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CIPD suggests to the coalition government to limit public sector job cuts

  20th September 2010      
 CIPD, Company News

The Governments plans on growth, employment, welfare to work and public service reform would be more effective if they ensured 8 out of 10 public sector job cuts took place prior to 2013. Even though obtainable forecasts from the independent Office for Budget Responsibility already points towards significant ‘back-end loading’ of job cuts, the CIPD, before next month’s all-inclusive spending review, is recommending to ministers the different benefits of approaching the cutting of costs with a more relaxed attitude; think of it as a middle distance runner instead of a sprinter. 

Speaking out before the official statistics on unemployment and private sector jobs growth, Dr John Philpott, Chief Economic Adviser at the CIPD, commented that it would be sensible for the government to limit public sector job cuts to 125,000 (approx 1 in 5 of the total cuts set out) or less, from now until the end of the economic year 2012-13.

“Whatever the latest figures show, the majority of forward looking indicators suggest that the UK jobs situation is about to take another turn for the worse. It’s difficult to judge how serious any dip in demand for labour might be, but one wouldn’t necessarily choose this moment to start cutting public sector employment. However, given the Government’s clear commitment to cuts to eliminate the deficit in this Parliament, it’s imperative that those cuts are implemented in a way that minimises adverse effects on the government’s wider objectives for growth, jobs, welfare to work initiatives and public service reform.

“The CIPD continues to hold to the view that the rate of net private sector job creation will be insufficient to start offsetting the impact of public sector job cuts before 2013. In view of this we urge ministers to limit public sector job cuts in the fiscal years 2010-11 to 2012-13 to no more than 125,000. This amounts to around 1 in 5 of the total job cuts expected to result from the coalition’s austerity programme. Ideally, the majority of subsequent job cuts would also fall closer to 2015-16 than 2013-14.

“On the CIPD’s central forecast for economic growth and total net job creation, such a strategy would prevent total UK unemployment from rising above 2.8 million by 2012 and thereafter make it easier for stronger private sector job creation to enable unemployment to fall. A more aggressive approach to public sector job cuts would push unemployment close to 3 million and be especially harmful to those regions of the UK least well placed to enjoy an early and significant improvement in private sector employment.

“Underpinning the labour market in the next few years during a period of continued weakness will also assist the government in its efforts to move benefit claimants off welfare and into work. Similarly, a back-ended timescale for workforce reductions in the public sector would improve the prospects of engaging staff in the process of downsizing, giving those employees at risk of job loss more opportunity to prepare for alternative employment and those who keep their jobs greater ability to adjust to changed work practices, thereby minimising any negative impact of staffing cuts on public service quality.     

“When it comes to public sector downsizing there is no strong economic imperative for the coalition to behave as though it is the fiscal equivalent of Usain Bolt. A more middle distance back-end loaded approach would be the best option for jobs and increase the chances that ministers last the course in pursuit of their stated objectives.”

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