Jobs growth 'to stagnate despite stronger economy'

The jobs market is set to get tougher next year as employers are determined to slash costs through slower recruitment and more redundancies, the Chartered Institute of Personnel and Development (CIPD) predicted.

The centre's chief economist John Philpott said even though the economy is set to strengthen in 2006, fewer jobs will be created than have been in the past 12 months. He said:"Slower economic growth in 2005, combined with unexpectedly high levels of job creation, are likely to see the year go down in history as the worst year for productivity growth since 1990."

Mr Philpott also said employers shied away from cutting jobs this year even as the economy slowed, hoping that better economic news would be round the corner. This contributed to record levels of employment and the creation of 300,000 jobs by the end of September, even though the economy has been growing below its long-term trend rate amid a downturn in consumer spending.

Next year, employers will take the knife to jobs in an attempt to boost flagging productivity, Mr Philpott predicted. "Job seekers who might have been expected to gain from stronger growth in 2006 instead look likely to feel the pinch as employers look to cut costs through slower recruitment, more redundancies, or efforts to raise productivity amongst the existing workforce."

In a recovering economy, large numbers of redundancies are not to be expected, though job losses are set to continue in manufacturing and may also affect the public sector, spurred by the efficiency savings recommended by the Gershon review. Instead, employers are likely to recruit fewer numbers of people to try to keep a lid on costs, continuing a trend that started in the middle of this year.

The CIPD's report pulls together the results of several surveys, using responses which came from more than 10,000 employers who between them employ millions of people across Britain.