Will The Private Sector Create The Jobs Required

[jaynewcastle]

With the looming announcement of further public sector job cuts, can the private sector create increased employment opportunities for those forced out of their current jobs ?

[jaynewcastle]

With the looming announcement of further public sector job cuts, can the private sector create increased employment opportunities for those forced out of their current jobs ?

[The Masked Tulip]

With the looming announcement of further public sector job cuts, can the private sector create increased employment opportunities for those forced out of their current jobs ?

No.

The Govt has no idea how to create jobs and there have been no incentives, direction or vision from Govt for the private sector to do so.

[Snugglybear]

I've posted this before, but I'll post it again. From the Touchstone blog back in July when the OBR's comedy forecasts were published. http://www.touchstoneblog.org.uk/2010/07/obr-analysis-where-will-the-new-jobs-come-from/

Anyone who argues that it's from the TUC and therefore untrustworthy ignores the fact that the figures are historical and a matter of public record.

"The Office for Budget Responsibility is forecasting the net creation of 2 million jobs over the next five years – but has provided no information on where these jobs are likely to come from. As Adam has pointed out, in previous recessions it took considerably longer for employment levels to rise by this amount.

So, in an attempt to better understand the OBR’s forecasts and consider where jobs may be created, we have (as reported in The Guardian on Saturday) looked at jobs growth by sector following previous recessions.

ONS’s estimates of workforce jobs are the best means to consider change in employment levels by sector. Although job levels vary from employment levels (some people have two jobs, and the workforce jobs estimates are mainly taken from employer surveys rather than the Labour Force Survey) net change provides a good indication of how employment changed across the economy in previous post-recession periods.

Looking firstly at the1980s recession, from the second quarter of growth following the end of the downturn (Q3 1981) to Q4 1988 (the point at which employment levels – as set out in Adam’s analysis – had increased by 2 million) the total number of jobs had increased by 2,416,000. But in some sectors, the number of jobs had fallen. In mining, electricity and gas (-229,000), manufacturing (-733,000) and transport and communications (-37,000) jobs had been lost – a net loss of close to 1 million (999,000) positions.

Other sectors therefore saw significant levels of jobs growth. Finance and business services saw a 1,164,000 increase in jobs, followed by distribution, hotels and restaurants (which includes retail) where 748,000 jobs were created. There was also a significant rise in jobs in (or funded by) the public sector (705,000 jobs created in public admin, education and health) and in construction (430,000).

The period following the 1990s downturn saw a similar pattern. From Q1 1992 to Q3 2001 (the period over which employment levels increased by 2 million) 1,943,000 jobs were created. Again, there were significant falls in some sectors – agriculture and fishing (-195,000), mining, electricity, gas and water (-127,000), manufacturing (-576,000) and construction (-132,000) – which were offset by considerable rises elsewhere. The sectors creating the most jobs were, as with the 1980s, finance and business services (1,414,000), distribution, hotels and restaurants (556,000) and public admin, education and health (387,000).

So, what does this analysis suggest for the current post-recession period? Firstly, it shows that when jobs are falling in some sectors, it is feasible for overall job creation levels to rise – albeit at a slower timescale than forecast by the OBR. But it is also clear that jobs growth in the past has been strongly driven by finance and business services – a sector that has been hit extremely hard by the current downturn losing over 290,000 jobs (compared to a gain of 7,000 jobs over the 1980s recession, and a loss of 94,000 during the 1990s recession).

Public admin, health and education has also seen net gains following previous recessions – but over the next five years the OBR is predicting a net fall in public sector employment of around 600,000. Of course the OBR’s estimates relate to directly employed public sector workers, and increased contracting out may lead to some growth in the number of private sector employees delivering public services. But even if this is the case, with the most severe spending cuts since WW2 on the cards it seems unlikely that (even if public services being delivered by the private sector were included) jobs growth in this area will be on a par with previous post-recession experiences.

If the recovery follows previous models, this would leave retail and hotels as the key driver of jobs creation. If GDP growth follows the OBR’s forecasts, there is no reason to suppose that jobs would not be created in these sectors – but what would the rate be? With growth forecast to be lower than previous post-recession periods, consumption will probably also be less, leading to fewer service sector jobs than in the past. And even the most optimistic scenario could not possibly lead to anywhere close to 2 million jobs in these sectors being created over 5 years – in the entire period since Q1 1980 until the end of last year, only 1,160,000 jobs were gained in distribution, hotels and restaurants.

Given that finance and business services and the public sector will not be driving jobs growth, and that the gains in retail and hospitality may be significant but nowhere near enough to reach the OBR’s totals, hopes may rest with manufacturing. But this would be a heroic assumption – since 1980 more than 4 million manufacturing jobs have been lost, and job levels have been falling consistently since 1998. In the absence of any clear strategy to support manufacturing jobs growth it is unclear both how this trend will be reversed and how enough jobs will be created to allow the realisation of the OBR’s forecasts.

Analysis of jobs growth following previous recessions shows that the OBR’s analysis is at best optimistic. When combined with analysis of change in workforce jobs by sector it becomes even more questionable – 2 million jobs weren’t created in 5 years even when finance was booming and public admin, health and education jobs were on the rise. For their analysis to have any credibility, the OBR need to tell us where the jobs will come from."

[ralphmalph]

No.

The Govt has no idea how to create jobs and there have been no incentives, direction or vision from Govt for the private sector to do so.

I disagree. This govt has realised as you say that a Govt can not create jobs, just look at Obama's efforts. so they are not trying to create jobs themselves. What they are doing is removing the barriers to employment.

So far they have scrapped regional development agencies (good job), redirected the money to local councils to attract business, allowed local concils to keep the extra revenue from business rates and council tax that is raised from new business setting up as opposed to giving it to the central government. They announced a 4 year plan to lower corporation tax for large and small business, announced that the first 10 new employees the employer will not pay N.I so lowereing the cost of employing new staff. They have said that there is to be a "one in one out" for all new business regulation and that there will be a great repleal bill to get rid on amongst other things regulations that are bad for business.

So they have done the best thing posible realised that central govt multi billion pound back to work schemes do not work but freeing up business, lowering the cost of employment and letting the business make more profit means more employment.

Not bad for three months work. Now they just need to get business to invest in the North, Wales and Scotland and they will have done really well.

[interestrateripoff]

We are at the top of the bubble, contraction seems inevitable and I really cannot see how they can create the number of jobs needed unless we have a new bubble say in green energy.

[The Masked Tulip]

I disagree. This govt has realised as you say that a Govt can not create jobs, just look at Obama's efforts. so they are not trying to create jobs themselves. What they are doing is removing the barriers to employment.

So far they have scrapped regional development agencies (good job), redirected the money to local councils to attract business, allowed local concils to keep the extra revenue from business rates and council tax that is raised from new business setting up as opposed to giving it to the central government. They announced a 4 year plan to lower corporation tax for large and small business, announced that the first 10 new employees the employer will not pay N.I so lowereing the cost of employing new staff. They have said that there is to be a "one in one out" for all new business regulation and that there will be a great repleal bill to get rid on amongst other things regulations that are bad for business.

So they have done the best thing posible realised that central govt multi billion pound back to work schemes do not work but freeing up business, lowering the cost of employment and letting the business make more profit means more employment.

Not bad for three months work. Now they just need to get business to invest in the North, Wales and Scotland and they will have done really well.

I would argue that the mindset in many public sector bodies, especially Councils, is not to even consider bringing in private sector bodies to do the work and help drive the economy. That is the problem.

[winkie]

I think the private sector can create the important jobs required....but not all the jobs and not so many jobs.

[ralphmalph]

I've posted this before, but I'll post it again. From the Touchstone blog back in July when the OBR's comedy forecasts were published. http://www.touchstoneblog.org.uk/2010/07/obr-analysis-where-will-the-new-jobs-come-from/

Anyone who argues that it's from the TUC and therefore untrustworthy ignores the fact that the figures are historical and a matter of public record.

"The Office for Budget Responsibility is forecasting the net creation of 2 million jobs over the next five years – but has provided no information on where these jobs are likely to come from. As Adam has pointed out, in previous recessions it took considerably longer for employment levels to rise by this amount.

So, in an attempt to better understand the OBR’s forecasts and consider where jobs may be created, we have (as reported in The Guardian on Saturday) looked at jobs growth by sector following previous recessions.

ONS’s estimates of workforce jobs are the best means to consider change in employment levels by sector. Although job levels vary from employment levels (some people have two jobs, and the workforce jobs estimates are mainly taken from employer surveys rather than the Labour Force Survey) net change provides a good indication of how employment changed across the economy in previous post-recession periods.

Looking firstly at the1980s recession, from the second quarter of growth following the end of the downturn (Q3 1981) to Q4 1988 (the point at which employment levels – as set out in Adam’s analysis – had increased by 2 million) the total number of jobs had increased by 2,416,000. But in some sectors, the number of jobs had fallen. In mining, electricity and gas (-229,000), manufacturing (-733,000) and transport and communications (-37,000) jobs had been lost – a net loss of close to 1 million (999,000) positions.

Other sectors therefore saw significant levels of jobs growth. Finance and business services saw a 1,164,000 increase in jobs, followed by distribution, hotels and restaurants (which includes retail) where 748,000 jobs were created. There was also a significant rise in jobs in (or funded by) the public sector (705,000 jobs created in public admin, education and health) and in construction (430,000).

The period following the 1990s downturn saw a similar pattern. From Q1 1992 to Q3 2001 (the period over which employment levels increased by 2 million) 1,943,000 jobs were created. Again, there were significant falls in some sectors – agriculture and fishing (-195,000), mining, electricity, gas and water (-127,000), manufacturing (-576,000) and construction (-132,000) – which were offset by considerable rises elsewhere. The sectors creating the most jobs were, as with the 1980s, finance and business services (1,414,000), distribution, hotels and restaurants (556,000) and public admin, education and health (387,000).

So, what does this analysis suggest for the current post-recession period? Firstly, it shows that when jobs are falling in some sectors, it is feasible for overall job creation levels to rise – albeit at a slower timescale than forecast by the OBR. But it is also clear that jobs growth in the past has been strongly driven by finance and business services – a sector that has been hit extremely hard by the current downturn losing over 290,000 jobs (compared to a gain of 7,000 jobs over the 1980s recession, and a loss of 94,000 during the 1990s recession).

Public admin, health and education has also seen net gains following previous recessions – but over the next five years the OBR is predicting a net fall in public sector employment of around 600,000. Of course the OBR’s estimates relate to directly employed public sector workers, and increased contracting out may lead to some growth in the number of private sector employees delivering public services. But even if this is the case, with the most severe spending cuts since WW2 on the cards it seems unlikely that (even if public services being delivered by the private sector were included) jobs growth in this area will be on a par with previous post-recession experiences.

If the recovery follows previous models, this would leave retail and hotels as the key driver of jobs creation. If GDP growth follows the OBR’s forecasts, there is no reason to suppose that jobs would not be created in these sectors – but what would the rate be? With growth forecast to be lower than previous post-recession periods, consumption will probably also be less, leading to fewer service sector jobs than in the past. And even the most optimistic scenario could not possibly lead to anywhere close to 2 million jobs in these sectors being created over 5 years – in the entire period since Q1 1980 until the end of last year, only 1,160,000 jobs were gained in distribution, hotels and restaurants.

Given that finance and business services and the public sector will not be driving jobs growth, and that the gains in retail and hospitality may be significant but nowhere near enough to reach the OBR’s totals, hopes may rest with manufacturing. But this would be a heroic assumption – since 1980 more than 4 million manufacturing jobs have been lost, and job levels have been falling consistently since 1998. In the absence of any clear strategy to support manufacturing jobs growth it is unclear both how this trend will be reversed and how enough jobs will be created to allow the realisation of the OBR’s forecasts.

Analysis of jobs growth following previous recessions shows that the OBR’s analysis is at best optimistic. When combined with analysis of change in workforce jobs by sector it becomes even more questionable – 2 million jobs weren’t created in 5 years even when finance was booming and public admin, health and education jobs were on the rise. For their analysis to have any credibility, the OBR need to tell us where the jobs will come from."

http://www.economicsuk.com/blog/001196.html

Here is another view on the same stats.

[Tired of Waiting]

With the looming announcement of further public sector job cuts, can the private sector create increased employment opportunities for those forced out of their current jobs ?

I think it will be almost impossible. the problem is that there is no alternative, as there is no money left. We were discussing that a few days ago, in that thread on Clegg's interview on Radio 4.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=150817&view=findpost&p=2704187 Clegg said that the cuts would be 6% / year. So, we were thinking:

6% of gov. spending, or the equivalent of about 3% of GDP.

In 2009-10 gov. revenues were £496bn, but spendings were £671bn.

The government plan is to keep interest rates as low as possible, to allow the private sector to grow enough to compensate the cuts.

But that means the private sector will have to grow by 6%/year too, or around 3% of GDP. Not easy. Unfortunately, there is no alternative. We run out of cash, a long time ago actually, and we are now close to run out of credit too. It is an all-mighty mess. Let's just hope (and pray) it works. As there is absolutely no viable ( = sane) alternative.

If the BoE prints more, the lenders will stop lending in sterling. (Who will be stupid enough to buy bonds in sterling? Or what interest rates would be enough to attract buyers?)

If the government keeps running fiscal deficits, the lenders will also stop lending (As above.)

It is indeed an almighty mess.

Yes, I think it will be virtually impossible for them, politically, to cut by that amount and speed, with the Labour party and the BBC opposing it.

The only other way to reduce the deficit would be to increase taxes. But that would repress growth even more.

And if they don't reduce the deficit, it will get more expensive to roll the debt - increasing the deficit.

It is a mess.

Apologies for the depressing analyses.

.

Edited September 14, 2010 by Tired of Waiting

[tim123]

I disagree. This govt has realised as you say that a Govt can not create jobs, just look at Obama's efforts. so they are not trying to create jobs themselves. What they are doing is removing the barriers to employment.

So far they have scrapped regional development agencies (good job), redirected the money to local councils to attract business, allowed local concils to keep the extra revenue from business rates and council tax that is raised from new business setting up as opposed to giving it to the central government. They announced a 4 year plan to lower corporation tax for large and small business, announced that the first 10 new employees the employer will not pay N.I so lowereing the cost of employing new staff. They have said that there is to be a "one in one out" for all new business regulation and that there will be a great repleal bill to get rid on amongst other things regulations that are bad for business.

So they have done the best thing posible realised that central govt multi billion pound back to work schemes do not work but freeing up business, lowering the cost of employment and letting the business make more profit means more employment.

Not bad for three months work. Now they just need to get business to invest in the North, Wales and Scotland and they will have done really well.

Are you sure that you're not a stooge for the Tory party. This looks just like a politician answering a question on TV by simply reeling off a load of new policy.

The question is not "what they have done", but "do people think that it will work".

I agree with the PP. The answer is no

tim

[feed]

Full time employment for all is history.

The jobs have gone. Forever.

Who will create the replacement jobs is the wrong question.

[ralphmalph]

Are you sure that you're not a stooge for the Tory party. This looks just like a politician answering a question on TV by simply reeling off a load of new policy.

The question is not "what they have done", but "do people think that it will work".

I agree with the PP. The answer is no

tim

I would say that the real question is does business both large and small think that what the coalition has done means they can take on extra employees. It has nothing to do with the people at large at all, how many of them make hiring decisions.

[alexw]

http://www.economicsuk.com/blog/001196.html

Here is another view on the same stats.

What a piece of fluff.

Absolutely no real analysis. You'll have to do better than that.

[zilly]

With the looming announcement of further public sector job cuts, can the private sector create increased employment opportunities for those forced out of their current jobs ?

Don't see it. Two decades plus of downsizing and offshoring, and no way of reversing the process without very drastic action.

The dot com and credit/real estate bubbles have been very useful for the globalists, as they've masked the true effects of globalisation on countries such as ours.

Over the coming years we will see those effects laid bare - the jobs have gone, and they aren;t coming back.

The future does not look pretty IMO.

[ralphmalph]

What a piece of fluff.

Absolutely no real analysis. You'll have to do better than that.

So where is the real analysis in the TUC article or is that fluff as well?

[fellow]

With the looming announcement of further public sector job cuts, can the private sector create increased employment opportunities for those forced out of their current jobs ?

Why would public sector cuts increase the employment opportunities in the private sector?

[LuckyOne]

With the looming announcement of further public sector job cuts, can the private sector create increased employment opportunities for those forced out of their current jobs ?

The truly private sector is really tiny. Even if it were to increase employment by 50%, the absolute numbers would be so miniscule that the jobs market wouldn't even notice it.

The challenge for the government (this one as well as the next one to three) is to allow the truly private sector to grow organically for the next decade or so until its contribution to the economy becomes material again rather than having a large, debt financed public sector.

The damage has been massive and will not be corrected in the short term. No matter where we work and how much or little money we are paid, we are all going to have to pay the price for the explosion in the size of the public sector financed by the expectation that the perpetual money motion scheme skimming money for the government was indeed perpetual rather than a simple ponzi scheme.

[Tired of Waiting]

Why would public sector cuts increase the employment opportunities in the private sector?

The main certainty is that if the government doesn't reduce the deficit we will have a falling sterling, inflation, and high interest rates. And that will push us into a deep recession.

If they reduce the deficit, sterling will fall less, we will have less inflation, and IRs won't go too high up. And that will be a bit less disastrous.

[aa3]

Once you start thinking about the coalition talk it is just silly. The private sector is not going to suddenly create good jobs by the several million in Britain. It is reducing good jobs, and has been for several decades now.

Without the huge stimulus the first thing companies in Britian would do is downsize to meet the lower demand. Then once they all did that demand would be even lower so they would have to downsize again.

Luckily the coalition has figured this out too.. and they are saying uh.. maybe we'll start cutting like sometime next year.

[blankster]

Short answer - no.

[InternationalRockSuperstar]

With the looming announcement of further public sector job cuts, can the private sector create increased employment opportunities for those forced out of their current jobs ?

not while the state still has in place a multitude of forced restrictions in every market.

[Fairies Wear Boots]

I don't see how they can look back at previous recessions and use what happened in those as a guide to what will happen in this.

I'm quite surprised that hospitality and retail increased in one of the last recessions. As this is a debt based recession, won't people not have enough money to spend more in the shops? Or is that what ZIRP is all about, letting shoppers spend as well as pay their mortgages?

[SNACR]

No, and any business that finds itself lumbered with a large fixed cost work force will find that its products are uncompetitive.

Employment contracts and worker's rights, much like 10 year + property leases, belong to another era, It's very uncommon now for any, particularly start-up but also existing, businesses to devise business models that they can be confident of having a shelf-life the length of a property lease and certainly not the entire working life of an adult in the UK.

I intend to reduce massively the number of staff per £1 turnover throughout the next decade. Mostly through automation but also a steady increase in making customers aware of how much extra they pay for service and how much they can save if they go without it - won't they see through this and realise they're ultimately destroying their own jobs? Absolutely, just like they all paid more for domestically produced products to keep out manufacturing industry alive.

[non frog]

No.