Public sector job cuts faster and deeper than expected

The scale and speed of job cuts in the public sector have been far more severe than initially predicted and are on course to exceed the Government’s estimate of 400,000 job losses by 2016.

In a report to mark the one-year anniversary of the Government’s spending review, professional services firm PricewaterhouseCoopers (PwC) revealed that 290,000 people were made redundant between December 2009 and June 2011.

The Office of Budget Responsibility (OBR) originally forecast that no more than 100,000 jobs would go in the whole of the 2011-12 financial year but PwC claims that this figure has already been exceeded in the first quarter alone.

Paul Cleal, partner and head of public sector at PwC, said: “The public sector job losses have come much faster than anticipated. The total number of job cuts over the spending review period to 2015 will not necessarily be that much greater than forecast as job losses may be lower in later years, but earlier than expected job cuts have sapped demand at a time when the economy is already relatively weak due to a series of global economic shocks this year.”

Local authorities have led the way in shedding posts, accounting for 145,000 out of the 240,000 roles lost in the year to the end of June 2011. Central government made 66,000 positions redundant during this period, while a further 29,000 went in public bodies such as the BBC and the Post Office.

The impact of public sector redundancies has been cushioned to an extent by jobs growth the private sector during the same period, with 600,000 posts created between December 2009 and June 2011.

However, there are concerns about the continued ability of the private sector to absorb the numbers being cut in the public sector. In the second quarter of this year, 110,000 posts were made redundant in the public sector, compared with just 41,000 new positions being created in private businesses.

John Hawksworth, chief economist at PwC, also pointed out that many of the gains in private sector employment since 2009 were in part-time posts, with the average working week now standing at 31 hours.

“Trends in full-time-equivalent employment have been less favourable during the last couple of years than suggested by the total employment numbers,” he added.

Figures from the Office for National Statistics out earlier this month revealed that UK unemployment hit a 17-year high in the three months to August 2011, standing at 2.57 million.

There was a record cut in the number of part-time positions during that period, with 175,000 posts going as employers looked to cut back further in the wake of a stagnating economy.

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