CIPD – media joyriding

Posted on 2 Nov 2010 by The Manufacturer

Howard Wheeldon questions the worth of CIPD projecting high unemployment figures, suspecting publicity might be the motivation

Just what is it that makes the Chartered Institute of Personnel and Development (CIPD) tick? Heaven only knows, though it is clear today that this is one organisation that is happy to take the media spotlight. If you have never heard of CIPD, don’t kick yourself too hard because you certainly wouldn’t be alone. In fact, CIPD has been around for many years and is an organisation that not only has a very extensive membership across various employment sectors in the UK but also one that, I am told, operates under a royal charter.

Until recently, apart from for organising the odd conference, CIPD was relatively unknown by the general public. Recently, it has been issuing employment forecasts more readily to the press. Thus, CIPD has joined other trade and forecasting bodies including the British Retail Consortium, EEF, the British Chambers of Commerce, the CBI and the TUC in packing out the news with gloom.

This morning, amid a blaze of no doubt very welcome publicity, the CIPD told us that it believes the rise in VAT to 20% in January will result in no less than 1.6 million jobs being ultimately lost across the public and private sectors. So, on top of the 2.45 million people already unemployed, this means that the CIPD in its infinite wisdom believes that very soon UK unemployment will hit 4 million or maybe even more. When I first heard this news reported on BBC Radio 4 News Briefing programme this morning I have to say that my blood started to boil. It isn’t that I have any particular desire to argue the figures being put forward, even if I don’t happen to believe that the situation will be anything like that bad. The point to me is that putting out projections such as these do nothing but harm to the employment sector of the economy, helping to destroy as they do any remaining confidence that we have in our ability to sort out a mess for which, let me remind, we are all in some way or another partially responsible.

True, when it comes to absolute unemployment projections I am also on record putting forward a belief that the total number of UK unemployed could hit close to three million before it peaks. That forecast though is little more than running alongside the national consensus which itself is only slightly above the Treasury’s own figure. But for the CIPD to hide behind a very small rise in VAT to 20% to reason and indeed auto suggest that because of this that UK unemployment might hit four million before the rise has even been implemented looks to me like an attempt to do nothing more than grab the attention of a media which is always hungry for negative news.

Official figures published just a few days ago showed that far from falling off a cliff, as many forecasters had expected, the UK economy was in fact still managing growth. OK, so it is very small and no-one in their right mind won’t entertain the notion situation is likely to deteriorate next year. But for all that the UK economy is still somehow bouncing along. Even erring on the side of caution, it does seem increasingly likely that the double dip theory might prove to be misplaced. Indeed, I wonder whether CIPD has built in to its economic model (assuming it has one) the fact that private sector employers are generally perceived to already be in a lean and mean state. If that’s right then it should mean that they will think twice about cutting even more jobs, particularly if they believe that some kind of recovery and maybe permanent resumption of growth might be around the corner from 2012 onwards. Now I am not suggesting for one moment that such a projection or assumption is one that I would wish to ride right now but by the same token I do not believe the UK economy really is about to fall off its perch or that unemployment will hit four million. More likely, in my commercial view, of the world from now we in the UK move forward on a flat line for the next couple of years.

Back to those CIPD forecasts today. Not content with the Treasury’s own 490,000 figure for the number of public sector jobs likely to be lost, the clever CIPD chaps decided that no less than 725,000 public sector jobs will be lost between 2009/10 and 2015/16. Of course, the clever CIPD guys that put these figures together presumably know full well that it will be five years before anyone can prove that its forecasts were right or wrong so they have nothing to lose by coming out with negative figures that are almost guaranteed to steal media headlines. But even if eventually proved to be right, the figures as they stand now in 2010 are to me nothing more than a complete load of tosh. Yes we all know that many more public sector jobs will be lost over the next few years and that the private sector will unlikely be able to mop up that much of the slack, despite having done so much to help the situation through the past year. The real point though is that precarious though the economy looks, attempting to second guess let alone forecast numbers so greatly in excess of the Treasury or Office for Budget Responsibility forecasts for unemployment numbers (the Treasury forecast for peak unemployment remains at 2.5m) serves no real purpose at all, save making a bad situation even worse destroying confidence and our ability to resolve this difficult situation.

FINAL THOUGHT: earlier this year the CIPD published what was to be subsequently termed as a “shoddy” report on education and training quangos. Some of the accusations made at the time included “that the author of the report seemed neither to understand the work of the identified organisations involved (some in fact were not quangos at all) and as the figures cited in the report were adjudged inaccurate that the author had not checked his facts. The CIPD subsequently withdrew this particular report though not before it had gone out in a blaze of press publicity.

Howard Wheeldon, Senior Strategist at BGC Partners