, reliance on cuts in public spending rather than tax increases as the primary means of cutting the deficit makes the short-term outlook especially bleak for those individuals and communities already suffering the greatest hardship in society,” Mr Philpott will tell a forum in London.

Given what is known historically about how the social burden of unemployment and stagnant average income growth is shared across communities, he says “the prospects for those already suffering the most disadvantage seem particularly bleak”.

That will present “a major challenge to a government that aims to reduce the deficit while also alleviating poverty, enhancing social mobility and mending a broken society”.

The CIPD’s earlier forecast for public sector job losses was based on a roughly 60:40 split between spending cuts and tax rises, but has been revised upwards because the split looks to be closer to 80:20.

“This time around deficit reduction will slow an already anaemic recovery and in the short-run be bad for jobs in both the private and public sectors, stalling any hopes of a sustained improvement in job prospects this year and causing the labour market to relapse next year.”

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