Cuts sooner rather than later

Kohoutek

CBI wrote:

The CBI is urging the Government to use its last Budget before the election to set out more details of spending plans for government departments in order to boost confidence in the UK’s public finances and provide economic stability.

Isn't that a fair enough comment? We all know Labour don't want to go into detail about spending cuts for electoral reasons, but I think the interests of the country should come before the Labour Party...

CBI wrote:

The Budget to be balanced by 2015-16, two years earlier than currently planned, to instill market confidence in the UK’s public finances.

A more detailed plan for public spending with a lower trajectory for overall spending. This should focus on public sector current spending cuts, rather than tax increases or cuts to capital spending.

Public sector productivity to be raised by re-engineering the way public services are delivered and inefficiencies in supply chains, procurement and workforce management to be addressed. Spending public money more smartly could generate savings of more than £130bn by 2015-16....

Looking at the CBI’s proposals to foster economic growth in more detail, the business group says the Budget should concentrate on reducing obstacles to growth, investment and employment, and nurturing entrepreneurship and competiveness. That is why it is calling on the Chancellor to reverse the planned rise in employer National Insurance Contributions by 1 percentage point from April 2011, as well as introducing other low-cost measures to help small and medium-sized firms access the capital they need....

With the public sector about to be squeezed, it will be up to business to take up the slack and deliver the growth needed to get the economy back on track.

Pennywise

aelitaman wrote: »

It is no surprise that business people are saying get it over quick. Think about the situation the public sector employees are in. Darling is saying there will be big cuts coming, Torys saying big cuts coming and the party that actually wants to cut deepest and quickest is the Lib dems.

So your average public sector worker is sitting there thinking will I have a job in 3 months with the Torys or a year with Labour (They know the libs can not win). Do you think this environment is condusive to public sector effecieny, they will be just sitting there de motivated worrying about the future (even with their 2 year salary redundancy payments).

Any business knows that if you have to repeatedley lay of staff multiple times it is the death knell for the business because staff get more and more demoralised. In the unfortunate situation of having to mke cuts do it once get it over with and make sure the remaining staff know that they have a job for the long term because the cuts have been enough to see off even the worst of times.

All the more reason to do a one-off hatchet job now - then everyone would know where they stand, no confusion or worries. All those workers who've still got a job can move forward with confidence. All those out of a job can do whatever they have to in order to get on with their lives. Dithering and delaying will do absolutely no good whatsoever.

I agree with your private business comments. I've seen many times the "drip" effect of laying a few people off at a time - I've never yet seen a positive result, from what I've seen close at hand, the end result is inevitable.

Once, I was working with a particular firm that was badly affected in the early 1990's recession - I sat in on several board meetings when redundancies and survival plans were discussed - they took the brave decision to do a one-off hatchet job, a real make or break change and made over half the workforce redundant in one go. I've never seen such a remarkable turnaround - the remaining staff worked their backsides off as they knew that it was now or never, productivity increased, sales increased and a couple of years later, they'd got through it, were well on the up again and were recruiting again - five years later, they were bigger and more profitable then before, and the staff were properly rewarded with an enhanced benefit package, including additional holiday days, etc. I remember some very lengthy talks about whether to make a particular manager redundant - he'd been working there for years and did a damn good job but was very expensive - it was literally either him or two of his staff - finally they decided to make him redundant, even though they knew it would have a disastrous effect on his life - I saw him afterwards and he said it was the best thing that had ever happened to him because it spurred him onto set up his own business and he'd never looked back!

Come on, we all know it's going to happen, let's just stop faffing about and do it. Fear of the necessary cuts is worse than the cuts themselves. Same with tax rises, let's just have them so we know where we stand. If we know how bad things are going to bad, then we can work with that and minimise the damage. I really can't understand all this dithering and faffing - it's like the politicians are frightened of giving us bad news - come on, have some backbone, we're not children! It's like when a child's pet dies - the way the parents don't want to give the bad news and go to any length to avoid the inevitable, but then realise the child doesn't really give a toss anyway!

CLAPTON

Its all very well saying get the cuts over quickly and in many ways that may be good for the people concerned because they can get on with their lives.

But if that is done and the reduction in demand (i.e. spending in the shops etc) is significant then that may cause a secondary wave of redundancies in the private sector which will further reduce demand (i.e. spending) which will cause a thrid wave of redundancies within the private sector and we are back to a recession... and we can't cut interest rates and QE is problematic


which is why, up to now (election time) people like the CBI, IoD etc have in fact been very cautious about calling for big cuts because they know this may devastate both the public and private sector and cause many companies to go out of business.

so be careful what you wish for .. redundacies may come sooner and nearer to home than you think

ChiefGrasscutter

My experience re drip drip redundancies or massive all out mega chop is precisely the opposite to 'Pennywise' above.

A steady yearly removal of surplus staff seems to keep the rest 'on their toes' - lest that next time it will be them in line to be fired. Indeed I recall that GE in the USA at one time actually had this as company policy regardless of the economic conditions/compnay performance.

A one off mega chop results in the remaining staff in effect saying that they can't cut anymore else the business will collapse (and the owner's/executive really do not want that to happen) so the impetus to "work their backside off" is less.