Jobless rate to hit nine per cent in 2011

UNEMPLOYMENT will increase to 2.7 million and average earnings will rise by a below-inflation two per cent next year, a leading business group predicted today.

The Chartered Institute of Personnel and Development (CIPD) said the jobless rate will reach nine per cent in 2011, with public sector employment set to fall by 120,000 and private sector jobs cut by 80,000.

The group forecast that the number of people in work will fall by 200,000 next year.

John Philpott, chief economic adviser to the CIPD, said 2011 will be a "fingers crossed" year for the economy and jobs.

"If all goes well and the unexpectedly strong progress made in 2010 is sustained, the jobs market will be able to cope with the impact of the coalition government's spending cuts and tax increases without any significant rise in unemployment.

"However, things only have to turn out a bit worse than expected in the wider economy for the jobs situation to weaken, which remains the CIPD's central forecast.