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Job losses are coming

Written by Gary Howes
Wednesday, 01 October 2008
Adjusting to economic downturn without cutting jobs becoming increasingly limited. Figures on UK productivity and unit wage costs published today by the Office for National Statistics (ONS) underline the deterioration in the economy and point to mounting pressure on employers to cut jobs says the Chartered Institute of Personnel and Development (CIPD). Related Articles This is NOT the Great Depression Migrant worker numbers fall UK businesses RIP Flexible workers at risk US and Europe to suffer in 2009 The British economy failed to grow at all in the second quarter of the year said the ONS. The ONS left its gross domestic product estimate steady at zero, having revised it down from 0.2% a month ago. It revised up, however, its estimate of annual growth to 1.5% from 1.4% as a result of extensive back revisions to previous data that it makes once a year in the so-called "Blue Book". The CIPD noted that productivity measured by output per worker has slumped. Each UK worker is now producing less than in the last sharp productivity downturn in 2005 when employers hoarded staff during what was a short and mild economic slowdown. At that time, with little inflationary pressure in the economy, employers were prepared to absorb rising unit wage costs and take a short-run hit on profits rather than cut jobs. Accordingly this time around, as the economy moves into recession and with non-labour costs like fuel and energy and borrowing charges high, many employers will be feeling the squeeze. John Philpott, Chief Economist at the CIPD says, "today’s figures indicate that employers have responded by working staff harder with the result that output per hour improved slightly in the second quarter, although still well below what was being achieved in 2006 and 2007. Modest pay rises have also helped contain what would otherwise have been an even sharper rise in unit wage costs. However, scope for adjusting to the emerging economic downturn without cutting jobs is becoming increasingly limited." “Even without the impact of the latest global financial market turmoil this makes a late autumn and winter shake-out of jobs all the more likely – and means that the Bank of England should make an immediate and substantial cut in interest rates.”