Challenging times for the employment market in the UK

On February 25, 2011, in Uncategorized, by Kesh Thukaram

Two major reports released by the Office of National Statistics (ONS) this week just re- affirms the challenges that lies ahead for the employment market in the UK.

Firstly, the inflation figures released deflated the hopes of many people who were hoping that interest rates would be left untouched for some time. The inflation at its current levels of 4% is double the target rate set by the government for Bank of Inflation. Most analysts believe that the Bank of England has to increase the base rate of interest from its historical low levels of 0.5% by at least a quarter or half a point to curb increasing inflation. Though the Governor of Bank of England made a few comments that has dampened the expectations of an early rise, it is inevitable that an interest rate rise is in the offing in the near future.

Secondly, the unemployment in UK for the last quarter of 2010 was 7.9% up a tenth of point from the third quarter of 2010. The major challenge is with the 18 – 24 years olds, wherein about 755,000 people are unemployed, up 42,000 when compared to the third quarter of 2010.

While on one hand the inflation increases the cost of doing business for most small to medium scale businesses which will force them to cut costs even further which may result in more redundancies, the impending cuts of the government of the public sector is only going to make matters worse as there will be more unemployed people in the UK. The government has made repeated statements that the private sector should be able to absorb some of the people made redundant by the public sector, but how much of that is practical is anybody’s guess.

Banks have to be liberal in lending in order to get some momentum in the UK market. But the early signs of the banks implementation of recent agreements with the government for lending to small to medium-sized businesses are far from satisfactory. In the short-term, it is very important for people to consider and invest in a good quality payment protection or income protection insurance so that if they lose jobs, they at least have an alternate cash flow to support themselves and their families.

The next 12 months will be very challenging across almost all sectors of the UK employment sectors and unfortunately there are no easy answers.

 

Comments are closed.