Jobless total to hit 2.7m next year as wages 'stall'

Unemployment will hit 2.7 million next year and average earnings will rise by a below-inflation 2 per cent, according to a report out today.

• "2011 will feel like another year in the economic doldrums" - John Philpott of CIPD. Picture: PA

The Chartered Institute of Personnel and Development (CIPD) said the jobless rate will reach 9 per cent in 2011, with public-sector employment set to fall by 120,000 and private-sector jobs by 80,000.

Official figures released earlier this month showed UK unemployment rising to 2.5 million, although the jobless total in Scotland fell by about 5,000 to 234,000 in the three months to October.

The unemployment rate north of the Border stands at 8.7 per cent, compared with 7.9 per cent for the UK as a whole.

John Philpott, chief economic adviser to the CIPD, said 2011 would be a "fingers crossed" year for the economy and jobs.

"If all goes well and the unexpectedly strong progress made in 2010 is sustained, the jobs market will be able to cope with the impact of the coalition government's spending cuts and tax increases without any significant rise in unemployment," Philpott argued.

"However, things only have to turn out a bit worse than expected in the wider economy for the jobs situation to weaken, which remains the CIPD's central forecast. Either way, this doesn't mean that we are facing a return to the dire recession days of late 2008 and 2009, but nonetheless 2011 will probably feel like another year in the economic doldrums, rather than the start of a return to prosperity."

He added: "Even if 2011 turns out to be a jobs-light, rather than jobs-loss or jobs-standstill year, the chances are that the bulk of any new private-sector jobs will continue to reflect the experience of 2010, with part-time and temporary jobs in the majority."

The report follows a warning yesterday that Britain's jobs market is set to "stall" in the New Year.

Online firm Totaljobs.com said areas where public-sector employment levels are high, such as Scotland, Northern Ireland and the north-east of England, will struggle.

The firm's "barometer" survey is based on data collated from more than 2.5 million jobseekers and some 9,000 recruiters.

Director John Salt said: "We expect a contraction in job supply at the beginning of the year as businesses wait to see how the UK economy performs."