The REC is worried that the public expenditure cuts announced in the CSR will lead to kneejerk cuts in staffing budgets.
Those in charge of recruiting may be tempted to take the easy option and axe the budgets for IT contracts and other roles currently fulfilled by umbrella company contractors. This could be a serious error of judgement with detrimental longer term financial implications, the Confederation says.
Jim Berrisford, the Regional director of the REC in Northern Ireland, said that temporary workers are often the first casualties when it comes to cost cutting but taking this option is invariably misguided. Contractors are more likely to be an effective solution to a problem rather than an economic drain on resources.
Berrisford acknowledges that the public sector needs to undergo fundamental reform in the way it delivers services and preening down the workforce is obviously going to play a major part in achieving this. But a workforce made up of highly skilled flexible contractors can play a major role in delivering cost effective, efficient services.
Dr John Philpott, the CIPD’s chief economic adviser, says that about 1.6 million new jobs will need to be created in the private sector by 2015-16 to offset public sector redundancies and January’s VAT rise. The CIPD has estimated that 725,000 public sector jobs will be lost over the next 6 years and another 650,000 jobs in the private sector will go as a result of public sector spending cuts. A further 250,000 private sector roles will be lost as a direct result of the rise in VAT, as demand for goods and services reduces.
The CIPD believes that the private sector is capable of creating 300,000 new jobs each year by 2015-16 if the economy can grow at a faster rate than 2.5% but this looks unlikely to happen before 2013.
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