Labour market recovery set to slow due to low economic confidence

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The recovery recently witnessed in the jobs market is set to slow sharply due to a fall in confidence in the country’s economic recovery.

That is according to the latest Labour Market Outlook survey by the Chartered Institute of Personnel and Development (CIPD) and KPMG, which found a “more sombre outlook” for private sector hiring intentions due to diminishing confidence.

The survey, which uses a net employment index to measure the difference between the proportions of employers looking to increase and decrease total staffing levels in the third quarter of 2011, fell from +3 to -1. More worryingly, the index, which measures hiring plans over the next 12 months, fell from +2 to -6.

Gerwyn Davies, public policy adviser at the CIPD, said: “Increasing uncertainty about growth prospects in both the UK and global economies is now affecting hiring intentions; particularly in those industries such as manufacturing that stand to lose most in the event of a global slowdown.

“Together with the public sector redundancies, which will affect one in 20 front-line workers according to our survey, the recent story of an employment revival may become one of an employment relapse. The survey evidence suggests that the relapse will hit some regions much harder than others, which points to the further development of a two-speed economy.”

The survey also highlighted stark differences between the North and South of England, with the index for the South at +10 but at -6 for the North of the country.

This finding has raised fears of a growing North-South divide and was echoed in a report in today’s (15 August) Times, which highlighted findings from research by the Organisation for Economic Cooperation and Development. This suggests that the economic recovery is dependent on many northern towns and cities, which have so far been lagging behind, and has led commentators to call on the Government to focus on facilitating growth in these areas.

Liberal Democrat MP for Bradford East, David Ward, told the Times of concerns that the Government is dominated by priorities for the South, and said: “I don’t think it is malicious, but they are not understanding the issues. I just think what is required is coordinated action from all MPs of the North, whichever party, to say you need to be aware of the impact of your policies outside the South-East.”

Ward’s views were supported by a number of MPs representing constituencies in the North of the country.

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