Forecast for public sector job cuts reduced by 160,000

The estimated number of public sector job cuts expected over the next five years has been reduced by 160,000 in the most recent forecast by the Office for Budget Responsibility (OBR).

In the Government’s October 2010 Comprehensive Spending Review (CSR), Chancellor George Osborne predicted 490,000 job losses in the public sector by 2014/15. That figure is now forecast to be significantly less at 330,000.

However, employment growth is expected to be slower than previously predicted, with an estimated 1.1 million jobs created by 2015, compared to the previous figure of 1.3 million.

Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD), said that the prediction of reduced job cuts is “clearly very optimistic”.

“The OBR estimates of likely public sector job losses is far lower than indicated by managers on the ground and it will be interesting to see if optimism in the public sector workforce now starts to pick up,” he said.

“If employment, unemployment and average earnings follow the path forecast by the OBR, the ‘era of austerity’ will be felt more in workers’ pockets and living standards than in terms of lost jobs,” he concluded.

Following the CSR, the CIPD claimed that the Chancellor had significantly understated the impact of spending cuts on public sector jobs and estimated that the final number of jobs lost would be nearer 725,000.

Meanwhile, the TUC has warned that the Government should not portray the figures as good news for workers.

TUC general secretary Brendan Barber said: “No doubt the Chancellor will try to spin the OBR report as a vindication of his approach. But a closer look at the figures reveals that even by the time of the next election, the OBR expects well over a million people still to be claiming unemployment benefit.

“With the economy still fragile, the Government is taking big risks with the recovery by deliberately planning for job losses.”

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