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Friday, 4 September 2009

Friday Guest Blog: What future for jobs in the North West?

by Gerwyn Davies,
Public Policy Adviser, Chartered Institute of Personnel and Development (CIPD)

At last a piece of good news on the jobs front, or is it? Fewer employers will be making staff redundant in the third quarter of 2009 compared with the second quarter, while the scale of redundancies will also fall. The news is better still for the North West of England, where job prospects are above the national average. These are some of the key findings from new regional analysis of the latest quarterly CIPD/KPMG Labour Market Outlook (LMO) survey – involving more than 900 employers and covering all sectors of the economy.

Nationally, the survey finds a negative balance of -10 between the percentage of employers expecting to employ more staff (in the three months following the survey) and the percentage expecting to employ fewer staff. This compares with a negative balance of -19 for the spring quarter. In the North West, the results are better albeit still negative, with a score of -5. Meanwhile, twenty seven per cent of employers in the North West will be making redundancies in the third quarter of 2009, down from 40% in the spring.

This all looks like very good news. But we should not get carried away. History suggests that there have been many false dawns and there are many good reasons to be particularly circumspect about the employment situation. Yes, the worst of the crisis is over, but as far as employment is concerned things are still getting worse. And they will continue to get worse, at least until the middle of next year given the lag between the state of the economy and jobs.

However, we face other threats, and in particular the threat of a second wave of redundancies this autumn. And here is why. One of the features of this recession is that we have not seen as many redundancies as many expected on the basis of previous recessions. And the reason? Simply that despite the scale of redundancies, employers have actually been hoarding labour by introducing alternative flexible working arrangements, such as three-day working weeks, to avoid or minimise the number of redundancies they make. This is highly commendable. But it is a temporary solution that comes at a cost to employers in the private sector in the form of higher unit labour costs. So unless we see a noticeable and sustained economic recovery, we should not be surprised to see more redundancies - and more dramatically a second wave of redundancies - by the end of the year.

This would deal a blow to business confidence levels that have risen in recent months – not least because we know that the public sector is about to bear the brunt of the jobs cull. So the next few months will be pivotal to ensuring that unemployment levels, which are already destined to exceed 3 million by the middle of next year, do not continue to climb to yet higher levels.

The CIPD’s Annual Conference and Exhibition has moved this year to the Manchester Central Convention Complex and takes place from 17-19 November 2009. For further conference and exhibition details or complimentary exhibition tickets, visit the CIPD website: www.cipd.co.uk/ace

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