Big Public Jobs Cuts Must Wait Until Private Sector Jobs Recover

LONDON, May 30, 2010 - The Work Foundation is launching a new policy prospectus today, calling
for the government to construct a growth strategy based on expanding private
sector jobs in all regions and countries of the UK, in order to tackle the
deficit. Cut, Tax, Grow?, warns that until a recovery is in place, triggering
big cuts in the public sector workforce would be counter-productive.

Ian Brinkley, Director of the Knowledge Economy programme at The Work
Foundation said, "Much of the public debate and discussion has been on
reducing the deficit through public spending cuts and tax rises. However, any
successful deficit reduction strategy must encourage growth and jobs and this
has so far received little attention in the public debate. The new government
faces the challenge of tackling the UK's very high public sector deficit
while at the same time encouraging and supporting the fragile recovery by the
private sector. The government must focus on growth as well as cuts."

The first requirement is that enough new jobs in the private sector are
generated in order to bring unemployment down. Total employment in the
private sector was still falling according to the statistics available at the
time of writing. This suggests the government should be wary of making big
cuts in public sector employment before the private sector is hiring in
sufficient numbers to take up the slack.

In the recession in the 1990s the public sector shrunk by around 14%,
shedding more than 800,000 jobs. If the same level of public service
reduction is repeated, job losses on the same scale could be expected over
the next five years. Given that the current deficit is three times higher in
this recession this is not an improbable outcome.

As well as cuts to the civil service and town hall staff, in the 1990s
there were also big cuts in the nationalised industries, armed forces and
local authority construction services. These can not be relied on to reduce
the public sector headcount this time around. It will be harder to spare
"ring-fenced" services such as health, education, social services and the
police than in either the 1980s or 1990s cuts.

Ian Brinkley warned that, "Without more detail on the government's plans
for curbing public expenditure or raising taxation, it is difficult to offer
an accurate assessment of likely job losses across the public sector. The
government might choose pay freezes or pay cuts over redundancies for
example."

The pace of cut-backs in the public sector must also be sensitive to the
impact on the regions. Ian Brinkley said, "A key objective must be to grow
the private sector outside the South East. Economic activity in the UK became
dangerously skewed towards excessive reliance on public sector job generation
over the past decade: 70% or more of net job generation came from the public
sector in much of the Midlands and North. This imbalance must be corrected,
but at a pace and in a way that does not cripple the economic base in areas
where the public sector represents the main source of high value knowledge
intensive activity."

    Notes to editors

    1) Ian Brinkley is available for interviews and briefings.
    2) Note on figures for the 1990s recession: 1992-1997, historic ONS
       definition of the public sector including central and local
       government, public corporations, and HM Forces. Includes some
       transfers to the private sector.
    3) The Work Foundation is the leading independent authority on work
       and its future. It aims to improve the quality of working life
       and the effectiveness of organisations by equipping leaders,
       policymakers and opinion-formers with evidence, advice, new thinking
       and networks. www.theworkfoundation.com.

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