Half a million public sector jobs to go as prospects for jobseekers worsen
Thanks to Danny Alexander’s gaffe we already knew that we would be told today that the spending review will cost 490,000 public sector jobs. In his statement to the Commons, the Chancellor confirmed that estimate, which was actually taken from the Office of Budget Responsibility projections at the time of the June budget. An updated forecast will be published on 29 November and it seems like a fair bet it will show a worsening picture.
Osborne said that the government expects much of the reduction to be “achieved through natural turnover”, with decisions left to public sector employers; but redundancies are seemingly inevitable given the drastic scale and speed of the cuts.
The CSR also flags the possibility of proposals from employers on short-time working or “pay restraint” (on top of the current freeze?!). While unions might consider getting round the table to protect jobs as they did in a number of private sector workplaces during the recession, there will be suspicion that this is just spin to distract from redundancies, pay freezes and pension increases. There will also be concerns that attempts to do this at a local level might chip away at national collective bargaining arrangements.
The government’s position that job losses in the public sector will be made up for by private growth also looks increasingly untenable. When unemployment is still high, with freezes and redundancies across the public sector and weak growth in the private sector, where will people find suitable work?
As Nicola said in last week’s Labour Market Report, the number of vacancies has now seen three consecutive monthly falls.
In September there were 459,000 vacancies across the economy, 30,000 down on the quarter. Since the start of the recession in April 2008 the vacancy level has fallen by 233,000 (34 per cent). As a result of the quarterly vacancy drop there was a slight increase in the ratio of unemployed people to jobs – which is now 1:5.2
And the picture is varied across the country. TUC analysis in July showed massive regional variations with a high of 43 claimants competing for each vacancy in Hackney North.
So the number of unemployed people to vacancies is rising. And analysis of past downturns shows that jobs were not created at anything like the rate needed to account for losses in the 1980s and 1990s recession. The OBR figures produced this summer made highly optimistic predictions of the rate at which employment will rise.
A survey of private sector employers this week also found some reticence about taking on former public sector workers. It’s not entirely clear what underpins the findings of the survey, which was carried out for recruitment firm Hays, but it adds to the doubts about the government’s suggestion people will be able to move easily between sectors.
The other development that was evident in the latest unemployment figures was that female unemployment has continued to rise compared to a slight fall in male unemployment in the same period. This trend is likely to continue as the public sector cuts bite, given that more women’s jobs are in the public sector: around 40 per cent of women’s jobs are in the public sector compared to 15 per cent of positions held by men, according to the Annual Business Inquiry.