Company Formation Owners Feel Unemployment Figures Mask Bigger Issue

Last week the Office for National Statistics revealed that throughout September and December, unemployment figures in the UK reduced by 7,000. However, a recent report by the CIPD warns that these figures, while positive, may well mask a broader issue.

Many economists predicted that unemployment in the UK would reach an all time high during the recession. However, while the number of people seeking employment is undoubtedly high, as the recent figures confirm, they are much lower than originally anticipated. However, the impact of the recession on the workforce should not be underestimated, as David Locke, small business advisor to the CIPD concludes:

“The fact that unemployment has decreased is definitely a positive step in the right direction. However, the government needs to realize that employment is not the only casualty of the recession. Indeed the long term impact of widespread redundancy and pay freezes on the UK’s workforce is still yet to be fully realized.”

“The government should also endeavor to find out what happened to the people who were made redundant but are no longer unemployed. Did these people become self-employed as the rise in company formation figures suggest? Or, did they take a significant pay cut to ensure they remained employed? It is important to understand the consequences of redundancy if unemployment figures are to continue to decrease and the productivity of the UK’s workforce is to be maintained.”