‘Unemployment won’t reach 1997 levels until 2015’
14 September 2009
Unemployment in the UK is unlikely to go down to pre-recession levels until 2015, the CIPD has warned.
With the economy beginning to show signs of recovery, CIPD chief economist John Philpott predicted a “jobs-light recovery”, which would involve a gradual increase in net job creation and continued high unemployment for another six years.
“Unless the economy rebounds from recession far more strongly than most economists expect, the likelihood is that the recovery will be broadly jobs-light, resulting in a slow grind back towards the pre-recession rate of unemployment,” he said.
But Philpott warned that a “jobs-loss recovery” could not be ruled out. A weak economic recovery and fears of a double-dip recession could lead to unemployment peaking at 3.5 million and unemployment not returning to 1997 levels for at least a decade, he said.
“While a jobs-loss recovery is not the most likely scenario, it remains a distinct possibility, which means it is of vital importance that the government, the Bank of England and their counterparts abroad maintain expansionary fiscal and monetary policies for as long as necessary,” Philpott added.
Official figures, out later this week, are expected to show that UK unemployment has risen above 2.5 million.
Philpott’s predictions were based on a new CIPD report, Jobs: The impact of recession and prospects for recovery, which also claims that job losses in the current downturn have been far less severe than in the recessions of the 1980s and 1990s. But the biggest losers this time have been men, full-time employees and UK-born workers, the report says.
The CIPD findings came on the same day that the TUC warned that unemployment could top four million. Speaking at the TUC annual congress, general secretary Brendan Barber said public spending cuts could provoke a “double-quick double-dip recession”, leading to a continued rise in job losses.
“Unemployment could well exceed four million and it would take many years before there was any chance of returning to anything like full employment. That would scar for life a whole generation of young people,” he added.