Winds of change

Oct 22 2002 by Brian Amble Print This Article

A combination of economic forces and government policy are fundamentally altering the economic balance of the UK economy, according to new reports from HR consultancy Chiumento and the Centre for Economics and Business Research.

Those in higher income groups have been most affected by the chilly winds of economic change and government taxation policy, while public sector and lower-income groups have benefited from increased security.

In a survey of 1,000 employees by HR consultancy Chiumento, 56 per cent said that no-one was free from the threat of redundancy, while 20 per cent said senior and mid-levels would be the first to go compared to 14 per cent of junior positions. One in five of the entire workforce feel at risk of redundancy while a third expect the UK to head into recession.

The 'Ready for Redundancy' report suggests that senior executives are in a precarious position in the present economic climate with one in five seeing such once-esteemed positions as the first to go.

"This research highlights the growing polarisation between confident plumbers and nervy senior executives," said Dr Diana Winstanley, senior HR lecturer at Imperial College.

"Employees in traditional crafts such as electricians feel safe in their jobs while white collar executives in financial services, computing and telecoms feel the most at risk from redundancy," she added.

The study showed that the larger the company, the bigger the risk of redundancy. Fifty-three per cent of people had recently been made redundant worked for companies with more than 250 employees. Furthermore, 29 per cent of employees who work for organisations with over 100 staff are seeing their company downsize, compared to 12 per cent of people who work for companies with less than 100 employees.

The Chiumento report is supported by a report from the Centre for Economics and Business Research (CEBR) that highlights the economic shift between different working groups in society.

It concludes that relative movements in housing and equity values, in inflation, in government spending, tax and interest rates are transferring economic power from what advertisers might call As and Bs, to C1s and C2s.

Security, says the CEBR, is shifting from those in their 50s to people in their late 20s, from private sector to public sector workers.

"High-income groups with share portfolios and private pension plans have seen their nest-eggs decimated. Young professionals who managed to buy property in the late Nineties but have not yet invested in shares have seen their relative wealth increase.

"Government policy, in the shape of £100 billion-a-year of extra spending over this parliament, is generating jobs and pay inflation for public sector workers, while the £5 billion of taxes on income next April will weigh heaviest on those on high incomes," according to the CEBRís Forecasting Eye.

Looking at percentage increases in net wealth, the higher earning As and Bs with money locked in investments would have seen a 2 per cent increase over the past two years, while lower paid, low mortgage public sector workers would have seen 66 per cent increase.

"Big swings in relative wealth and income favour the Smiths over the Smythes,í the report states, "and new tax credits from April 2003 will increase the difference."