Why jobs are on a slippery slope

UNEMPLOYMENT is close to an all-time low. The labour market is in great shape and the prospects for jobs are excellent. That is the story the politicians have tried to drum into our heads during a month of election campaigning.

Few people have objected to these claims, but a growing tide of evidence from the labour market is telling a different tale.

Jobs are being slashed at some of Britain's most established employers, including MG Rover, Marconi, Waterford Wedgwood and, most recently, US computer giant IBM, which has substantial operations here.

Public sector jobs growth is set to fall and the Office for National Statistics says that the trend in employment is now firmly downwards. To top it off, a disturbing survey yesterday predicted that more than half a million more jobs will be lost in the next three years.

Are these warnings really compatible with the claims - accepted by all three major parties - that the labour market is in a good state? The short answer is No. The long answer is even more difficult to stomach. Recent job cuts may have been upsetting, but they will certainly not be the last.

The consequences of a significant rise in unemployment are likely to have repercussions in the febrile housing market, which has been propped up not only by low interest rates but also by people's optimism over their job prospects.

If a report from ABN Amro is to be believed, manufacturers will be joined by retailers and services providers in cutting back on staff in a painful purge of the jobs market. The investment bank believes the economy is heading for its toughest year since Britain plunged out of the Exchange Rate Mechanism and into recession 13 years ago.

Its UK economist, James Carrick, said that 500,000 jobs on the High Street and in factories could be lost by 2008. This total could climb to 650,000 if the consumer downturn was even worse than expected.

The grim forecast comes at a time when beleaguered manufacturers are already cutting staff at a frightening rate. They have been hit by the rising cost of oil and raw materials, according to David Smith, UK economist at Williams de Broe. He says: 'Companies which produce goods, rather than services, are not able to compete with manufacturers in China and India. They have also had to deal with more regulation from the Government.'

Politicians may dismiss heavy industry as passe, but manufacturing still matters - not least because it accounts for half of our exports. So it is deeply worrying for all of us that our industrial heartlands are slowly becoming Bermuda triangles of employment.