Take your pick of forecasts about just how severe the jobs squeeze will be as the British economy enters slowdown mode. Two reports today estimate that between 330,000 and 440,000 workers could lose their jobs in a labour shake-out. On the surface these are pretty big numbers, but we need to consider what has happened to employment in total over the last fifteen years to get a better perspective.
It is inevitable that jobs will go when an economy hits the buffers and spending and output growth slows right down. The fall out from the credit crunch and the housing market recession will lead to an increase in cyclical unemployment as businesses look to control their costs and protect profits.
The Mail reports that “Up to 440,000 workers could be made redundant in the next two years as bosses take drastic action to contain salary costs, according to Capital Economics.” The Times reports that “Up to 350,000 people will lose their jobs as the economy grinds to a virtual standstill, wiping £1 billion off company profits.”
The Financial Services industries and sectors linked closely to housing are likely to bear the brunt of the contraction in labour demand. But there are pressures right across the economy for businesses to take a long cold hard look at their operations and consider where cost savings can be made. In a sense, this is part of the remedial effects of a slowdown; it focuses minds and emphasises the need to raise productivity and concentrate on core areas of the business.
But we need to have a longer term perspective on these ‘forecast’ job losses. Since the end of the last recession, the UK economy has enjoyed a remarkable expansion of employment with nigh on four million extra jobs created and a sustained rise the employment rate (the percentage of the population of working age in some form of paid work). So a blip in the employment data whilst salient should be seen in the context of a decade and more of increasing job opportunities. Indeed there are few shortages of jobs in the economy at present, more than 600,000 jobs remain unfilled.
Telegraph: UK could lose 350,000 jobs as profits slow