Public sector job losses far greater than predicted
Jobs are being cut in the public sector at a far higher rate than official projections, according to new research, and if job losses continue at the current rate the total could be 50% higher than forecast.
The number of jobs lost in the public sector since April is five times more than the Office for Budget Responsibility (OBR) forecast for the entire year, says the Chartered Institute of Personnel and Development (CIPD).
In June 2010 the OBR forecast that government spending cuts would lead to the loss of 610,000 jobs in the public sector between 2010 and 2016. Then, in November last year it revised that prediction down to 410,000.
But, based on the current rate of job cuts, the CIPD predicts that the actual number of jobs lost is likely to be 610,000 - the same as the initial forecast from the OBR.
"With the economy and labour market in such a fragile condition, it is worrying that public sector job losses are turning out to be much greater than ministers have previously been suggesting," says Dr John Philpott, chief economic adviser at the CIPD.
The CIPD believes the high level of job losses in the public sector is bad for the economy at a time when unemployment is rising. So far, the private sector has not been able to create enough jobs to compensate for the shrinking public sector.
"Especially worrying is that public sector job losses in the second quarter of 2011 far exceeded net private sector job creation, which suggests that the slowdown in economic growth since the autumn of 2010 is gradually sapping the strength of those parts of the economy that were creating jobs in the initial part of the recovery," the CIPD says.
Dr Philpott wants the government to delay any more public sector job losses until a time when the private sector is able to absorb those made unemployed.
However, the Treasury doesn't support the report from the CIPD. A source told the BBC that it was sceptical of the CIPD's projections as it had previously overestimated the UK unemployment peak.
"Half a million private sector jobs were created last year and the independent OBR has forecast that there will be 900,000 more jobs created in the private sector than lost in the public sector by 2015," a Treasury spokesperson told the BBC.
Office for Budget Responsibility
Formed in May 2010, the OBR makes an independent assessment of the public finances and the economy, the public sector balance sheet and the long-term sustainability of the public finances. The OBR has four man priorities: to produce two forecasts a year for the economy and public finances, to judge the progress the government has made towards meetings its fiscal targets, to assess the long-term sustainability of the public finances and to scrutinise the Treasury’s costing of Budget measures.