The CBI said the decade of growth before the recession masked “entrenched” problems, including long-term unemployment and inactivity, high dependency on public sector jobs, and “serious” skills shortages.
A study of future employment trends suggested that the labour market divisions will deepen, with highly-skilled jobs expected to be most in demand in London and the South East, said the CBI.
Director-general John Cridland said: “The boom years before the recession masked the extent of deep-rooted problems in parts of the labour market, including long-term unemployment and an unhealthy dependency on the public sector. These problems will not disappear with the economic recovery and left unchecked will have grave social and economic consequences.
“Only private sector growth can create the jobs we need and we must ensure the fruits of recovery are felt in every region. We need to get the UK working and that is going to require fresh thinking and innovative solutions.”
Latest unemployment figures will be published on Wednesday, and the CBI said it expects the current total of 2.46 million to continue rising through 2011, peaking at 2.6 million, before edging lower next year.
The CBI said long-term unemployment and economic inactivity had been hidden by the cyclical rise and fall in employment, pointing out that 1.4 million people on out of work benefits had been receiving them for nine out of the last 10 years. The business group added that youth unemployment had risen “significantly” since the start of the recession, with 935,000 people aged between 16 and 24 now out of work.
Public sector dependency was particularly high in Wales, parts of Scotland, Northern Ireland, the North East and Merseyside, but less so in Cumbria, the Midlands and the south of England, said the CBI report.
A Department for Business spokesman said: “Our economic priority is strong, sustainable and balanced growth that is more evenly shared across the country and between industries. With major commitments last week from Nissan and BMW we are seeing signs of successful rebalancing of the economy towards exports and manufacturing.
“We also launched the second stage of our plan for growth last week. There will be an intensive programme of engagement with business over the coming months as we develop a radical programme of reforms and action plans for growth in areas like skills, the rural economy and medium sized businesses.”
Source: Press Association