Crystal Umbrella

Anxious contractors working through umbrella companies may be heartened to hear that they should not have to worry too seriously about employment prospects for the coming year, following news that there is unlikely to be a dramatic rise in unemployment over the next twelve months, according to Work Wise UK.

Commenting on figures just released by the Office for National Statistics, Work Wise UK’s Chief Executive, Phil Flaxton, believes they bode well for 2011. For those aged 16 to 24, employment remained at 70.8% over the three-month period from September 2010 and total employment actually increased during the same period. This seems to have occurred largely as a result of more people opting for self-employment – a trend that may indicate the umbrella contracting market is starting to pick up.

Mr Flaxton reported that several business leaders are confident that the private sector will absorb some of the job losses which are expected in the public sector; he also believes that the UK’s still-prevalent skills shortage will help ensure that unemployment levels stabilise and may even fall. Skilled professionals on the contractor payroll are likely to draw some comfort from this view.

Even so, he cautioned against wild optimism; many believe that the record low employment seen over the last ten years was an effect of the previous government’s massive creation of new jobs in the public sector, and that’s clearly about to change. Flaxton also believes that growth in the private sector sufficient to absorb all the public sector’s job losses will take several years to achieve, a view shared by the CEBR and the Institute of Directors.

The latest available figures show that the number of unemployed people in Britain has fallen once again. These figures from the Office for National Statistics (ONS) shows that for the quarter ending in December unemployment stood at 2.46 million which was a decrease of 3,000 from the previous quarter. The rate of unemployment showed no change, staying at 7.8%. However, there was an increase in the number of people claiming Jobseekers Allowance which was up to 1.64 million – a rise of 23,500.

Chief economic adviser of thee Chartered Institute of Personnel and Development, Dr John Philpott said: “Today’s unemployment figures confirm that the UK jobs market is still in an extremely fragile state. New official estimates of ‘underemployment’ also show that the pain of the recession is much deeper than the headline numbers indicate. With a weak economic recovery set to result in further job losses in the coming months it is highly likely that the unemployment situation will get worse before it starts to get significantly better.”

Chief economist from the British Chambers of Commerce (BCC), David Kern, spoke to the Recruiter about these latest figures: “The economy is still very weak, and there is clearly no justification for an immediate tightening in monetary policy. The forthcoming Budget provides the Government with a perfect opportunity to introduce measures that will support businesses’ ability to increase employment – with particular emphasis on full-time jobs. It should start by scrapping the hike in employer National Insurance Contributions, planned for next year, and substitute it for a 1% rise in VAT.”

‘What Do Graduates Do?’ is a new survey conducted by the Higher Education Careers Services Unit (HECSU) in association with the Universities and Collesges Admissions Services (UCAS) and the Association of Graduate Careers Advisory Services. This research has shown that the prospects of a graduate facing unemployment are now at their highest level since 1995/6.

The survey was conducted amongst 220,065 graduates from 2008. Of those surveyed, 7.9% were unemployed. This is an increase of 2.4%.

With regards to those graduates who were successful in finding employment, these figures have decreased in every sector. Financial services housed 7.5% of graduates compared with 8.7% the previous year. There was a similar decrease in graduates working within the IT sector.

HECSU chief executive Mike Hill says “We’re now starting to see the extent of the impact the recession has had on graduate unemployment. Despite unemployment increasing, for those who have found a job, salary levels are holding up. Any signs of economic recovery may not be reflected in the destinations of new graduates until the 2010 graduating cohort. In fact it’s likely that unemployment for 2009 graduates may be even higher than that reported here. However, graduates shouldn’t feel disheartened; many organisations continue to recruit, and a degree will certainly remain valuable for many years to come.”

Meanwhile, another new report from Centre for Cities has detailed that 52% of graduates currently work in the public sector. However, it is expected that 290,000 public service jobs will be lost over the next five years.

Dermot Finch, chief executive of Centre for Cities, commented: “In a public spending squeeze, UK graduates will continue to find it tough to take their first step on the employment ladder. This means more private-sector opportunities will be needed to bridge the gap.”