No jobs boom for Britain in 2006


Britain's economy will get stronger next year, but the good news will not be translated into more jobs as employers focus on cutting costs rather than expanding headcounts.

The prediction for 2006 from the Chartered Institute of Personnel and Development has suggested employers will be more focused on restoring productivity than creating extra jobs.

John Philpott, the CIPD's chief economist, said 2005 had been a year of slower economic growth, combined with unexpectedly high levels of job creation.

The year was likely to "go down in history as the worst year for productivity growth since 1990", he added.

Employers shied away from job cuts during 2005 as the economy slowed, hoping for better economic news round the corner, he argued.

"This contributed to record levels of employment and the creation of 300,000 extra jobs by the end of the third quarter of the year, despite economic growth remaining below trend," he said.

Philpott continued: "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."

But the threat of large numbers of redundancies appears less likely as the economy recovers, although there will probably be further job losses in manufacturing and areas such as public administration, Philpott predicted.

"The vast majority of employers have struggled to fill at least some vacancies – blaming a lack of specialist skills and required experience for their troubles," he continued.

"Employers are responding in many different ways. The most popular response is to recruit people underqualified for the vacancy but with the potential to be developed in post and grow into the role," he added.

More than a third of employers had turned to migrant labour to fill vacancies, with central and eastern Europe set to become the most popular regions to recruit from for the first time during 2006, the CIPD predicted.

More than half of employers recruiting from abroad said they had increased the proportion of vacancies they filled in this way.

"Employers are also adopting new ways of appealing to job seekers, including offering new flexible working options to increase their chances of recruiting," said Philpott.

"The variety of measures available to employers has served to reduce upwards pressure on wages, despite the tight labour market and the consequent recruitment difficulties employers have faced," he added.