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 CIPD PRESS RELEASE 11 June 2008
Firing activity remains subdued as dip in employment growth
drives up jobless rate
The latest official labour market statistics, published
earlier today by the Office for National Statistics
(ONS), show a substantial fall in the rate of growth
in employment compared with recent quarters and a
further rise in unemployment on both the Labour Force
Survey and claimant count measures. However, employers
are still hiring and there is no sign yet of a rise in
redundancies which indicates that the labour market
overall is cooling only moderately. This, along with
a slight pick-up in the rate of growth of regular pay
(earnings excluding bonuses), means that the latest
rise in unemployment does not strengthen the case for
a cut in official Bank rate says John Philpott, Chief
Economist at the Chartered Institute of Personnel and
Development (CIPD).
Dr Philpott commented as follows:
"The jobs market overall remains relatively buoyant but
signs of the impact of the credit crunch are beginning to
emerge. Employers are still hiring and there is still no
sign of a widespread increase in the firing rate. However, the
rate of growth in employment is much slower than in recent
quarters and some sectors are showing obvious signs of
strain. Combined with continued strong growth in the
number of people entering the labour market the economy
is now generating too few jobs to prevent the dole queue
from starting to lengthen.
"The finance and business services sector remains in
the eye of the storm, shedding 20,000 jobs in the first
quarter, and is now easily outstripping manufacturing
as the principal sector experiencing job cuts. But
shops, hotels and restaurants are suffering too and
are now in a period of jobs standstill. And public sector
employment, which staged a brief statistical rally
following the switch of Northern Rock employees into
the state workforce, is now falling again.
"For the time being, however, it looks as though contract
staff - the self-employed and temporary workers - are
bearing the brunt of the jobs slowdown. Although in
current conditions contract staff are more likely to be
hired by employers cautious about future demand prospects, contract
staff are also those easiest to let go if need be.
"The fact that reduced hiring rather than increased
firing of core permanent staff is the cause of the jobs
slowdown means that claimant unemployment is rising
because fewer people are leaving the jobless count
rather than more joining it. This might be welcome news
insofar as it suggests that the labour market maintains
a degree of positive momentum though it is bad news for
the Government in its efforts to move more claimants off
the welfare roll and into jobs.
"All in all, while some might argue that signs of slower
growth in jobs and rising unemployment strengthen the
case for a cut in official Bank rate, the latest labour
market figures remain strong enough to suggest otherwise, especially
given a slight rise in the rate of growth in regular pay
(i.e. excluding bonuses). Indeed, with inflation set to
rise further above target in the near term, the probability
has increased that Bank rate may have to increase. Though
perhaps necessary, this would serve to exacerbate the jobs
slowdown and increase the risk of big rise in unemployment. If
so today's jobs figures may be amongst the best we see for
some time to come."
Notes to editors:
* John Philpott is available for interview.
* The Chartered Institute of Personnel and Development (CIPD)
has over 130,000 members and is the leading professional
institute for those involved in the management and development
of people.
* Read John Philpott's weekly blog on the CIPD website
CIPD press enquiries:
Gregor Ridley / Jemma Walsh / Christian Zarro
CIPD Press Office
151 The Broadway, London SW19 1JQ
020 8612 6400
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