Job losses predicted to continue into the recovery

Employers look set to shed more jobs in the final quarter of the year, suggesting that the UK labour market will remain under pressure even as the economy emerges from the downturn.

According to the latest monthly Labour Market Outlook report from the Chartered Institute of Personnel and Development (CIPD), job losses in the last three months of the year will rise, although at their slowest rate since the middle of 2008.

The survey of more 700 employers revealed that there is a balance of minus 3 per cent between those firms planning to take on staff and those intending to reduce their workforces.

The figures are a significant improvement on the minus 19 per cent and the minus 10 per cent recorded in the second and third quarters of the year respectively, but they also indicate that the labour market is still in decline.

One in six employers have cut the working hours of some of their staff over the last year, while a similar number reported plans to reduce working time over the next 12 months.

Wage increases are set to remain weak too. The survey found that the next average wage rise predicted by employers is 1.5 per cent, down from the 1.7 per cent of three months ago.

Gerwyn Davies, the CIPD’s public policy adviser, said: “The UK jobs market remains flat on its back. Things aren’t anywhere near as bad as they were earlier in the year when redundancies spread through the economy like a virus. And with things looking up in one or two sectors there is mounting hope that the ongoing gradual decline in job prospects might run its course next year before unemployment reaches 3 million."

However, Mr Davies added that the economy remains “seriously weak and won’t recover for several years – even if a return to robust economic growth provides the necessary tonic – and could easily relapse if the recovery is as fragile and anaemic as many economists fear”.