Winners and losers after Osborne’s spending review, say recruiters
27 June 2013
The recruitment sector will have winners as well as losers due to yesterday’s spending review in which Chancellor George Osborne announced spending cuts of £11.5bn in 2015-16.
Thu, 27 Jun 2013The recruitment sector will have winners as well as losers due to yesterday’s spending review in which Chancellor George Osborne announced spending cuts of £11.5bn in 2015-16.
As a result of the cuts, an additional 144,000 jobs are expected to be lost in the public sector.
As Osborne signalled that the age of austerity is due to last two or possibly three years longer than he had planned, recruiters forecast a range of effects, both good and bad.
The cuts were not shared equally across government departments, with education, health and overseas aid being largely protected. In contrast other government departments will suffer cuts in their day-today spending of up to 10%.
Chris O’Connell, founder director of Timothy James Consulting, says he sees some positive news for recruiters. O’Connell tells Recruiter: “With 60% of all departmental spending carried out within schools, the NHS and on overseas aid, which have been largely protected from the cuts, this is good for recruitment in these areas.”
And he adds: ”The 1% cap on public sector pay raises will mean more people look to move into new opportunities, leaving more vacancies behind in the public sector.”
Steve Porter, operations director of health sector recruiter Mediplacements, tells Recruiter that with health spending being protected, “it could have been a lot worse for the NHS.” And he sees a continuing need for flexible staffing within the NHS, “which is good”.
Dean Shoesmith, joint executive HR director at Sutton and Merton Councils, tells Recruiter that the cuts raise concerns about skills shortages. He predicts there will greater competition for those with niche skill sets, including leadership, project management, budget management and commissioning skills. This will be accompanied by “a more flexible workforce” with fewer directly employed staff, and more subcontracting.
Jeff Tune, chief executive officer of New Directions Education, tells Recruiter that despite government spending on education being ring-fenced, the reality is “not as comfortable for recruiters as it would first seem with inflationary pressures inevitably eroding these budgets”.
However, he says that the continuing need for the public sector to focus on budgets is not all bad news. “Recruiters who embrace the requirements of providers and work with them to manage their budgets will gain in increased revenue streams,” he says.
That said, he warns: “Companies who feel unable to have margin flexibility may feel inclined to compromise on core values such as quality to stop an erosion of their bottom line figures.”
Raj Tulsiani, founder and CEO of Recruiter HOT 100-listed interim and executive recruiter Green Park Interim & Executive Search, tells Recruiter that he is concerned about how any pain from driving down cost is shared along the supply chain.
“The issue is around the big managed service providers pushing all the cost savings onto the supply chain and squeezing out the creativity and the innovation of the SME suppliers,” he says.
Richard Nott, website director, CWJobs.co.uk tells Recruiter that the spending plans “may deepen concerns shared by IT professionals that cuts could be discouraging young talent from entering the public sector”.
“The government needs to make sure that the figure outlined for education also includes a sum earmarked to develop ways of better showcasing IT career options for young people – to ensure all sectors and industries are enriched with new talent to help the UK compete on the global stage."
And with the government maintaining spending on apprenticeships for those aged 19 or above, Ann Pickering, HR director at O2, says: “It’s welcome news that the government has once again recognised the important role of apprenticeships in helping business in the UK develop a workforce that is fit for the future.
“Thousands of British youngsters already possess valuable digital skills - apprenticeships are one way to help these digital natives meet the future skills requirements of a truly digital world.”
As a result of the cuts, an additional 144,000 jobs are expected to be lost in the public sector.
As Osborne signalled that the age of austerity is due to last two or possibly three years longer than he had planned, recruiters forecast a range of effects, both good and bad.
The cuts were not shared equally across government departments, with education, health and overseas aid being largely protected. In contrast other government departments will suffer cuts in their day-today spending of up to 10%.
Chris O’Connell, founder director of Timothy James Consulting, says he sees some positive news for recruiters. O’Connell tells Recruiter: “With 60% of all departmental spending carried out within schools, the NHS and on overseas aid, which have been largely protected from the cuts, this is good for recruitment in these areas.”
And he adds: ”The 1% cap on public sector pay raises will mean more people look to move into new opportunities, leaving more vacancies behind in the public sector.”
Steve Porter, operations director of health sector recruiter Mediplacements, tells Recruiter that with health spending being protected, “it could have been a lot worse for the NHS.” And he sees a continuing need for flexible staffing within the NHS, “which is good”.
Dean Shoesmith, joint executive HR director at Sutton and Merton Councils, tells Recruiter that the cuts raise concerns about skills shortages. He predicts there will greater competition for those with niche skill sets, including leadership, project management, budget management and commissioning skills. This will be accompanied by “a more flexible workforce” with fewer directly employed staff, and more subcontracting.
Jeff Tune, chief executive officer of New Directions Education, tells Recruiter that despite government spending on education being ring-fenced, the reality is “not as comfortable for recruiters as it would first seem with inflationary pressures inevitably eroding these budgets”.
However, he says that the continuing need for the public sector to focus on budgets is not all bad news. “Recruiters who embrace the requirements of providers and work with them to manage their budgets will gain in increased revenue streams,” he says.
That said, he warns: “Companies who feel unable to have margin flexibility may feel inclined to compromise on core values such as quality to stop an erosion of their bottom line figures.”
Raj Tulsiani, founder and CEO of Recruiter HOT 100-listed interim and executive recruiter Green Park Interim & Executive Search, tells Recruiter that he is concerned about how any pain from driving down cost is shared along the supply chain.
“The issue is around the big managed service providers pushing all the cost savings onto the supply chain and squeezing out the creativity and the innovation of the SME suppliers,” he says.
Richard Nott, website director, CWJobs.co.uk tells Recruiter that the spending plans “may deepen concerns shared by IT professionals that cuts could be discouraging young talent from entering the public sector”.
“The government needs to make sure that the figure outlined for education also includes a sum earmarked to develop ways of better showcasing IT career options for young people – to ensure all sectors and industries are enriched with new talent to help the UK compete on the global stage."
And with the government maintaining spending on apprenticeships for those aged 19 or above, Ann Pickering, HR director at O2, says: “It’s welcome news that the government has once again recognised the important role of apprenticeships in helping business in the UK develop a workforce that is fit for the future.
“Thousands of British youngsters already possess valuable digital skills - apprenticeships are one way to help these digital natives meet the future skills requirements of a truly digital world.”
