Until recently, unemployment had actually been on its way down, dropping by 49,000 to 2.46m in the three months to the end of June. But back in July, after ordering Government departments to identify budget cuts of between 25% and 40%, Chancellor George Osborne hinted that any department that managed to slim down early would be looked upon favourably ahead of October’s axe-swinging spending review. As a result, departments are trying to get their retaliation in early by making a start on redundancy programmes. This was the big check on job market growth in August, according to REC.
Unfortunately, the chances of things picking up in the near future look slim. The Office for Budget Responsibility has estimated that the spending review could lead to 600,000 people working in the public sector losing their jobs over the next six years. That’s an awful lot of out-of-work civil servants to boost those unemployment figures (not to mention the Government’s jobseekers allowance bill).
The Coalition's theory, of course (and the OBR appears to concur) is that the private sector will roar into action and pick up the pieces – ultimately ensuring that the jobs market will grow over the course of this Parliament. But with business and consumer confidence still looking pretty weedy (the REC survey also found that salaries are rising at the slowest rate in seven months), we can't help feeling this still looks like a pretty long shot. Let's hope we're wrong.