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CIPD: UK policy-makers have employment lessons to learn from the US


British and EU policy-makers need to learn a lesson from US jobs data as unemployment there drops below the UK rate, according to the CIPD.

After a prolonged period of 'jobless growth', the US economy is now creating jobs at a healthier pace.

The US unemployment rate, at 8.3%, has for the first time since the start of the financial crisis fallen below the UK rate (8.4%), and is now well below the average 10% plus rate in the euro area.

While US unemployment is on a clear downward path, joblessness is rising in both the UK and mainland Europe, with many forecasters expecting UK unemployment to rise close to 3 million (or 9%) by the end of 2012.

John Philpott, chief economic adviser at the CIPD, said: "Policy-makers in both the UK and EU need to learn the lesson of what might be described as today's 'stimulus-based jobs crossover'. The US jobs market is benefiting from a combination of both fiscal and monetary policy stimulus, in stark contrast to the crude austerity being imposed on the UK and euro economies.

"A dash to deficit reduction in the midst of mounting recessionary forces is the wrong medicine. For the UK, this should mean temporary tax cuts to stimulate consumption and job creation plus directed expenditure on infrastructure projects to inject much-needed demand into a stagnating economy."