The UK’s Chartered Institute of Personnel and Development (CIPD) has reviewed economic forecasts from a number of organisations (including the Office for National Statistics and the European Commission) and published its predictions for 2015 for the UK’s labour market.
The economy in 2015
UK growth forecasts range from 2.4% (Office for Budget Responsibility) to 2.7% (European Commission and OECD). Current forecasts are based on continued cuts in public services. However, the UK is facing a general election in 2015 and a new government may change public spending policies.
After a long period of low rates, forecasters are predicting that the Bank of England will begin to increase interest rates in 2015. However, any rates rises will be low – particularly as inflation levels are below the 2% target.
Also likely to impact the UK’s economy in 2015 is the economic situation in Europe. Government debt remains high across the Eurozone and six member states are experiencing negative inflation rates. Slow growth in the Eurozone will impact the UK – seven of the UK’s top ten export markets are in Europe.
The workforce in 2015 – predictions
- Employment up 400,000 by end of 2015
- Unemployment falls 200,000 to 1.7 million
- Labour supply increases (more EU migrants; changes to benefit systems; increase in older workers)
- Average earnings expected to grow by 2%
Implications for employers
Employers should focus on improving productivity - this may require investment in capital assets and in people through improved job design and management practices.