Slow job growth for 2010
Treasury unemployment forecast points to years of
slow jobs growth and continued pay squeeze The Treasury’s decision to publish a
forecast of claimant unemployment in this week’s Pre-Budget Report is a welcome
The forecast offers a very sober assessment of the
medium-term outlook for the UK jobs market, says John Philpott, Chief Economic
Adviser at the Chartered Institute of Personnel and Development.
“The Treasury has made a
bold decision in breaking with Whitehall convention to publish a forecast of
claimant unemployment for the period to the end of 2012. Ministers are
doubtless pleased that unemployment has risen by less than expected during the
recession, providing an unanticipated fillip to the beleaguered public finances.
But while it now looks as though claimant unemployment will peak at a lower
level (around 1.75 million) in 2010 than originally feared, the Treasury
forecast offers no sign of a swift return to low unemployment.
“The Treasury reckons there
will still be 1.5 million people claiming Jobseeker’s Allowance at the end of
2012, which can be translated into around 2.3 million on the wider survey based
measure of unemployment. This is 700,000 more than the pre-recession level of
unemployment even after what the Treasury forecasts will be three years of
healthy economic recovery.
“The Treasury has provided a
very sober forecast of the medium term outlook for the UK labour market. The
forecast implies that unemployment will probably remain above 2 million for the
first half of the next decade even on what may prove to be an optimistic
forecast for economic growth. Unemployment at this level will also act as a
tough constraint on pay rises, which are unlikely to outstrip price inflation
for some considerable time.”
18 December 2009