SNP hit out at Labour over council redundanciesThe UK jobs market is likely to be under real pressure in the early part of the year with expenditure cuts reducing public sector employment.

The latest data from the REC’s December JobsOutlook shows positive signs from private sector employers with one in four businesses saying they would be adding to their headcount during the year.

In addition to the 23 per cent of businesses planning to take on more permanent staff in 2011, a further 32 per cent said they would be growing their temporary workforce. Only five per cent of employers were predicting a decrease in their workforce numbers.

However, optimism for the jobs market must be tempered by the impact of public sector cuts. The JobsOutlook survey shows that 40 per cent of public sector employers expect a direct impact on employment in the sector. Because of this the REC forecast is that unemployment will rise from 2.47 million to 2.65 million by mid 2011 as public sector cuts start to bite.

The increasing employer confidence will lead to more opportunities in the private sector but this will not be strong enough to compensate in the short term. The REC’s assessment is that unemployment will peak at 8.4 per cent in mid to late 2011.

Commenting on the jobs forecast for 2011, Kevin Green, the REC’s Chief Executive says:

“The outlook for the UK jobs market is mixed but there is scope for cautious optimism. The increasing employer confidence is a good sign and the feedback from professional recruiters confirms that fluidity is returning to many sectors of the labour market. Demand for staff is likely to continue expanding in areas such as financial services, export-focused industries and knowledge intensive sectors such as technology and pharmaceuticals.

“Businesses are also looking to build greater flexibility into their resourcing which will provide temporary and contact work opportunities. Overall, we expect the jobs market to remain in recovery mode for the early part of the year, with a more marked upturn during the second half of 2011.”