Jobs test essential to North East labour market

A BUSINESS group whose members collectively employ a third of the total North East workforce has urged the Government to introduce a jobs test ahead of any public sector cuts in the region.

The North East Chamber of Commerce (NECC), which has more than 4,000 members, has counselled that cuts to public services must be undertaken with the full understanding of the impact this will have on the private sector.

NECC cites the “untypically large role of the public sector” in the region as a pressing need for what it has called an ‘employment recovery test’.

With 32% of the region’s employees working in the public sector – compared to 27% nationally – the potential heavy impact on the region’s labour market is clear. A secondary effect could be felt due to the extra role of public spending in the economy and the number of private sector firms who rely in part on public sector customers.

Local authorities in the North East alone are predicting cuts of more than £800m to capital spending over the next three years, potentially affecting 17,000 construction sector jobs.

James Ramsbotham, NECC chief executive, said: “It is no secret that the public sector plays a larger role in the North East economy than it does in other regions. We have been working hard to grow the private sector to redress that imbalance but it isn’t going to happen overnight.

“Public spending cuts must be carefully assessed to avoid a knock-on impact on businesses that supply the public sector. The region is relying on companies to create jobs in the future and the Government mustn’t make it harder for them to do so.”

NECC advised that the Government’s ‘age of austerity’ would require a smarter approach to procurement decisions in the region to avoid unintended economic and employment consequences. It also called for the proposed increases to employer National Insurance contributions to be cancelled immediately.

NECC believes the Government could further help economic prospects by taking a ruthless approach to cancelling unnecessary proposed regulation. In addition, it wants to see strong lobbying at European level by North East representatives on employment regulation issues.

The industry warning comes on the day that fresh labour market data showed employment now stands at 69.4% and unemployment at 9.3%.

A study by NECC’s policy team on the state of the labour market has highlighted that the region is in a far healthier state now than during the last recession. Employers have worked closely with employees to find ways to keep skilled staff which has dampened unemployment.

Mr Ramsbotham said: “This comparison demonstrates the measures taken by both employers and employees to look creatively at issues such as hours, pay and overtime rates to minimise the need for job cuts.

“However, this does point to a degree of spare capacity within the current workforce which employers will use before significant re-employment begins.”

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