Outlook for British unemployment worsens

The institute surveyed 500 employers over their hiring plans and its conclusion was that the jobs market would continue to worsen over he next quarter. Its shocking findings included evidence that the downturn is beginning to hit the public sector, after so far being more obvious in the private sector.

More employers are planning to cut back than hire staff and a quarter of all the organisations contacted are considering pay freezes. “Net employment intentions”, the number of employers planning redundancies set against those planning to hire, has fallen to a record low of -19, 10 points lower than in the last quarter.

But it is the problems in the public sector which catch the eye. Employers there are forecasting a rise in unemployment, with local government and charities bearing the brunt of the problems. In fact, according to the Local Government Association, councils have already cut an estimated 7,000 jobs over the past six months.

John Philpott, chief economist at the Chartered Institute of Personnel and Development, predicted further struggles ahead, saying: "While I expect private sector net employment intentions to start to improve in the near future, the current figures for the public sector will look like a walk in the park as the drive to balance the books gets under way in earnest."

WHAT THEY ARE SAYING
Andrew Smith, chief economist at KPMG, in the Independent: "While low wage increases and even absolute cuts may help to reduce business costs and somewhat ameliorate job losses for now, there is also a potential downside as, collectively, lower incomes also reduce aggregate demand. Whichever way you look at it, the labour market outlook remains bleak even though some data is showing signs that the freefall in economic activity may be coming to an end."