Wednesday, 16 March 2011

Soaking it Up : Can the private sector really absorb public sector job losses?

With the latest unemployment figures hot off the press and showing a rise to over 2.5 million and large scale public sector job losses yet to hit in earnest, one could be forgiven for questioning the Chancellor’s claim that the private sector is well positioned to lead a recovery in the job market and provide a haven for recently unemployed public sector workers.  Certainly in the North East of England, where both the percentage of workers employed in the public sector and the overall rate of unemployment is greatest, the statistics make for gloomy reading.  Whilst sectors such as manufacturing are showing signs of recovery and are slowly starting to employ more workers, this recovery is tentative at best.  Regardless of domestic factors (and the forthcoming Budget will make for interesting reading), the globalised nature of our economy poses some alarming problems for the year ahead.  Rising oil prices are compounded by uncertainty in the Middle East and make a direct impact on the areas of the British economy that are making baby steps to recovery.  The oft-quoted statistic that a $10 rise in a barrel of oil leads to a 0.5% fall in GDP makes for startling reading when considering that in the last quarter alone, prices have risen by $10 a barrel.

With GDP falling in the last quarter in the UK, we are one negative quarter away from recession and faced with a situation of falling growth coupled with rising unemployment, exactly where will the spare capacity be found in the private sector to stem the rise in unemployment?  Speaking as an HR recruiter in the North of England firstly, I do see signs that there is some openness from private business to welcome the skill set of public sector employees.  This may in part be due to the fact that we live in an area with a very high concentration of public sector workers and a huge percentage of candidates that I deal with will have worked in the public sector for at least part of their career.  In advising such candidates, I cannot stress highly enough the value of a good recruiter working on their behalf to really spend time with the client to ‘sell’ the skills and experience of the candidate and explain that in most cases, these skills are indeed transferrable and any shortfalls in commercial knowledge can be quickly picked up and developed.  I’ve lost count of how many times candidates over the past few months looking to move from the public sector have stressed ‘but I’m not really a public sector person at all!’.  If I could give any advice on this, it would be to focus on your competencies and not the sector which you have come from – most skills, certainly within HR, are broadly transferrable and with a good recruiter representing you properly there is no reason why you can’t make the transition – provided the jobs are there!

Which brings us back to the central point – where are the jobs coming from?  I was astonished just the other day to read that if HALF of the SME’s in the UK were to take on just one member of staff, we would have NO unemployment in the UK.  The governing party (well, the lead party in the coalition of partners if we are being diplomatic!) bill themselves as the party of enterprise yet the SME sector has been bashed from all sides in the past year – increases to VAT, increases to employer NI contributions and a banking sector which is just paying lip service to opening up credit lines all combine to make life very difficult indeed for the SME sector.  If the Chancellor is serious about boosting growth and employment, then our small businesses could hold the key – especially in the North.  Whilst most people to one extent or another recognise the need to cut the deficit, without tax revenue from employees, the austerity drive is doomed to failure.  With some concessions to small business and the private sector economy as a whole in next week’s Budget, the aim of absorbing public sector workers looks more achievable.

It goes without saying that if you are a public sector employee working in Human Resources, I will do all that I can to help you make the transition to the private sector – feel free to contact me for any advice or pointers.  As you might have guessed, I’m always available for a chinwag on socioeconomics too!  We’re a multi-faceted bunch at Exclusive Human Resources but then we do strive to be different!

Gareth Harrison - Senior Consultant