The North-South jobs gap is likely to increase

The Labour Market Outlook compiled by KPMG and the Chartered Institute of Personnel and Development shows that more employers in the private sector intend to reduce their headcount than increase it over both the coming three and twelve months.

There has been a sharp decline in confidence in the manufacturing industry which will affect the North and could upset the coalition's plan to offset public sector redundancies through increases in export-led businesses.

Northern businesses registered a balance of minus 6 across all sectors, indicating that they intend to make staff redundant over the next three months. Companies in the South, on the other hand, registered plus 10, which suggests they are still hiring.

The quarterly index does indicate that the private sector will continue to grow but at a slower rate than in the previous quarter. Confidence in manufacturing has dropped to +11 from the +32 seen three months ago. In the public sector, confidence is -51 and in the voluntary sector it is +7.

The CIPD's public policy adviser, Gerwyn Davies, said hiring intentions are being affected by increasing uncertainty about the economy, not only at home but globally. This is particularly apparent in industries, such as manufacturing, that suffer most as a result of a global slowdown.

5% of public sector front-line workers are likely to be made redundant which could mean the recent revival in employment becomes a relapse. He went on to point out that some areas of the country will be worse hit than others.

KPMG's chief economist, Andrew Smith, said the UK's growth prospects are being affected by government austerity measures, the Eurozone debt crisis and the lack of growth in the US. He went on to say that it was particularly concerning that sinking confidence in manufacturing dealt a blow to the government's plan to rebalance the economy towards investment and exports, rather than consumption.

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