Jobs market faces 'slow, painful contraction'

The CIPD predicted that the employment situation will get worse for the rest of the year, while medium-term prospects were no better (GETTY IMAGES)

The jobs market is facing a "slow, painful contraction", with firms scaling back decisions on whether to recruit more staff against a background of global economic "turmoil", a new report warned today.

The Chartered Institute of Personnel and Development (CIPD) predicted that the employment situation will get worse for the rest of the year, while medium-term prospects were no better.

Fewer firms were planning to offshore jobs abroad and recruit overseas workers, while the private sector will grow at a slower pace in the next three months, it was suggested.

Confidence in the public sector remains low for the next three months and will get worse next year, said the CIPD after surveying 1,000 employers.

Gerwyn Davies, public policy adviser at the CIPD, said: "The figures point to a slow, painful contraction in the jobs market.

"Many firms appear to be locked in wait-and-see mode, with some companies scaling back on all employment decisions against a backdrop of increasing uncertainty as a result of the eurozone crisis and wider global economic turmoil.

"The good news resulting from this lull in business activity is that fewer employers are looking to relocate abroad or make redundancies.

"The downside is that recruitment intentions are falling, which will make further rises in unemployment therefore seem inevitable given that public sector job losses are outpacing the predictions made by the Office for Budget Responsibility.

"There is no immediate sign of UK labour market conditions improving in the short or medium term."

The report was published ahead of new unemployment figures on Wednesday which will show whether the youth jobless total has gone over a million.

A DWP spokesman said: "We always said that the road to recovery would be tough - there is a long way to go until before we deal with all the economic challenges ahead particularly given the crisis in the Eurozone.

"There are jobs out there, with Jobcentre Plus taking on 10,000 vacancies every working day.

"Our new Work Programme is now up and running and will make a big difference in ensuring that people on out-of-work benefits get the right support to get into employment."

PA