WIREDGOV

Dr John Philpott, Chief Economic Adviser at the Chartered Institute of Personnel and Development (CIPD) comments as follows on official labour market statistics published recently by the Office for National Statistics (ONS):

“The mixed picture of the UK labour market conveyed in the latest official figures offer room for both optimism and pessimism. The headline rise in unemployment suggests that the labour market weakened at the turn of the year, well before the impact of the Coalition Government’s spending cuts and tax rises start to take full effect. Indeed, figures showing that public sector employment had already fallen by 123,000 in the year to December 2010 suggest that the eventual cull of public sector jobs by 2015 could be considerably higher than current Office for Budget Responsibility estimates suggests. However, figures showing more people in work in the private sector, including in manufacturing, and fewer on welfare benefits offers hope that the labour market might withstand the economic headwinds better than previously expected.

“On balance the latest jobs figures probably offer more to the optimist than the pessimist, and indicate that the labour market is nowhere near suffering any kind of meltdown. Nonetheless, at the start of 2011 the CIPD cautioned that the official jobs data would be difficult to interpret in the first few months of the year since our own independent survey evidence showed a pick-up in demand for labour toward the end of 2010 followed by a further dip in the first quarter of this year. For the time being therefore the CIPD still expects headline unemployment to reach 2.7 million by the end of 2011 and continue to rise into 2012.

“On the theme of caution, the CIPD repeats its call from earlier in the week for commentators to acknowledge the distorting effects of 16-24 year olds in further and higher education on the headline rate and level of youth unemployment. 1 in 8 young people in this age group are unemployed and almost 30% of those classified as unemployed are full-time students. The UK is experiencing a serious youth unemployment problem which requires an appropriate policy response but talk of a ‘lost generation’ of jobless young people does not aid sensible debate over possible solutions.”