Employee acceptance of pay cuts and freezes saved jobs in 2009

Chartered Institute of Personnel and Development (CIPD) chief economic adviser John Philpott told the BBC’s Today programme on Radio 4 that the predicted peak of 2.8 million people unemployed by mid-2010 was a ‘remarkable outcome’ in the face of earlier predictions that the total would reach 3.2 million.

He said the improvement was the result of the labour market being much more flexible than it had been in the past, with employees accepting pay cuts and wage freezes to stave off redundancy.

But Philpott warned against complacency if things seem to improve. Pay was held down in 2009 in a time of comparatively low price inflation, he said, and if this changes the task for pay negotiators in 2010 will be harder.

“The number of jobs lost will remain high for a long time,” he said, “but the important thing is to make sure people don’t stay out of work for a long time.”

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