The Chartered Institute of Personnel and Development publishes a new report: Counting the cost of the jobs recession
- Almost 2.7 million people have been made redundant in the past four years, equivalent to one in ten employees at the start of the recession. The manufacturing and construction sectors together account for a third of total redundancies since 2008 (more than double the combined share of these sectors in total employment). By comparison public administration, education and health account for 11% of redundancies, while the finance, insurance and real estate sector accounts for 6%.
- Adjusting for the share of redundancies across sectors and differences in the average cost of redundancy between sectors, the total cost of redundancy to UK employers since the start of the jobs recession is an estimated £28.6 billion.
- The cumulative loss of output to the economy as a result of the jobs recession amounts to between £87 billion and £135 billion (6% to 10% of GDP), depending on different assumptions about the potential productivity of unemployed people and the extent of underemployment amongst people in work.
- Two-thirds of people made redundant are paid less in the next job they find. On average the pay penalty is 28%.
- High and rising unemployment has put downward pressure on pay increases since 2008. The proportion of employees receiving a pay increase has dropped from two-thirds in 2008 to less than half (45%) in 2011. In cash terms the average worker is £3000 a year worse off than if pay had increased at the pre-recession rate.
- Higher inflation has also resulted in a real pay squeeze. Private sector workers are on average earning 7% less in real terms than in 2008 and public sector workers 4% less.