During this recession, the job market in Wales has been hit hard.
The most recent government data showing that there were 125,000 people registered as unemployed in Wales for the period August-October 2009, an increase of 30,000 on the previous year.
To date, the private sector has borne the brunt of these job losses, with no actual net job losses in the public sector since the beginning of 2009.
However, given the reduction in public expenditure now signaled by both Labour and the Conservative Party after the general election, there is likely to be a second tsunami of job cuts during the next twelve months with potentially up to 30,000 public sector posts going across Wales unless savings can be found outside of the staff budget.
Indeed, the process has already begun in the university sector with Bangor University indicating last week that up to 100 jobs will be lost with the closure of five academic departments.
Whilst higher education is taking an early hit, it likely that local government will also be forced into efficiency savings through cutting hundreds, if not thousands, of council jobs across Wales.
Given such a scenario, many are questioning whether Wales can recreate the record levels of employment we saw in August-October 2007, given that the economy has 48,000 less people of working age in employment than two years ago?
Some optimists will point to the fact that the UK economy is widely expected to come out of recession for the fourth quarter of last year, thus ending the largest contraction in the economy since 1921. Indeed, the National Institute of Economic and Social Research predicts that the UK economy grew by 0.3 per cent between October and December 2009.
Of course, we mustn’t forget the fact that the UK has contracted for six consecutive quarters with an annual fall in output last year which was worse than the Great Depression. This means that those who are expecting a quick recovery for the UK economy may be optimists in the extreme, especially as the signs from the last two recessions are ominous to say the least.
As a recent report from the Office for National Statistics demonstrated, the UK’s employment rate fell by 7.5 per cent between 1980 and 1983, and by the same amount between 1990 and 1993 before recovering.
However, there was only a fall of around one and half percent in employment during the initial twelve months of both recessions, a situation which is similar to 2009. The vast majority of the fall in employment actually happened during the subsequent two years as the UK economy struggled to get back on its feet.
Given such a scenario, many are questioning whether Wales can recreate the record levels of employment we saw in August-October 2007, given that the economy has 48,000 less people of working age in employment than two years ago?
Some optimists will point to the fact that the UK economy is widely expected to come out of recession for the fourth quarter of last year, thus ending the largest contraction in the economy since 1921. Indeed, the National Institute of Economic and Social Research predicts that the UK economy grew by 0.3 per cent between October and December 2009.
Of course, we mustn’t forget the fact that the UK has contracted for six consecutive quarters with an annual fall in output last year which was worse than the Great Depression. This means that those who are expecting a quick recovery for the UK economy may be optimists in the extreme, especially as the signs from the last two recessions are ominous to say the least.
As a recent report from the Office for National Statistics demonstrated, the UK’s employment rate fell by 7.5 per cent between 1980 and 1983, and by the same amount between 1990 and 1993 before recovering.
However, there was only a fall of around one and half percent in employment during the initial twelve months of both recessions, a situation which is similar to 2009. The vast majority of the fall in employment actually happened during the subsequent two years as the UK economy struggled to get back on its feet.
Given this, the worry is that we will see yet another jobless recovery during the next two years, which will do little to help those who are currently unemployed.
Of course, this is very different recession, especially in terms of the reasons behind the economic downturn, namely the collapse of the banking sector. Therefore, there is real uncertainty as to how, or if, the economy will recover quickly.
Certainly, there are those who believe that whilst the economy may return to growth, albeit a fragile one, the same pattern as in the 1980s and 1990s will be followed i.e. very few employment opportunities within both the public and private sectors.
Whilst the election debates are raging over which of the main parties has the best solution to aiding recovery at a UK level, we mustn’t forget that the Welsh Assembly Government (WAG) has announced that it will be developing an economic renewal programme to bring the Welsh economy out of recession over the next twelve months.
Given that 9 per cent of the fall in employment in the UK during the last year has occurred in Wales (when we have 5 per cent of the UK population), cynics would say that there is very little that politicians and civil servants in Cardiff Bay can do, beyond empty rhetoric, to help the economy recover.
I disagree, and I believe that with the right approach, the public sector in Wales can work alongside the private sector to create real opportunities for the future of this nation.
Of course, this is very different recession, especially in terms of the reasons behind the economic downturn, namely the collapse of the banking sector. Therefore, there is real uncertainty as to how, or if, the economy will recover quickly.
Certainly, there are those who believe that whilst the economy may return to growth, albeit a fragile one, the same pattern as in the 1980s and 1990s will be followed i.e. very few employment opportunities within both the public and private sectors.
Whilst the election debates are raging over which of the main parties has the best solution to aiding recovery at a UK level, we mustn’t forget that the Welsh Assembly Government (WAG) has announced that it will be developing an economic renewal programme to bring the Welsh economy out of recession over the next twelve months.
Given that 9 per cent of the fall in employment in the UK during the last year has occurred in Wales (when we have 5 per cent of the UK population), cynics would say that there is very little that politicians and civil servants in Cardiff Bay can do, beyond empty rhetoric, to help the economy recover.
I disagree, and I believe that with the right approach, the public sector in Wales can work alongside the private sector to create real opportunities for the future of this nation.
After all, there are billions of pounds of funds available in WAG’s economic development, transport and education budgets that, if used properly, could transform the Welsh economy. This is in addition to the £2 billion of European funding that has been awarded to Wales for being one of the poorest regions in Europe.
However, as the British Chamber of Commerce noted recently, the key to any type of recovery, be it at a regional or a national level, is to allow the private sector the freedom to create jobs and wealth.
If politicians and civil servants are prepared to reduce the bureaucracy that has become a byword for supporting business in Wales, use public funds to match fund private sector projects (and vice versa) and work alongside our entrepreneurs to support their businesses, then perhaps, and against all the odds, we may well begin to see employment growth in the Welsh economy sooner rather than later.
However, as the British Chamber of Commerce noted recently, the key to any type of recovery, be it at a regional or a national level, is to allow the private sector the freedom to create jobs and wealth.
If politicians and civil servants are prepared to reduce the bureaucracy that has become a byword for supporting business in Wales, use public funds to match fund private sector projects (and vice versa) and work alongside our entrepreneurs to support their businesses, then perhaps, and against all the odds, we may well begin to see employment growth in the Welsh economy sooner rather than later.
Comments
The success of the manufacturing industry is not based on the number of people it employs.
Business is foremost and wholly about making money - everything else that comes as a part of it is a bonus. It doesn't exist to give the great unwashed a purpose or to help fund society! This is a fundamental rule.
Any deviation from this - such as trying to buy jobs through grants and other subsidies is just going to end in tears.
This recession has seen a lot of companies who were bribed into Wales through grants in the 80's and 90's, being bribed back out of Wales to Eastern Europe.
The manufacturing we have left are those who are able to produce world leading products with a minimal number of staff. Each person employed is highly skilled, and very valuable to anyone in their industry world wide.
This is modern manufacturing.
The mentality of lots of semi skilled jobs to keep the unemployment levels low belongs in China and India - Wales should move on!
What is most worrying about your article is the forecast for employment based on previous recessions.
If it is around 1.3 million now, then a further six per cent cut over the next 2-3 years could see 78,000 less people working in Wales. That is a shocking statistic.