Business

Unemployment set to rise in 2012, suggests CIPD

  • 28 December 2011
  • From the section Business
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Unemployment will rise further in 2012, peaking at 2.85m in 2013 from 2.64m currently, says the Chartered Institute of Personnel and Development.

The human resources industry body warns the private sector will fail to offset the 120,000 job losses in the public sector in 2012, but it sees no sign of widespread private sector redundancies.

The jobless rate is expected to hit 8.8% in 2012, from 8.3% most recently.

Government policy should help youth and long-term joblessness, the CIPD said.

"As long as there is a relatively benign outcome to the eurozone crisis we expect the 2012 jobs recession to be milder than that suffered in 2008-9," said John Philpott, chief economic adviser at the CIPD.

"But unemployment in the coming year will be rising from a much higher starting point, so the UK jobs market in 2012 will be weaker than at any time since the recession of the early 1990s."

In response, a spokeswoman for the Department for Work and Pensions said: "There has obviously been an unwelcome increase in unemployment since the summer but the latest unemployment figures show some signs that the labour market is stabilising.

"The number of people in employment is higher than last month's published figure, and the number of unemployed people is steadying."

She added that "the increase in those claiming Jobseeker's Allowance has slowed and our welfare reforms are having a positive impact, with overall benefit claimant numbers falling by around 40,000 in the last 18 months."

However, shadow work and pensions minister Ian Austin said it was "crystal clear that this government is failing to get people off benefits and into work".

"With unemployment continuing to rise, the benefits bill is going up too - and that's making the deficit harder to bring down."

'Frustration'

The situation is particularly difficult among young jobseekers.

Andy Preston set up the Middlesbrough and Teesside Philanthropic Foundation with other local businesses. It pays for young people in the area to take up apprenticeships.

Mr Preston told BBC Radio 4's Today Programme that he sees the frustration many young people feel when they are looking for work.

However, he thinks there is some room for optimism: "We're managing to find some opportunities for some young people locally and hoping to find a lot more," he told the BBC.

That may not be good news for older job seekers, the CIPD's John Philpott points out: "In a weak economy where jobs overall are not rising, any benefit to young people is to the detriment of older people."

Record joblessness

The forecast is more downbeat than estimates published by the Office for Budget Responsibility (OBR) in November.

The OBR, which was set up by the government to provide independent assessments of the UK economy, expects unemployment to peak at 8.7% of the total workforce in the final quarter of 2012. The CIPD believes the unemployment rate will hit 8.8% in 2012.

Official figures showed that the UK unemployment hit its highest level since 1994 in the three months to October, when it rose by 128,000 to 2.64 million.

The Office for National Statistics (ONS) said the jobless rate for the three months to October was 8.3%, up from 7.9% in the same period last year.

Youth unemployment rose to 1.027 million, the highest since records began in 1992.

Multiple applicants

Meanwhile, in a separate study, online recruiter Totaljobs analysed their recruitment records for the past year, and the results paint a picture of a highly competitive jobs market.

Although the supply of jobs has increased by 8% across the UK, there has been a 42% rise in the number of applications.

According to Totaljobs, the average number of applications per job is 23. However, that hides wide variations across different industries: 46 people apply for every customer service job available; 45 for every secretarial job; and 42 applications per retail job.

Add in the variable of geography, and those numbers get even worse - on average 60 people apply for every secretarial job in London.

Regionally, competition is at a peak in the South East, with 33 applicants on average for every job, in contrast with East Anglia where only 10 apply for each job.

However, the part of the UK that has seen the greatest increase in competition is Scotland, where 16 people apply for every job - up from nine in 2010. This is largely due to a 28% drop in the number of jobs available, according to Totaljobs.

'Frozen out'

Jobs that need less technical training, such as customer services or secretarial jobs have seen applications per job rise by over 50%.

"This suggests that those without technical skills that are currently in demand could be frozen out of the workforce," John Salt, director of Totaljobs, told the BBC.

Sectors that are showing job growth - engineering, aerospace and the oil and gas industries - require specialised skills, and these haven't seen a rise in the number of applications.

Another structural problem in the labour market is the gap between the public and private sector.

The coalition government had hoped that the private sector would pick up the slack when public sector jobs were shed.

But Mr Salt said that according to his analysis, in the last six months to the end of November this has not happened: "One job has been created in the private sector for every 13 jobs lost in the public sector."

His advice for jobseekers is to be flexible about your location, salary and job, and to tailor your application.

"The most important thing is to be very clear and focused and not apply for hundreds of jobs with the same application," he said.

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