We are likely to witness a new North/South divide, courtesy of the government’s Comprehensive Spending Review, according to thinktanks and unions.
Umbrella company contractors may need to carefully consider which side they are on.
Although the government believes that the private sector will be able to create jobs for the 490,000 public sector workers who are going to be made redundant, towns such as Blackpool and Liverpool, which have weak private sectors, are going to feel a disproportionate impact.
The senior economist at the Work Foundation, Neil Lee, said that it was important to realise that the public sector is not only an employer. It also supplies local services and provides opportunities for local businesses. The cuts in public spending will have a knock-on effect on private sector employment, and areas with weaker economies will be hit worst.
Ed Cox, a director of the Institute of Public Policy Research North, agreed saying that the speed and severity of the cuts are a major threat to the recovery of the North of England. The area was the hardest hit by the financial crisis and is still struggling to recover. A lot of jobs in the North are reliant on the public sector and these drastic cuts could cause a sudden increase in unemployment and a large rise in the benefits bill.
The Institute thinks George Osborne should have arranged to reduce the budget deficit over a period of 6 years, instead of the planned 4. If there was also scope for adjustment, the North would stand a better chance of a private sector recovery, which could in turn absorb some of the public sector job losses.
The general secretary of the TUC, Brendan Barber, agreed that job losses in the public sector are going to occur in some depressed areas of the UK where there is already poor private sector recruitment.
Let’s hope that things turn out better than people are currently predicting!
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