Private sector job challenge is massive task – Bailey

THE private sector faces an enormous challenge if it is to fulfil the Government’s desire to create the new jobs necessary to offset losses in the public sector, a leading Midlands business analyst has said.

Professor David Bailey, of Coventry Business School, said with the scale of job losses announced in the Comprehensive Spending Review, private companies needed a lot of support if they were to pick up the slack.

Predictions are that around 500,000 people will lose their jobs in the public sector between now and 2014-15 – the spending review period.

“The scale of the task faced by the private sector – and the Government is massive. When you factor in the multiplier effect of the public sector job losses, the private sector is going to have to create between 1.5 to 2m jobs,” he said.

“It is only right therefore that the Government should talk about how it is going to create the conditions for growth.”

In a speech to the annual conference of the CBI yesterday, the Prime Minister outlined a three-point plan for growth.

Firstly, he said the Government would use all powers at its disposal to create the right framework for enterprise and business investment. Secondly, Mr Cameron said the coalition would marshal its resources behind industries where Britain enjoyed a competitive advantage such as green technologies, the creative industries, financial services, retail, pharmaceuticals and advanced manufacturing.

Finally, he said the Government would use its “power and muscle” to make it easier for new companies and innovations to flourish and create “a new economic dynamism”.

Prof Bailey said that if businesses were to lead the recovery then it would be interesting to see if the monetary policy was sufficient to meet their needs, especially if hopes for an export-led recovery were to materialise.

“There are a lot of factors to consider which may be beyond the Government’s control so it will be interesting to see if they have a plan B. We want to create conditions for investment but with a slowing global economy it is vital that British goods are made as attractive as possible,” he said.

“Therefore it will be interesting to see if there is an easing in quantitative easing and if sterling can be kept at a level where it makes British goods competitive.”

Neil Rami, head of Business Birmingham, the city’s inward investment programme, said the Government’s strategy had to result in growth and prosperity being spread throughout the regions.

“The government is starting to flesh out its plans to grow the private sector, but businesses still want to see more meat on the bones. Inward investment is crucially important to fill the gaps in the economy left by public spending cuts and, when you consider where these cuts are happening, it’s in areas outside of the South East where inward investment is most needed. Just as cuts need to be fair, so does growth.

“We recently conducted a survey of 500 business leaders and 77% think there should be greater focus on spreading economic prosperity around the UK. Infrastructure projects like high speed rail will certainly help, but in the nearer future businesses across the UK would welcome less red-tape, which currently costs businesses £80bn per year.”

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