UK Unemployment Likely to Worsen: Report

The employment outlook in the UK is set to worsen as a third of private sector companies are planning to make redundancies.

The Chartered Institute of Personnel and Development (CIPD) has reported that the number of people signing on is expected to reach almost three million over the next few months due to firms laying off more staff. It said that there had been a drop in confidence in the private sector over the past three months.

Whereas employers were in wait-and-see mode three months ago, more private sector firms, particularly among private sector services firms, have decided to push the redundancy button in response to worsening economic news. This will exert yet more pressure on a jobs market that is buckling under the strains of contractions in economic growth and public sector employment, said Gerwyn Davies, public policy adviser at the CIPD.

With many employers telling us that access to finance has been a big factor in preventing them from creating new jobs over the last two years, and with net private sector hiring intentions now on the slide, the labor market case for government action to increase the availability of credit to businesses is stronger than ever, added Davies.

The jobless total increased to 2.68 million last month and is expected to increase further due to a drop in confidence in the private sector. CIPD said the findings reinforced its prediction that unemployment could reach 2.85 million by the end of the year unless business conditions improved.

The report, based on the survey of 1,000 employers, has revealed that the UK jobs market is facing a difficult phase with the recession due to job cuts in the public sector and redundancies in private sector.

Everybody's worst fears about rising unemployment and a new North-South divide are coming true. We were promised a private sector-led recovery but instead private sector workers are joining public servants in the dole queues, said Trades Union Congress (TUC) general secretary Brendan Barber.

According to the survey, 31 percent of organizations plan on making redundancies this quarter, up from 24 percent for the last quarter research. The report also found that six out of ten employers said they were not planning to create any new roles in the next three months.