The Chancellor significantly understated the impact of spending cuts on public sector jobs in the Comprehensive Spending Review (CSR), the Chartered Institute of Personnel and Development (CIPD) warned today.
Unveiling the CSR in Parliament yesterday, George Osborne said that the planned cuts in public expenditure will result in the loss of 490,000 public sector jobs by 2014/15, a figure he said was based on estimates from the Office for Budget Responsibility (OBR).
But the CIPD estimates that the final number of public sector jobs lost will be nearer 725,000, given that spending cuts are unlikely to be reversed after 2015.
Dr John Philpott, chief economic adviser at the CIPD, said: “What the CSR conveniently fails to mention is that the OBR’s complete forecast suggests a loss of 660,000 public sector jobs between 2010/11 and 2015/16.
“Unless the Chancellor decides to reverse spending cuts pencilled in for 2015/16 he should admit this will be the outcome, at least until the OBR publishes its next forecast on 29 November.
“Moreover, the CSR does not acknowledge the likelihood that very large percentage cuts in the cost of administration across Whitehall, local authorities and even ostensibly ring-fenced areas of spending such as the NHS, will have a disproportionately negative impact on some of the most labour-intensive parts of the public sector,” he added.
As a result, the CIPD estimates that the public sector jobs impact of the CSR by 2014/15 will be a loss of more than 500,000, with total job losses rising to close to 750,000 by 2015/16 if the coalition sticks to its existing longer-term spending plans.
It is possible that this jobs toll could be reduced if, as the CSR recommends, public sector employers were to explore voluntary deals on pay restraint or reduced hours of work in order to cut payroll costs, admitted Philpott, but he cast serious doubts on whether or not this could be achieved.
“There is no suggestion in the CSR that expected public sector job downsizing will at some future point be reversed,” he explained. “In circumstances where public sector organisations are expecting to shed jobs on a permanent basis – which probably describes the vast majority of the intended impact of the CSR – it makes little sense to expect pay restraint or changes to working hours to lessen the blow, which also makes it unlikely that workers will be prepared to make sacrifices since they can expect nothing in return.”