Spending cuts, to be announced next week, will result in around half a million job losses across the private sector, research suggests.
A report, “Sectoral and regional impact of the fiscal squeeze” by PricewaterhouseCoopers (PwC), predicts that job losses caused by public sector spending cuts, including resulting losses in the private sector, will amount to around 3.4% of total employment in the UK in 2014/15.
The Chancellor, George Osborne, is expected to announce significant cuts to public sector spending in the Comprehensive Spending Review on 20 October.
However, John Hawksworth, chief economist at PwC, commented that the increased flexibility in the labour market, caused by employees working less hours or for lower wages, could lead to fewer job losses. He added that during budget cuts in the 1990s, there was a net rise of around 1.2 million in private sector employment.
“Although the recovery may not be as strong this time as in the 1990s, we would expect at least some rise in private sector employment over the next five years despite the fiscal squeeze, bearing in mind that this squeeze should allow interest rates to remain lower for longer,” said Hawksworth.
Unions have called on the Government to “rethink” the planned cuts in light of the PwC’s findings.
David Prentis, Unison general secretary, responded: “The Government must rethink its ideological obsession with cutting public spending fast and deep. There is an alternative that includes targeting the bankers who caused the recession, and the tax dodgers, rather than ordinary working people.”
For advice on how the Comprehensive Spending Review may affect HR, see Personnel Today’s HR Austerity Panel discussion.