News

Public sector jobs

Date: 20 Apr 2010

“The CIPD estimates that the post-Election squeeze on public spending will be far greater than any of the main political parties is at present prepared to admit. A 10% reduction in the 5.8 million core public sector workforce is probable, the prospect of 500,000 public sector jobs being shed in the next five years dwarfing anything implicit in the Election manifestos. Moreover, it is misleading to suggest that the pain of job loss could be eased by some combination of pay cuts or short-time working. This strategy has been successful in the private sector during the recession as a means of avoiding redundancies during a cyclical downturn in the economy but is not an effective response where long-term structural change is involved.

Job creation and unemployment

“An economy with almost 30 million people in work and in which tens of thousands of jobs are lost and created every year should be able to cope with a period of large scale public sector downsizing without this resulting in higher unemployment. However, a favourable outcome depends on a return to health of the wider economy and increased demand for labour from the private sector. The CIPD supports all the political parties in their enthusiasm for generating jobs in the low carbon, digital and creative sectors, though the suggestion that any particular policy will result in any given number of jobs should be considered purely speculative. What will ultimately matter is the overall effectiveness of macroeconomic policy and measures designed to boost enterprise, skills and employability.

“The election manifestos understandably focus in particular on the problem of high youth unemployment. It remains far from clear, however, whether any of the policies on offer will genuinely boost the long-term employment and earnings prospects of young jobless people as opposed to simply providing short-term palliative relief while jobs remain scarce, as has been typical of such measures in the past. In this respect the CIPD is also concerned by the Liberal Democrat manifesto proposal to pay the same rate of National Minimum Wage to all workers aged 16 and over (apart from apprentices). It makes little sense to spend taxpayers’ money providing young people with short-term work experience or training placements while at the same time making it more expensive for employers to hire them in the normal way.