Warning over further job losses from Bank of England

The Bank of England has warned that the UK could be in line for another wave of job losses as a result of productivity falling faster than wages. The central bank claims that this could result in further job losses in the New Year, which would come as a huge blow given the many jobs that have already been lost during the recession.

Many employees have managed to keep their jobs as a result of agreeing to reduced hours or pay cuts, but if things don’t improve even this may not be enough to save their jobs. Wage costs for many companies have dropped as a result of cutting pay and losing staff, but productivity has fallen even faster and it is this that could lead to further job cuts in the New Year.

The Bank of England recently published its quarterly inflation reports, and in it stated that whilst dole queues had not increased as fast as some had expected during the recession this could quickly change and the number of people claiming benefits could rise sharply as more and more people lost their jobs. The central bank also said that changes would need to be made in the labour market if companies wanted to reduce their costs and increase their income.

The concern now is whether these changes will result in companies further cutting pay for employees in order to save money or whether they will decide to lost members of staff. The continued sluggishness of the economy is also likely to affect the number of job losses that is seen next year.

The Bank said: ‘There remains a risk of a larger retrenchment if demand turns out to be weaker than companies expect.’ It added that future employment levels could ‘partly depend on the willingness of creditors to show ongoing forbearance’.

Tags: Labour, huge blow, Confederation of British Industry, bank of england, job losses