Job losses will continue this quarter, but at the slowest pace since the beginning of the recession, according to figures from the Chartered Institute of Personnel and Development (CIPD) and KPMG, the financial services firm.
Their monthly Labour Market Outlook shows that the percentage of employers expecting to employ more staff in the final three months of the year is 3 per cent lower than those expecting to employ fewer, a balance of minus 3.
It is a big improvement on the balances of minus 19 and minus 10, recorded in the second and third quarters, respectively, as increasingly employers feel that they have made all the cuts necessary at this stage.
Gerwyn Davies, public policy adviser at the CIPD, 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 — [however] the patient 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.”
Unemployment climbed by 88,000 to 2.47 million in the three months to August, the most recent official data available, and many analysts expect the number to reach three million next year. Last month, a forecast of GDP for the third quarter by the Office for National Statistics confounded expectations for growth, by estimating that Britain’s output had declined by 0.4 per cent.
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The CIPD/KPMG report also shows that the situation is worsening for people with jobs. Wage increases are expected to have have fallen to a record low of 1.5 per cent, compared with 1.7 per cent three months earlier.
The survey also shows that about one in six companies has reduced the working hours of at least some staff in the past year. A similar proportion said that they planned to cut the working hours of some staff in the next 12 months.
Andrew Smith, the chief economist at KPMG, said: “This recession has come through not only in job losses but also in greater labour market flexibility — reduced working hours, pay freezes and outright wage cuts.
“The decline in average pay settlements suggests that underlying inflation pressures continue to weaken while the risk of deflation is rising — justifying the [Bank of England] Monetary Policy Committee’s decision to extend its quantitative easing programme by £25 billion.”
The Bank’s programme aims to bolster the economy by boosting the supply of money electronically and purchasing assets, such as bonds from banks, in the hope that they will step up lending. The MPC decided to increase the programme by £25 billion to £200 billion at its last meeting on Thursday.
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The meeting also decided to keep interest rates at their record low of 0.5 per cent.