2008 to be ‘worst year for jobs this decade’

The economic downturn will slash growth in the job market next year, an influential study has claimed.

The annual report by the Chartered Institute of Personnel and Development (CIPD) forecasts that there will be a net gain of 75,000 jobs in 2008 – just a third of the number forecast for each of the previous two years.

The employment organisation's chief economist John Philpot said that strong growth in the private sector over the past couple of years had compensated for fewer public sector jobs.

"But 2008 will be the first year for a decade that the engine of job creation will be spluttering right across the economy," he said. "This will be the worst year for jobs this decade and easily the worst since the Labour government came to power in 1997."

The report forecasts that the number of people out of work will rise by 150,000 to 1.8 million, with higher fuel costs and food prices continuing to push the cost of living above likely rises in income.

In his new year message to members, the general secretary of the TUC, Brendan Barber, agreed that 2008 was set to be "a rocky year" but warned against "talking ourselves into thinking the economic situation is worse than it is".

"Employment remains at record levels, and businesses say they are optimistic for the year ahead," he said. "Lower interest rates can only help. The greatest threat would be to confuse the difficulties now being suffered by banks with the economic fundamentals."