No let up in gloomy outlook

With job cuts and pay freezes continuing to cast a shadow over 2010, despite a huge hike in inflation, the TUC has warned that reduced consumer demand could threaten economic recovery.

Frances O’ Grady, deputy general secretary, said: “If staff are not paid properly then companies will have no-one to buy their goods and services,” although she warned that some employers may be exaggerating the need for pay restraint in order to boost profits.

The evidence is not encouraging. A survey by the Chartered Institute of Personnel and Development and consultants KPMG suggests that redundancies will double compared with the final quarter of 2009, with the outlook particularly bleak in the public sector.

Alan Downey, head of public services at KPMG, described the figures as “the starting gun for a public sector recession”. The private sector was expecting a slight increase in staff numbers, and pay rising by 2% (compared with under 1% in the public sector but a tenth of private sector companies were planning to outsource jobs overseas.

Forecasts for 2010 by trade union reps and officers were also gloomy, Labour Research’s sister magazine Workplace Report recently reported. Half of those taking part in a survey at the end of last year gave a negative assessment of the economic outlook while almost two thirds said bargaining would be tougher.