Private sector jobs must be encouraged in cities reliant on public sector, Centre for Cities warns

The government must focus on nurturing private sector employment in cities reliant on the public sector, before trimming back government jobs, a think-tank has warned.

A Centre for Cities report has warned there are currently not enough private sector job opportunities to cushion the blow of a cutback on public sector employment, while some cities have been losing private sector employment over the past decade.

This decline in private sector employment in cities such as Stoke and Burnley has been masked by a surge in public sector jobs, the think-tank warned.

Stoke lost 20,900 private sector jobs between 1998 and 2008, while Burnley lost 7,500 and Swindon lost 6,900.

But some cities have enjoyed a sharp spike in private sector employment, with Milton Keynes seeing an increase of 22,400 jobs. Preston has also increased its private sector employment by 17,100 and Reading by 16,900.

Centre for Cities has now called on the government to prioritise investment budgets on city economies that have the best chance of generating extra jobs, while also capitalising on realistic opportunities to develop struggling city economies.

Dermot Finch, chief executive of the Centre for Cities, said: “England’s cities have become too dependent on the public sector, and now need to generate more private sector jobs. With public spending cuts now a reality, many cities are facing a wave of public sector job losses.

“The coalition government is right to want more enterprise and growth in the towns and cities outside the M25 – but rebalancing our economy in this way will be an enormous challenge.

“New private sector jobs will not grow overnight, and will not emerge smoothly across the country. The government should support the further expansion of buoyant cities like Milton Keynes, where new private sector jobs are most likely to appear – and look for realistic opportunities to develop struggling city economies like Burnley.”

The Chartered Institute of Personnel and Development (CIPD) previously warned 500,000 public sector jobs could be lost over the next five years as the government cuts budgets.

John Philpott, chief economist at the CIPD, warned there would be “quite a lot of problems in store” for those cities that rely on the public sector, as some cities hit by the recession in the 1990s took more than a decade to recover.

He said HR based in those cities could look to try to hire locally where possible, but the skills of those made redundant in the public sector might not be suitable for private sector employers.

“Organisations in these cities have to remain as vibrant as possible,” he told Personnel Today. “If they can, they should recruit locally, it would make a lot of sense as there would be no relocation issues and they could make use of skills available close by.”

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