North-South jobs divide is set to widen

The over the next year as manufacturers' confidence falters, a new report claims.

More private sector employers now intend to shed staff than take them on over both the next three months and 12 months, according to the latest Labour Market Outlook from the Chartered Institute of Personnel and Development (CIPD) and accountants KPMG, a reversal from earlier this year.

Confidence in the manufacturing sector has fallen away especially sharply, which will hit the North and threatens Government plans to offset job losses in the public sector through gains in export-led businesses, the survey's authors said.

Differences in the net employment plans for the next three months highlight the "stark regional differences", said the report.

There was a negative balance of minus 6 among northern businesses, indicating that they will shed staff, while in the South the balance was plus 10, suggesting they are still recruiting.

Gerwyn Davies, CIPD's public policy adviser, said increasing uncertainty over both the UK and global economies is now affecting hiring intentions.

"Together with the public sector redundancies, which will affect one in 20 frontline workers, the recent story of an employment revival may become one of an employment relapse," he said.

Andrew Smith, chief economist at KPMG, said sinking manufacturing confidence will also dent hopes that cuts in public sector employment will be offset by the private sector.

The CIPD survey comes as a report by global economic think-tank the OECD suggested that the UK's economic recovery could be jeopardised unless the North participates fully.

The survey's author, OECD senior economist William Thompson, said that lifting growth rates in the North would have a significant impact on the national picture and should not be seen as a social policy, the Times reported.