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Wednesday 16th of June 2010
June 10, 2010    

CIPD warns of high unemployment amid Government spending cuts

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by Kay Murchie
”CIPD

A report by the Chartered Institute of Personnel and Development (CIPD) has warned that UK unemployment could reach 2.95 million, from its current 2.51 million, as a result of the Government’s planned spending cuts.

According to the influential think tank, 750,000 public sector workers could join the dole queue as the new coalition Government embarks on tough austerity measures to bring the deficit down.

New chancellor George Osborne has already outlined plans to shave £6.2 billion off public spending this financial year and further measures are expected in an emergency budget on 22 June.

The report warns: “There is little prospect of real wage growth on average throughout this period and ongoing real wage cuts in the public sector.”

While chief economic adviser of the CIPD, John Philpott, acknowledges that the cost-cutting measures are unavoidable, he said they will have serious knock-on effects for many in the UK.

Meanwhile, CBI deputy director-general John Cridland believes tax hikes should be avoided as they could be damaging to growth.

He comments: “A radical re-engineering of public services is a must if damaging tax rises are to be avoided. Only an effective cost reduction strategy can safeguard future growth.”

TUC general secretary, Brendan Barber, has his own view on the spending cuts and believes the Government is at risk of damaging the economy and increasing the north-south divide.

He comments: “Northern regions depend more on public sector jobs, and staff who lose their jobs will find it harder to get new ones. The private sector will be hit hard too as public procurement is cut.

“The risk of a double-dip recession across the UK as a whole is growing – and is now a near certainty in those regions that were worst hit by the recession. The net result could well be that the deficit is hardly dented as tax receipts fall and benefit spending grows,” he added.

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