Unemployment in the UK is expected to peak at 2.8 million next year, according to a report published 21 December by leading employment management group, Chartered Institute of Personnel and Development (CIPD).  This figure is more optimistic than the group’s earlier prediction this year that unemployment would reach 3.2 million by mid-2010. The group said the tail end of the recession will push companies to reduce costs with job cuts, reported Agence France-Presse (AFP).

Read the CIPD’s statement on the report here.

The CIPD report predicted the number of unemployed will rise by 250,000 by the first half of 2010 and reach 2.8 million by the summer. Dr. John Philpott, chief economic adviser to CIPD also forecasted low wage inflation.  The Retail Prices Index (RPI) measure of inflation will be at 3 percent next year and put a strain on pay, reported The Wall Street Journal. But those who are already employed are expected to see a below-inflation pay rise of 2 percent next year, reported the BBC.

Job Centre Puls. Photo credit: Jason Cartwright

Currently, the total number of unemployed in the UK stands at 2.49 million and Britain’s economy is expected to exit the recession by the fourth quarter of 2009. But Philpott also warned that a slower-than-expected the economic recovery could push the peak figure to three million, reported AFP.

The UK public sector is anticipated to make up the bulk of unemployment in 2010 as the government’s cost-cutting plans go into full swing in the New Year. The unemployment figure could stretch beyond 2.8 million if Conservatives gain in the General Election and impose more immediate public spending cuts, reported the BBC. Further job losses may take place as employers consider the anticipated increase in national insurance contributions.

Employers have tried other ways to reduce costs by cutting work hours and impose wage freezes and the CIPD believes a “jobs light/pay tight” recovery period will dominate the next few years, reported The Wall Street Journal.