British growth ‘reliant’ on firms hiring enough staff to absorb public job cuts

BRITISH companies will hire enough workers to absorb the loss of about 310,000 jobs in the public sector, according to the Confederation of British Industry.

“Even though CBI forecasts show private-sector employment growth will be sluggish in 2011, it should still be enough to offset public-sector job losses,” the London-based business lobby said in a report published in London.

“Once healthier economic conditions are restored, past experience suggests there should be plenty of new job opportunities.”

British Prime Minister David Cameron is counting on private companies to take on workers as his government drives through the deepest budget cuts since World War II. The opposition Labour Party says the Treasury needs to “radically slow” the pace of deficit reduction or it risks tipping the economy back into a recession.

“Creating new jobs in the private sector on a sufficient scale is achievable, providing that there are no further major economic shocks,” the CBI said.

The group sees private payrolls rising by 85,000 this year and 180,000 in 2012. Data last week showed that total employment in the three months through April rose by 80,000 from the period through January.

The CBI said 29% of companies plan to add permanent jobs in the next six months, citing a survey of 335 employers.

Still, the report raised the prospect of a further squeeze on living standards, with the share of employers implementing pay freezes rising to 23% from 14% in October.

Excluding public-sector jobs, the share was 16%.

Labour-market data on June 15 showed wage growth excluding bonuses slowed to 2% in the three months through April, the weakest since the quarter through August. That compares with an inflation rate of 4.5% in May.

“With the recovery in its early stages and inflationary pressures a worry, employers are having to take tough decisions on pay,” CBI director general John Cridland said in a statement.