The unemployment boom

Posted on 21 Feb 2011 by The Manufacturer

Can manufacturers cash in on job losses in the public sector and cold competitive climates in service and retail?

Last week the Office for National Statistics released new employment figures for the UK. The stark statistics revealed that unemployment in the UK has risen to a shocking 2.49 million, an increase of 44,000 in the last three months alone.

Following the release of the ONS figures Neil Prothero, analyst at the Economist Inteliigence Unit, submitted the following comment to The Manufacturer: “The structural weakness of the economy and the intensified fiscal squeeze will continue to loom over the UK jobs market.”

Focusing on the news that employment for young people had fallen by another 0.3% on the previous quarter Prothero continued: “The outlook remains ominously uncertain for the UK’s next generation of workers, who face a Britain damaged by the effects of the financial crisis and recession. In the decade prior to 2008 the economy, and thus job creation, was driven in large part by the expansion of the public sector, financial services, construction and retail–all of which now face a sobering period of adjustment.”

Prothero admitted that the private sector and manufacturing in particular had great potential for filling the employment deficit left by public sector cuts but cast doubt on the sectors ability to save a generation from the effects of a culture of job loss: “New areas of growth will emerge over time, in manufacturing, “green” energy and technology, but with the outlook for private consumption so muted, and labour productivity still subdued, we are sceptical that hiring by the private sector will pick up sufficiently strongly this year and next to offset the public sector culls.”

Philip Whiteman, CEO of the manufactunring Sector Skills Council, Semta responded to Prothero’s comments with the following thoughts: “We know that the engineering and manufacturing sectors are at the heart of rebalancing the UK economy and newly released CBI industrial trends data demonstrates the valuable contribution the industry makes. Semta represents 130,000 UK sites employing 1.8 million people who each add value which is well above the national average.

“As older workers retire and emerging technologies, like composites and biotechnology, create the need for increased technical and higher level skills, we’re working with colleges and universities and creating apprenticeship frameworks that provide innovative development pathways from apprentice to degree and masters levels. It is these frameworks that will be crucial in making sure companies develop appropriate skills. Currently, only 15% of engineering employers offer apprenticeships, so we’re actively working with businesses to help them understand the value of apprenticeship programmes in helping deliver the 10,000 higher skilled employees that will be needed each year between now and 2016.

“There are some terrific opportunities. For example, one company with an established and growing apprenticeship programme in place is leading car manufacturer BMW, which is currently looking to recruit additional apprentices to its already 145-strong programme. Apprenticeships provide real business benefits such as making increasing productivity levels and competitiveness by addressing the issue of skills gaps directly, even in uncertain economic times.”

This optimistic response to the challenge facing private sector enterprise is encouraging however Whiteman does fail to respond fully to the time sensitivity issue raised by Prothero. Are British employers in the manufacturing industry aware of the expectation being place on private enterprise to absorb the sudden glut of available labour in order to fast track growth and support economic recovery? And perhaps more critically is growth really a realistic proposition in a time when many small employers are struggling simply to keep their heads above water let alone expand their offering, employment profile and competitive boundaries?