Surviving tight times

Wednesday, 20 October 2010

Excellent people management will be crucial if the public services, and the businesses which depend upon them, are to survive these current tight times. the CIPD has said.

In the Comprehensive Spending Review (20 October 2010), Chancellor George Osborne revealed average cuts in departmental budgets of 19 per cent over four years. Local authorities will face 7.1 per cent annual cut in their budgets, while the Home Office and Ministry of Justice will each face 6 per cent cuts a year, and police forces 4 per cent. Health and education have been largely protected from the cost reductions, while defence will face a limited cut of 8 per cent over four years.

Official predictions show that 490,000 public servants could lose their jobs as a result of the deficit reduction plan.

In response Mike Emmott, employee relations adviser at the CIPD, warned that the way people are engaged and managed will be the critical factor in determining whether the scaled-back public sector is still capable of delivering the government’s other aims.

“Front-line commitment and industrial harmony can only be delivered by persuasive messages about why the cuts are needed, and an unswerving focus on excellent day to day management of the ‘survivors’,” said Emmott. “Proposals to improve the autonomy and empowerment of front-line service workers will fail if front-line managers are not equipped with the skills to support these behaviours. Radical plans such as employee-led public sector co-operatives and a step-change in co-ordination and collaboration between local public service providers can only succeed if there is a sustained focus on building management capability.”

The public sector should also consider pay cuts and more flexible working practices to limit job losses resulting from the CSR, HR experts have said.

Ian Tomlinson-Roe, human resources services partner at PricewaterhouseCoopers, said that the biggest HR challenge is faced by public-sector employers who have little experience of managing mass redundancy programmes. He added that the cost of these redundancy programmes will also be considerable. “Redundancy terms vary considerably across the public sector so using the civil service as an example, we estimate that the cost of downsizing 100,000 civil servants over the next 4 years ranges from £5.3 billion to £9 billion, depending on whether conducted over 12 months or 48 months. Every month lost in implementing the redundancies could cost the government £100 million”.

The Chancellor also announced that the state pension age will rise to 66 by 2020 for both men and women, a measure which raises the female retirement age quicker than expected to bring it into line with the male retirement age.