There have been various questions raised during the last two weeks whether the private sector can compensate for the loss in public sector jobs.
Certainly businesses are giving it a good go – the latest figures on employment growth in the private sector show that businesses in the UK have already created an additional 308,000 jobs between March and June 2010.
However, another 650,000 jobs need to be created to get the private sector back to the record 23.76 million employed by business in March 2008.
If 450,000 jobs are cut within the public sector, this will be equivalent to a reduction of 7.4 per cent. This will take public sector employment back to the levels of employment last seen in March 2003.
Indeed, public sector employment will still be around 250,000 higher than it was when Labour won their second term back in May 2001. To compensate, the private sector has to grow by only 1.9 per cent (and it grew by 1.3 per cent between March and June 2010).
On a regional level, Wales currently accounts for 5.7 per cent of all public sector employment in the UK. Therefore, given that the UK Government has indicated that a maximum of 450,000 jobs may go across the UK public sector, that means around 25,500 public sector jobs could be lost in Wales.
That is a slightly different estimate to that given by the First Minister in the Western Mail today, where he claims that 38,000 public sector jobs will go in Wales. Where he gets those figures from, I don't know, but whilst they may fit in with his half empty view of the Welsh economy, they do not tally with official statistics (do journalists ever check what the Government tells them?)
Even if we assume his distorted data, Carwyn Jones forgets to state that will means that the Welsh private sector will only have to grow by around 4 per cent over the next five years to compensate for this loss in public sector employment. Ironically, such growth would still leave the private sector in Wales employing 50,000 less employees than it did in 2008.
To be fair, this does not take into account the jobs that could be lost as a result of potentially lower procurement with Welsh-based firms. However, as the public sector, even with best estimates, spends only half of its £5 billion expenditure in Wales, there could be room to compensate for this by increasing contracts with Welsh firms.
So, we have a rough idea of what needs to be done to grow the private sector in Wales to deal with public sector cuts. It is just a shame that the Economic Renewal Programme has no targets on jobs to be created via government programmes during the next five years and therefore cannot help us with WAG's expectations in terms of employment growth in the private sector.
Surely, given the 'vision' of the One Wales Government, a growth of less than 1 per cent per annum in the private sector over the fourth term of the Assembly must be at the bottom end of Ieuan Wyn Jones' expectations of his plan's outcomes, yet this is all that would be needed to compensate for the loss in public sector jobs in Wales.
However, it would seem that whilst politicians and journalists have been wallowing in the doom and gloom, no-one has focused on the one silver lining that Wales has in terms of funding which is aimed specifically at improving the economy.
Unlike any other region of the UK (with the exception of the county of Cornwall), Wales actually has access to an additional £2 billion of European Structural Funding for the period 2007-2015.
To date, £1.4 billion of European Structural Funds have been committed to 193 projects. However, only £286 million has been paid out by WEFO so far, which means that over a billion pounds of expenditure is still to take place in the Welsh economy, and that is only in those projects that have been approved by WEFO.
There is still another half a billion pounds waiting to be approved for other projects in the pipeline.
So that means that over the next five years, there will be around £1.6 billion spent on European funded projects in Wales, which is roughly equivalent to the worst estimates of the decline in the Welsh budget by 2015, although if you take the official UK Government line that the cuts in the budget amount to only £500 million, it demonstrates that Wales is better off.
The most important aspect about this funding is that it is ringfenced and not subject to any cuts from Westminster. That is a competitive advantage that the other devolved nations in the UK simply do not have.
What effect will this will have on employment?
Well, the Welsh European Funding Office (WEFO) have suggested that, for the West Wales and the Valleys, 36,000 gross jobs will be created in Wales as a result of the main Convergence programme.
Given that WEFO have estimated that only 4,000 gross jobs have been created so far, then we can at least expect a further 32,000 jobs to be created from the European funds available to West Wales and Valleys between now and 2015.
That also doesn't take into account the other outputs from the programme, including:
I wonder if any of the economists predicting doom and gloom for the Welsh economy have take this funding and these potential future outputs into account, a situation which at least gives us the opportunity to cushion a large part of the blow from the reduction in public expenditure.
Perhaps those journalists, who seemed to have become an integral part of the Labour Party's press machine, should look outside of the press releases fed to them every day and look at the advantages that this nation possesses, not least in the £1.6 billion of unspent European funding.
Finally, shouldn't our politicians, rather than talking down the Welsh economy through their constant carping about the state of the public sector, be looking to maximise the opportunities that will be created through this funding and go out there and emphasise the advantages we have from the £1.6 billion of European funding that is there to be spent on jobs, enterprise, training and investment.
Update: As if Carwyn Jones wasn't bad enough, the Deputy First Minister has joined the whinging in an article in the business pages of the Western Mail. Whilst two thirds of the article consists of moaning about the settlement for Wales, the remainder, interestingly, doesn't tell us how many new jobs will be created as a result of the Economic Renewal Programme "concentrating on areas with the greatest potential for jobs and wealth creation – with special emphasis on research and development". Not surprisingly, European funding programmes are not mentioned at all. Now I am naturally assuming that the ERP is going to create jobs and the highly paid civil servants in the Department of Economy and Transport know how many. perhaps, it is time they got round to telling the rest of us?
