Bank of England study adds dose of realism to assessment of UK labour market outlook
Responding to today’s analysis in the latest Bank of England Quarterly Bulletin of UK labour market adjustment during the recession, the CIPD’s Chief Economic Adviser, John Philpott, says that Bank officials have produced a realistic assessment of the outlook for jobs:
“The Bank of England study adds a dose of realism to the view that unemployment is already close to its post-recession peak. As the Bank warns, the risk of further substantial job losses remains, especially if the economic recovery is as weak as most current indicators suggest.
“The likelihood of a ‘jobs-light’ or, worse still, a ‘jobs-loss’ recovery has been of concern to the CIPD for some time. What is equally sobering, however, is the Bank’s comment on another potential risk previously highlighted by the CIPD – that employees may be unwilling to accept the inevitability of a ‘pay-tight’ recovery, with a squeeze on their real living standards. The Bank is raising the prospect of workers pressing for pay rises in line with price inflation. While pay restraint helped save jobs during the recession, the dawning realisation that this will have to continue for some considerable time if jobs are not to be lost during the recovery will test the goodwill of UK workers to the limit. Superior line management skills will be crucial to maintaining employee motivation and business competitiveness against this austere backdrop.”
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