Private Sector Growth may not be Sufficient to create Jobs, warns CIPD

The UK job market will be hit hard if private sector growth even slightly misses official targets, the Chartered Institute of Personnel and Development (CIPD) has warned.

According to the employment group, economic growth needs to be at least 2.5% per year between now and 2015 in order for the private sector to create enough jobs to offset those that would be lost as a result of massive Government spending cuts.

Growth even slightly less than this, between 2 and 2.5% a year, would “seriously diminish” overall job prospects, the CIPD warned. 

Last month, the Office of Budget Responsibility (OBR) forecast the UK economy will expand by 1.3% in 2010, before rising to 2.6% in 2011 and 2.8% in 2012 and 2013.

“Against the massive public sector job downsizing, it doesn’t take anything like a double-dip recession to cause a serious prolonged jobs deficit, merely economic growth in the range of 2 per cent to 2.5 per cent a year rather than the 2.5 per cent plus annual growth rates the OBR expects and the government hopes for,”

said CIPD chief economic adviser, John Philpott.

A slightly milder growth outcome was “easily imaginable”, he added, but this would leave unemployment still close to 2.5 million by 2015.

The CIPD’s warning comes in spite of the latest official job figures, which indicate that unemployment fell by 30,000 in the three months to May to 2.47 million. However, many industry and business groups remain pessimistic about long-term job prospects, saying the impact of public sector job losses had yet to be felt. 

The British Chambers of Commerce’s spokesman, Sam Turvey, said recent government initiatives to stimulate enterprise ? such as the reduction in corporation tax and National Insurance exemption for certain firms creating new jobs ? were “positive steps” for small business, but more needed to be done.

“In particular, we need to see the scaling back of unnecessary red tape and a delay on the forthcoming Equality Bill, which will be extremely costly for businesses,” he said. “We believe the Bill should be pushed back until the economy is properly on its feet.”

A spokesman for the Department of Work and Pensions (DWP) said securing recovery and generating sustainable jobs growth were “key priorities” for the Government.

“There is still a huge amount of work to do to revitalise the economy and create an environment where businesses are growing and employing people again,” he said.  

Private Sector Growth  may not be Sufficient to create Jobs, warns CIPD

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