Labour market still fragile as public sector cuts yet to bite, experts warn

Employment experts have warned that the labour market remains fragile despite latest official figures which show that unemployment in the UK fell by 49,000 between April and June 2010 to 2.45 million.

The Office for National Statistics said the unemployment rate for the three months to June 2010 was 7.8%, down 0.2 percentage points on the quarter – the second month in a row that the jobless number has fallen.

Analysts described the figures as positive news for the UK job market, but employers’ bodies remain cautious and fear weaknesses in the market will be realised as soon as the public sector cutbacks begin to bite.

Jim Hillage, director of research at The Institute for Employment Studies, said: “We are now beginning to see the early signs of the public sector downturn, with vacancy numbers across public sector industries beginning to contract sharply.

“As these trends gather pace in the coming months, overall unemployment is likely to rise unless the recovery in the private sector will be sufficient to compensate for significant public sector job losses.”

Kevin Green, chief executive of the Recruitment and Employment Confederation, warned that the rate of jobs growth had started to ease. “Public sector cuts will clearly be a factor and we can expect the deceleration in the jobs market to continue.

“However, we are not expecting there to be any significant increase in unemployment rather we can expect a flat jobs market with increased hiring activity in the private sector just about compensating for the public sector squeeze.”

Charles Levy, senior researcher at The Work Foundation, added: “The labour market still has a very long way to go before it can regain the 725,000 jobs lost in the recession, and these weaknesses may well be exposed once the full strength of public sector spending cuts and redundancies are felt.”

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