Budget 'overly optimistic' on jobs says industry body

Today’s Budget paints an excessively optimistic picture of the outlook for jobs, once ongoing private sector job cuts, an impending public sector jobs cull and the planned rise in employer National Insurance Contributions are taken into account.

In its analysis of the Budget, the Institute also welcomes the extension of support for the young unemployed, but calls for more similar support for the over 50s who’ve lost jobs, as this group particularly struggle to get back into work.

The CIPD has also called for greater restraint on the public sector pay bill, going further than the restraint on top earners already announced as well as swifter action on public sector pensions, with urgent steps to tackle MPs own pensions as an essential first step.

 John Philpott, Chief Economic Adviser at the CIPD, commented: “This budget is as bullish as the Chancellor could realistically get away, although it hardly amounts to ‘Alistair in Wonderland’. While becoming a bit more cautious on economic growth in the near term, Mr Darling nonetheless presents a slightly more optimistic outlook for public borrowing.”

Philpott went on to say that despite this Darling was unable to offer much in the way of surprise tax or spending giveaways, deciding instead to spread limited funds across a range of small initiatives, mostly targeted at the young unemployed and small businesses.

He further claimed that the Chancellor had failed to put any additional meat on the bones of his deficit reduction plan, leaving him open to the criticism that he is either not prepared to be tough enough or has a hidden agenda for cuts that is too painful to unveil before the General Election.

Referring to proposed support measures for the unemployed Philpott added: “The measures put in place to mitigate the worst effects of unemployment have undoubtedly played a real part in keeping unemployment lower than we and most other commentators had predicted. The Government has rightly targeted support at younger workers, and we welcome the extension of the support available to the under 24s.  But we’ve warned for some time that, although the over-50s are losing their jobs in lower numbers than younger workers, they are struggling to get back into work where they do fall out of work.” 

Charles Cotton, CIPD Performance and Reward Adviser, commenting on public sector pay and pensions, and plans to relocate civil servants out of London, added: “Tougher action is required on the public sector pay bill to help protect jobs and services. Freezing public sector pay for top earners and endeavouring to ensure that public sector pay awards in general are not higher than 1% from 2011 is not enough, we need a freeze in the overall pay bill.  And a radical rethink of how we link pay to individual and collective contribution and organisational success in the public sector is also necessary if Government, post-election, is to have any hope of delivering more with less.”

He went on to say that no public servant should get a pay award or a bonus if their organisation is not performing, but the chances of the public sector delivering on political and public expectations would be enhanced by an intelligent and well-targeted approach to performance-related pay and bonuses.

 “Public sector pensions are also in need of urgent reform, and we heard little on this in today’s Budget.  After the election, we’d expect to see swift progress.  But that process cannot realistically begin until MPs have sorted out their own costly pension arrangements.  The consultation on MPs pensions closed last summer, but there’s still been no official response, let alone action.  That action is essential to provide the moral authority for the significant challenges to come on public sector pensions.

“Relocating 15,000 civil servants will not deliver efficiency savings if these individuals are allowed to keep their London salaries.  Indeed, if this happens it could create more difficulties in public sector pay by distorting regional pay rates. If money is going to be saved, then these higher London salaries need to be phased out over a three-year time span.”

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