Report reveals high cost of redundancies
In its latest Work Audit report, the Chartered Institute of Personnel and Development (CIPD) has looked at the impact of the jobs recession that began in 2008 on employers, workers and the economy as a whole.
The report, 'Counting the cost of the jobs recession,' based on official statistics and CIPD survey evidence, finds:
- Almost 2.7 million people have been made redundant in the past four years, equivalent to one in ten employees at the start of the recession.
- Adjusting for the share of redundancies across sectors and differences in the average cost of redundancy between sectors, the total cost of redundancy to UK employers since the start of the jobs recession is an estimated £28.6 billion.
- The cumulative loss of output to the economy as a result of the jobs recession amounts to between £87 billion and £135 billion (6% to 10% of GDP), depending on different assumptions about the potential productivity of unemployed people and the extent of underemployment amongst people in work.
- Two-thirds of people made redundant are paid less in the next job they find. On average the pay penalty is 28%.
- High and rising unemployment has put downward pressure on pay increases since 2008. The proportion of employees receiving a pay increase has dropped from two-thirds in 2008 to less than half (45%) in 2011. In cash terms the average worker is £3000 a year worse off than if pay had increased at the pre-recession rate.