Monday, 18 October 2010
Almost one million jobs could be lost in the UK because of government cuts in public spending, a report suggests. The knock on effect of public sector cuts upon private sector firms is rarely mentioned or taken into account, but this report does attempt to do so.
Accountancy firm PwC said that about 500,000 of those job losses may be in the private sector due to the impact on firms supplying the public sector, with business services and construction would be among the industries hardest hit.
The impact of this is in fact already starting to be seen, with contracts not being renewed, renegotiated or withdrawn altogether (e.g. the building schools for the future programme), and the PwC report puts the total number of job losses arising from the public sector spending cuts - including the knock-on effects in the private sector - at about 943,000.
It also suggests the output of private firms may well fall by £46bn per year by 2014-15. PwC chief economist John Hawksworth said the predicted levels of job losses would be a drag on the pace of the economic recovery "but should not derail it altogether".
The report said that in absolute terms, the areas worst hit would be the south east of England, the north west and Scotland. But PwC added that in percentage terms, Northern Ireland would suffer most with one in every 20 jobs set to go.
A Treasury spokesman said "a decisive plan" was needed to "reduce the UK's unprecedented deficit and restore confidence in the UK economy ... and not taking action to tackle this problem would put the economic recovery at risk," they added, saying this was a view shared by many organisations including the International Monetary Fund, the World Bank and the Bank of England.
The question that's never asked (or answered) is where new jobs are going to come from for the economy to start to recover. For a more prosperous and sustainable future, levels of untapped talent need to reduce (not increase), and creativity needs to increase to create growth, reduce the deficit and pay back the debt ... and releasing staff without any plan of action for this could make matters worse, not better, with more people without any work and wholly dependent on the state.
The application of a simple, effective and more holistic 'economic' test (of overall 'well-being'), known as "BUTS" test, where:
B = Borrowing
U = Untapped talent
T = Trade deficit
S = Stress
rapidly highlights how well-being in the UK in the future is likely to get much worse, with any reduction in borrowing likely to be at the expense of increased taxes and reduced public services ... as well as growing levels of untapped talent (e.g. unemployment) and increasing levels of stress.
There is growing concern about unemployment, not just from a financial perspective, but from an individual point of view too, as more people lose self-confidence, belief and self-worth. People's natural ability/desire to help others, add value, and make a difference to other people's lives reduces ... reducing the overall well-being of the community, as well as the nation's economy too. There is also the risk of growing frustration & anger, particularly from younger generations, as youth unemployment rates are much higher, they have been saddled further with debt (e.g. due to tuition fees) and given little prospect of a job, house prices still being expensive to rent/buy and they are also the ones who'll have to pay most of the Government current borrowing back (through future tax rises).
Shockingly, the official figures of 2.4 million unemployed are a gross underestimate, as there are in fact over 8 million people of working age able to work but classified as 'economically inactive' ... and even this figures represents just the tip of the iceberg, as levels of untapped talent within the workplace lies at around 90%, due to outdated management practices failing to harness the talents of those in work too! No economy will ever be successful with such shockingly poor foundations, and outdated leadership and management practices are also generating further unnecessary stress too.
Outdated leadership and management practices (19th/20th century) primarily rely upon extrinsic motivation, self interest and personal gain ... where management primarily involves managing budgets, telling staff what to do and ensuring they meet internal/arbitrary targets ... rather than going to the front line, listening to customers actually want and supporting front-line staff in their quest to continually improve how value can be provided to customers (nb this is what 21st century leadership and management practice is all about - take a look at my book for instance) ...
The former systematically generates frustration and stress, for customers and front line staff alike. It also drives people to manipulate 'the system' in order to meet their targets & goals; deflecting people away from the real purpose of the enterprise (i.e. to create value for customers) which destroys teamwork, morale, and the future of the enterprise too. Such practices have also been shown to systematically generate between 40-90% waste in terms of both time and resources as well - i.e. traditional enterprises spend most of their time (and resources) wasting time, effort and money, for their customers ... whilst stressing them out in the process too ...
... and the traditional response to this ... "it's just the way work is" ... and "let's send everyone on a 'stress management' course - to help them to process stress" (and to also reduce the risk of being sued!) ...
The problem with the traditional management statements above is that they are both wrong - and flawed. 21st century management practices do not involve helping people to 'process stress' - they focus on systematically 'eliminating stress'! ... so there is no need for stress management courses at all ... (i.e. such courses are a 'cost of failure', and they do not reduce the risk of leaders/managers being sued either).
Enterprises applying 21st century leadership and management practices do not just transform the performance of the enterprise, they transform the lives of people - forever, and for the better. Most enterprises applying such practices quickly transform their capability (e.g. improvements of between 40-1000%) and change out of all recognition. Staff moral is positively transformed and stress is systematically reduced. People are naturally motivated to innovate, to add value and to help others. They are also more than capable of finding new ways to improve current products/services and to find new products/services that would allow even more value to be created too (given the opportunity). All they need is clear direction, as well as trustworthy leaders & managers who support them on the front line, who listen, learn, and help them to systematically improve how value is provided. Again not rocket science - just rarely practiced in traditional enterprises.
Stress, and the impact of stress, on people is heavily responsible for the 'eighth waste' in 21st century management practice ('untapped talent') - as it destroys people's desire/ability to contribute, to be creative or to think rationally (e.g. take a look at Ch. 8 of my book). It also impacts on people's overall well-being, as well as the well-being of those around them ... which impacts on communities/nations as a whole too (NB hence it's inclusion in the 'BUTS' test).
The National Institute for Health and Clinical Excellence (NICE) has said the cost of work related mental illness was £28bn - a quarter of the UK's total sick bill, and it also made clear that the stress created as a result of bad management/managers was the single biggest cause of problem. The 'economic loss' of stress goes way beyond the £28bn referred to here too ... this is literally just the tip of the iceberg, with actual figures more likely to be around 80-90% (and growing).
Those leaders who believe stress management courses will 'protect them' from 'being sued' are I'm afraid also sadly wrong ... as 'ignorance' is 'not bliss' (or a defence - nb landmark cases are already occurring - but are mostly settled out of court to avoid publicity). The writing is on the wall now that 21st century leaders & managers have demonstrated the capability/outcomes created from applying 21st century practices ... which highlight the way forward, as well as the fundamental flaws in traditional practices ...
21st century leadership/management practice and examples will no doubt be used in evidence against those continuing to apply outdated traditional 19th/20th century practices ... and as millions of law suits start to get filed, yet more traditional private enterprises will go bankrupt ... and yet more taxpayers money will be diverted away from providing front line services (to pay for millions of out-of-court settlements) ... joining all the taxpayers money already being diverted to service Government debt, as well as the colossal (and unfunded) civil service pension liability ...
A 'Double Dip" is on the way I'm afraid ... and a 'triple dip', and a 'quadruple dip', may well follow too I'm afraid ... unless current leaders/managers change course quickly ... as it's also the adoption of 21st Century leadership/management practices that will harness and unleash the untapped potential within our society, and systematically uncover the plethora of world-class solutions people around the globe are looking for and more than willing to pay a premium for ...
A 'political response' which goes ahead and slashes millions of jobs, without any clear understanding or robust plan to harness untapped talent/potential to systematically provide the future product/services the world needs, is in fact not a 'solution' at all, but a short-sighted and flawed act, which will have a huge, negative and corrosive impact on individual/community well-being ... and will not provide any robust foundation for reducing borrowing (or reversing the massive trade-deficit) in any sustainable way either. It is a systematic change the UK now requires, not a political one.