Press Release

Now It’s Official – Job Vacancies Falling And Redundancies On The Rise As Credit Crunch Pushes Up Unemployment

13 August 2008

The latest official labour market statistics, published earlier today by the Office for National Statistics (ONS), confirm that UK job prospects are on the slide. But John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD), warns there is worse to come.  

Dr Philpott commented as follows:

“This is the weakest set of labour market data since the economic slowdown began. Employment growth has ebbed to a trickle – indeed employment has fallen in several regions of the country - while the rise in unemployment is gaining worrying momentum. The number of unemployed people claiming Jobseekers’ Allowance has risen in every month since January - with each monthly increase greater than the last – and there are now more people in receipt of this welfare benefit than a year ago.

“The impact of the economic slowdown is also becoming more widespread. Nearly every sector of the economy posted fewer job vacancies in the three months to June. This is particularly evident in those parts of the private sector that until recently were major engines of job creation such as shops, hotels and restaurants, finance and business services, and construction. Moreover for the first time since the credit crunch emerged there is a clear sign that redundancies are on the rise.

“These figures only tell us what was happening to the jobs market until mid-summer. Worryingly, the latest CIPD/KPMG/Ipsos MORI Labour Market Outlook survey – published earlier this week - indicates that the jobs situation will continue to deteriorate in the coming quarter. By the end of the year it is likely that the level of employment will be falling across the country and unemployment rising at an accelerating pace as the number of people claiming Jobseekers’ Allowance climbs back toward 1 million for the first time this decade.

“With today’s ONS figures showing that the worsening jobs situation is already having a dampening effect on growth in average earnings, the prospect of a ‘pay-price’ spiral triggered by current sharply higher inflation seems remote. It nonetheless remains vital that employers and workers keep pay rises in check so as to minimise any further threat to jobs during the economic slowdown.”