Many workers will face unemployment next year as the UK labour market contracts to its worst level in a decade, a leading recruitment body warns today.
The gloomy forecast by the Chartered Institute of Personnel and Development comes as the TUC warns that 2008 will be a "rocky year" for the British economy.
The private sector, which has been the driver of job creation in the last few years, will see a slowdown in hiring, the CIPD says. Meanwhile, higher energy costs and slower global growth will force employers to cut costs and reduce jobs, particularly in the public sector, as they brace themselves for uncertain economic times.
John Philpott, chief economist at CIPD, said: "In the early part of the decade periods of slower growth in private-sector employment were masked by relatively rapid growth in public-sector jobs. A downward trend in public-sector employment in the past two years has in turn been more than offset by rising numbers of private-sector jobs.
"But 2008 will be the first year for a decade that the engine of job creation will be spluttering right across the economy. This will be the worst year for jobs this decade and easily the worst since the Labour government came to power in 1997."
CIPD forecasts a rise in total UK employment of 75,000 - 0.25% in the year to December 2008. This is only a third of the rise recorded in 2006 and 2007.
The grim predictions spell a marked turnaround for the British jobs market after recent official data showed the unemployment rate on the clamaint-count measure was at its lowest in 32 years while employment levels surged to an all-time high this year. They also come as a blow to British households suffering from sluggish earnings growth and higher interest rates. Petrol prices, which hit record highs above £1 a litre last month, and climbing food prices have also cut deeper into disposable incomes.
The CIPD said the extent of the slump in new hiring was uncertain as long as the credit crunch continued. A tightening in lending has hit the City - a key sector for UK employment and economic growth.
"With jobs harder to come by this could reinforce the impact of the economic slowdown, possibly necessitating bigger cuts in interest rates than currently anticipated to head off the threat of recession and a worrying prolongation of the slowdown into 2009," said Philpott.
His forecasts were echoed by a bleak new year outlook from the TUC.
Brendan Barber, TUC general secretary, said that Northern Rock was just the first victim in the wake of the credit crunch. The full effects of the crisis, triggered by "irresponsible lending" in the US sub-prime mortgage market, had yet to work their way through the economy.
He joined Philpott in calling for lower interest rates to soften the impact of the turmoil in financial markets. Despite a cut in borrowing costs this month - the first in more than two years, Britain has the highest interest rate among the group of seven industrialised nations at 5.5%.
He also urged the government to rethink proposed cuts in public-sector pay over the next three years. Recent data from the Industrial Relations Services showed that public-sector pay growth had fallen to 2.5%, its lowest rate in 13 years.
Separately, the Institute of Directors issued downbeat expectations for the economy next year, predicting a near halving of growth to 1.7% from 3% but persistent inflation pressures.
Source
Jobs expected to shrink to lowest level in 10 years
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