Following on from predictions by the Office of Budgetary Responsibility that the north east is likely to be enduring double-digit levels of unemployment for the foreseeable future the Chartered Institute of Personnel confirmed last week that many employers are close to the tipping point where further redundancies are increasingly likely. Throughout the first episode of the double-dip recession many employers in the region sought to retain staff, in part informed by the ambition to be in as strong a position as possible to move quickly out of recession, in part also as a result of the knowledge that recruiting good quality, skilled workers is more difficult than keeping the employees you already have.
This strategy engendered willing conciliation from trade unions too, with workers agreeing shorter working weeks, pay freezes and other amendments to terms and conditions to work with employers to maintain staff levels as high as possible in what was then thought to be the most difficult economic period. This has contributed to a number of companies being able to ride out the first recession a little easier than would otherwise have been the case and some companies have emerged stronger, more resilient and with better workforce relations.
The failure of the coalition government's economic policy, however, is surely testing those adept measures to breaking point. A new CIPD survey suggests this is 'make or break' time for a large number of employers. Many have been maintaining staff levels above what they need to meet the workload demand of their business, recognising the importance of retaining a skilled workforce. However, many are now questioning the sustainability of this situation and are suggesting that if the economy doesn't pick up very soon, and there is no sign that it will, then as many as two thirds of employers will be looking to make redundancies in the near future.
The real risk of the continuing failure of this government to facilitate economic progress is that the damage inflicted is permanent; as more firms find it difficult to retain staff, to keep skills, there is always a percentage of those losses that do not return with economic growth. The key driver persuading employers to seek to maintain staffing levels above what is strictly needed for their business is the recognition that it is much more difficult to get back to the number of employees, with the same skills, knowledge and experience that has been lost. It means reduced capacity in our economic base.
It is this permanent scarring that should inform the government to take more action to improve the economic fortunes of the UK, especially in regions like the north east, where unemployment and a relatively weak private sector ensure the recession impacts deeper and longer than in other parts of the country. It is not sufficient to simply repeat the mantra of reducing public spending and reminding people that it is going to be 'tough' for a while.
Briefing document (600 words) issued 20 Aug 2012
This page http://www.tuc.org.uk/economy/tuc-21337-f0.cfm
printed 18 May 2013 at 14:22 hrs by 18.104.22.168