05 Dec, 2011

Public sector job cuts

05 Dec, 2011

In its latest Economic and Fiscal Outlook, published recently, the independent Office for Budget Responsibility (OBR) projected that general government employment would fall by 710,000 between the first quarter of 2011 and the first quarter of 2017. However, as Dr John Philpott notes, it is important to recognise that the full impact of the Government’s fiscal austerity measures is set to be around 850,000 – almost 15% of the public sector workforce when the government came to power in 2010:

“While the latest OBR projection better reflects what public sector employers expect to happen to public sector jobs in the coming years, the estimated cut of 710,000 excludes the effect of austerity measures introduced in 2010-11, particularly the freeze in public sector recruitment announced immediately after the 2010 general election. According to the Office for National Statistics the level of general government employment fell by almost 140,000 in that period. Assuming the OBR projection proves correct, the total cull of public sector jobs by 2017 will thus be 850,000, almost 15% of the public sector workforce at the start of 2010.

“The loss of 850,000 public sector jobs in less than a decade is not unprecedented in UK economic history. A similar cull occurred in the 1990s and was easily absorbed without any associated rise in unemployment. At that time, however, the labour market was being boosted by a strongly rising economic tide. There is less prospect of a similarly benign outcome in today’s far more straightened times.”