CIPD warns of ‘jobs-light recovery’

Last week - a year on from the near-collapse of the global banking system - there was a fair sprinkling of encouraging news on the economic and, finally, employment fronts.  But a new CIPD report urges caution.

‘Jobs: The Impact of Recession and Prospects for Recovery' aims to provide an assessment of the recession's overall impact on the labour market, and considers what might happen to jobs once the economy begins to recover.

The report posits three possible scenarios:

- a ‘jobs-lined recovery' (i.e. a strong, sustained rebound in global demand and investment enabling employers to create jobs, with a return to pre-recession unemployment rates by the end of 2012);

- a ‘jobs-light recovery' (i.e. a modest, sustained economic recovery enabling a gradual increase in job creation, with recruitment only slightly exceeding redundancies and no prospect of a return to pre-recession employment rates before 2015);

- a ‘jobs-loss recovery' (i.e. a weak, uncertain economic recovery with further recruitment cutbacks, renewed redundancies, unemployment rising well beyond 2010 to a peak of at least 3.5m and no prospect of returning to pre-recession unemployment rates for at least a decade).

CIPD chief economist John Philpott seems to be anticipating the middle option.  "Unless the economy rebounds from recession far more strongly than most economists expect, the likelihood is that the recovery will be broadly jobs-light, resulting in a slow grind back toward the pre-recession rate of unemployment," he says, but adds "while a jobs-loss recovery is not the most likely scenario, it remains a distinct possibility."

The report includes a number of other interesting findings.  The percentage fall in employment during the current recession has been less than a third as big as the percentage contraction in the economy, for example, representing a much lower ‘job distress ratio' than the recessions of the 1980s and '90s.  In addition, the burden of job losses has been shared much more evenly across the workforce as a whole (demonstrating, according to the CIPD, that "Britain's flexible labour market is good for jobs and social well being").

The report also suggests that, from this autumn, the onward climb of unemployment towards the 3m mark next year is likely to be "more of a crawl than a rush".