The impact of “anaemic” economic growth on the labour market remains severe, despite the outlook for unemployment becoming “less bleak”, the Chartered Institute of Personnel and Development (CIPD) has claimed.
This is according to the CIPD’s latest forecast for UK economic and employment growth, which predicted that the economy would grow by 1.4% in 2011, revised downwards from the December 2010 forecast of 1.6% growth for this year. For 2012, the CIPD predicts 2% growth, down from the previous forecast of 2.1%.
However, the CIPD predicts that unemployment will peak at 8.7% in mid-2012, rather than at 9.5% as previously forecast.
Despite this, the CIPD predicts unemployment figures to be around 2.4 million in 2015, roughly the same level as at present and 800,000 higher than before the recession.
John Philpott, chief economic adviser at the CIPD, commented: “Just as pay freezes and pay cuts protected jobs in the recession, the ongoing pay squeeze is helping our anaemic economy support employment.
“This is clearly preferable to a further very sharp rise in unemployment. But a combination of falling real wages and the likelihood of unemployment well above pre-recession level for for several years to come represents an equivalent amount of market distress.
“While the specific labour market symptoms of economic austerity are different than initially expected, the ongoing pain is no less severe as the UK workforce continues to suffer an implicit trade-off between jobs and real living standards.”