UK Unemployment Levels Could be Static for Five Years

(MoneyWatch)  Unemployment has dropped over the last three months to May, but one pundit is pessimistic about future employment trends.

The Office for National Statistics has reported unemployment fell to 2.47million, taking the proportion of the UK population out of work to 7.8 percent.

The increase in the number of people in work is in part due to the rise in part-time working, which now accounts for nearly a third of all jobs in the country.

Experts warn that unemployment is likely to rise next year though, as cuts in public spending take hold.

That's not all ?€"- the CIPD has just brought out a report that predicts employment prospects are likely to be low for the next five years. The premise is that the Office for Budget Responsibility's (OBR) forecast for growth only needs to be a few percentage points out for the net gain in employment to be reduced to a tenth of current predictions by 2015.

The OBR forecasted the economy to grow by over 2.5 percent from 2012-2015, resulting in a net gain in employment of 1.3million over the next five years. However, Dr John Philpott, chief economic adviser at the CIPD warned that growth only needs to stay at 2.5 percent or below ?€"- never mind a double-dip recession, which is also on the cards ?€"- and net employment gain will shrink to 100,000. This means unemployment will stay close to 2.5million until 2015.

So what will this mean to the man in the street? Philpott thinks job prospects will not fall any further than they are at the moment, but there is a possibility the condition of work will be changed. Employees can expect to be out of work for short periods throughout the next five years, although the spectre of the long-term unemployment seen in the 1980s is unlikely.

Employers will be less likely to invest in training their staff, because the recruitment pool will be widened with skilled, experienced jobseekers.

Wages will be static and increases for most employees will be in line with inflation, if at all.
Philipott is unsure that the government can do anything to stimulate employment. The deficit has to be addressed. He says the one thing it can do is encourage welfare-to-work schemes, so that unemployed people can gain the skills they need to remain attractive to employers and keep in touch with the world of working.

Once a person is viewed as long-term unemployed, their prospects of finding employment are greatly reduced, he says.

(Pic: morebyless cc2.0)