Flexible labour market will drive job growth to record levels before next general election, according to CIPD report
Employment will grow to a record high of 30 million people by 2015 as a result of a “flexible labour market”, according to the Chartered Institute of Personnel and Development (CIPD).
Its latest annual “Barometer” report on the labour market indicates that the number of people in employment should grow during 2013 to reach 30 million before the next election on 7 May 2015.
If true, this would result in the UK reaching the historic milestone of 30 million employed people earlier than Office for Budget Responsibility (OBR) forecasts. Earlier this month the OBR predicted that employment would not reach 30 million until late-2015.
In mid-December, the ONS reported that employment was 499,000 higher in the three months to October 2012 than it had been in the same period a year earlier to stand at 29.6m – its highest ever level. But the ONS said average earnings, excluding bonuses, were rising at an annual rate of 1.7% – well below the current inflation rate of 2.7%.
The CIPD says that the reasons for jobs growth at the same time as relatively static economic growth are “an enigma”. It added that it cannot be explained entirely by underemployment – people taking part-time jobs when they would prefer to work full-time work – because underemployment hasn’t grown hugely significantly.
Instead, Mark Beatson, chief economist at the CIPD, suggested that a flexible work market will help drive jobs growth. He said: “The ‘jobs enigma’, of strong growth in private sector employment in the absence of sustained economic growth, has been one of the most mystifying economic features of 2012.
“We think the OBR may be proved pessimistic in its prediction that it will take until well into 2015 before employment hits the landmark figure of 30 million. Employers are proving adept at maximising the potential of the UK’s flexible market, leading us to conclude that the government may be able to celebrate 30 million employed before the next election.”
A separate report published on 28 December 2012 warned that workers can expect longer hours, a continued squeeze on pay and fewer jobs being created in a “hard year of slog” in 2013.
Job insecurity will remain high, with workers maintaining a “grin and bear it” attitude, said John Philpott, director of The Jobs Economist. Unemployment is forecast to increase by 120,000 to 2.63m in 2013 because growth in the workforce will exceed the number of jobs being created, Philpott added.