The leading UK financial commentators agree that there will be more jobs lost in 2012, the question is how many and where in Britain will be hit hardest. It is generally accepted that those areas where there is a disproportionate reliance on the public sector for jobs are likely to suffer more than most. Local authorities are frequently the largest employer in cities outside of the Southeast of England. However it is not just the local council employees who will be affected.
Since the late 1980's, in the industrially hollowed out towns and cities, such as Burnley and Birmingham, local authorities and government agencies became the engine of the economy in the regions. They had central government funds for urban regeneration and regional development grants all focused on building local services, enterprise zones and infrastructure. This spending did indeed attract some flagship companies, especially successful overseas brands seeking to operate in 1990's booming Britain.
However, most jobs created by this new investment were predominantly service based industries and primarily dependent upon the local economy. Car component manufacturing and machine tool building cannot truly be replaced by Japanese car dealers and double glazing manufactures. These new industries don't export or sell to customers far beyond their own locality.
In the case of the major northern conurbations, the jobs and spending power of people employed in the public sector are critical to the local economy. In contrast, those areas where the workforce is predominantly in the private sector, though they took a sharp hit in 2008, are now fairly stable. Most firms that did survive are much stronger, but marking time waiting to see how the UK economy survives before they expand or take on staff.
Consequently, for areas of the country where there is a concentration of these quietly successful businesses, the reduction in head count and spend by the public sector is only having a marginal effect on what is being spent in the local shops and on services. This is particularly noticeable in London and the Southeast.
In contrast, where there is high dependency on the public sector for employment, the public spending cuts are being felt hardest of all and consequently local service industries will suffer a far larger fall off in customer spending. We are seeing the re-emergence of a two-speed Britain, the Southeast is recovering, or at worse marking time, whereas other regions are still contracting with the major conurbations suffering most of all.
A warning must therefore go out to anyone who works in the private sector outside of the Southeast. Even though they may feel their job is safe at present. The deep austerity driven cuts have yet to be fully implemented or truly felt by their local economy. Job cut backs and redundancies will inevitably grip retail and service industries in the wake of a fall off in demand. For the wage earners dependent upon this type of job, especially those with young families, it is essential to consider their options should their employer become one of many who will have to make cut backs to survive.
The shocking truth is that, on average, most people are out of work for seven or more months following redundancy (source 2011 specialist provider market research). During this time they are largely on their own financially with UK state benefits such as Job Seekers Allowance at less than £70 per week. People who are thrown out of work, but have savings that could pay their bills for six to twelve months, will survive. For anyone who does not have savings there is an alternative to running up huge debts and risking their home.
Low cost Lifestyle Protection Insurance, also known as short-term Income Protection Insurance, will typically pay anyone who is unable to work due to accident sickness or unemployment, up to £1,500 per month for a year. This payment is tax-free and does not affect entitlement to state benefits. If an individual aged 30 bought a policy that paid them out £1,000 per month, their premium would be less than £30 per month.
Quotes as low as this are only available from on-line specialists providers. The same cover can be bought from banks and independent financial advisers, although they charge considerably more for a personal service. This is however a very simple insurance product and well worth looking into on-line and not leaving it until bad news is received.
A critical point any potential buyer must understand; Lifestyle Protection Insurance and short-term Income Protection will only be offered to someone in steady work. This is because the insurance underwriters only cover people with an average risk of redundancy. For example, say a company has made an announcement that it is cutting back its staff or even merging with another. A Lifestyle Protection Insurance underwriter would view an application from someone who works at this company, little different from a Household Insurance underwriter being asked to cover a building already on fire! Therefore, anyone in a job at this time, who thinks this insurance might be for them, should look at buying this sooner rather than later.
For people living in the regions and especially those in the cities in the North, large sections of the working population could soon be prevented from buying Lifestyle Protection Insurance and short-term Income Protection Insurance. It is important people in these areas appreciate that they probably only have a limited window to buy this cover before insurers turn them away in increasing numbers.
Dennis Haggerty FCII M IDM Marketing Manager iprotectinsurance.co.uk is an Income Protection Insurance expert, specialising in helping people to protect their financial wellbeing at times of economic stress. Dennis particularly advocates low cost on-line; Lifestyle Protection Insurance, Income Protection Insurance and Mortgage Payment Protection Insurance. He offers consumers an inside track to finding a good deal and how to check the products they are considering are suitable for their needs.