Unemployment figures raise fears private sector not ready to absorb public sector job losses

Unemployment figures published today point to a period of ‘calm before the storm’ and raise fears about whether the private sector can absorb the looming public sector jobs cuts, experts have warned.

Figures released by the Office for National Statistics revealed the number of unemployed rose by 23,000 to 2.47 million in the three months to April.

Employment remained broadly stable, with the number of private sector jobs increasing by 12,000 in the three months to March, compared to a drop of 7,000 jobs in the public sector.

John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD), said: “Signs of recovery in the private sector jobs market are welcome but beg the question whether the private sector will be able to fill the jobs gap once the process of public sector downsizing gets fully underway.”

The CIPD has already forecast that 725,000 public sector jobs could be lost by 2015.

Philpott also warned all the net new jobs created in the private sector had been either part-time, temporary, or filled by the self-employed.

The number of employees and self-employed people working part-time because they could not find a full-time job increased to 1.08 million – the highest level recorded since comparable figures were introduced in 1992.

Ian Brinkley, associate director of The Work Foundation, added while the labour market had stabilised, it was “still premature to talk about a solid recovery in private sector jobs”.

“The big challenge for the new government is to avoid large and rapid reductions in public sector employment before private sector jobs start to come through,” he said.

The Work Foundation forecasts that by 2015 the private sector could absorb about 500,000 jobs lost from the public sector, allowing employment to return to pre-recession levels, but the think-tank warned if cuts were “too big and implemented too soon, the private sector will be swamped”.

With new jobseekers and those with the least skills finding it hardest to be re-employed, Brinkley said the cuts could lead to high levels of unemployment among the under-25s.

Nigel Meager, director of the Institute for Employment Studies, added: “With the upturn in the private sector still fragile, and substantial job cuts imminent in the public sector, which will have knock-on effects across the economy, it is difficult to escape the conclusion that unemployment could continue to grow during the rest of 2010 and beyond.”

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