Unemployment time-bomb revealed in report

New research has indicated that the recent improvement in the UK employment situation is in danger of being reversed soon, should the economy stay in the doldrums.

The Chartered Institute of Personnel and Development (CIPD) has found a third of employers are currently maintaining staffing levels above their current needs, with 62 per cent of such companies doing so in order to retain their skills.

It also found that in the short term, the prospect is for a further fall in joblessness as five per cent more firms intend to take on staff than shed jobs in the third quarter.

However, the poll also found 62 per cent of employers believe they will have no choice but to cut back on their workforce if the economy does not pick up within the next year.

Discussing these findings, CIPD labour market advisor Gerwyn Davies said: "This is a make or break moment for employers – unless growth picks up many will find that they cannot hold on to some workers any longer."

He added: "The labour market is approaching a game-changing phase – one that could shape Britain’s capacity to compete for a generation."

In the first instance, this could cause many Britons to find themselves in debt problems, because they will lose the ability a working income gives them to meet their repayments should they be made redundant.

Those hit in such a way should seek help to deal with their debt as soon as possible to stop it spiralling out of control.

Secondly, if the warning given by Mr Davies turns out to be fulfilled, Britain's long-term economic performance would be weak even when the international crisis passes and this may cause more debt problems due to the number of new jobs generated being low.

The latest Bank of England forecast has been for very low growth over the coming months.

By Joe White