Headlines: October 10th, 2011

There should be a temporary halt to public sector job cuts to stimulate economic growth and combat rising unemployment. This call for the cuts to be halted for several years comes from the Chartered Institute of Personnel and Development in a report published today.

The report questions the Government’s argument that its programme of public sector job cuts is modest and manageable, relative to the overall level of public sector employment and given that the vast bulk of job losses won’t occur until late in the current Parliament. As a result, ministers do not expect public sector austerity to add to unemployment, which would make it more difficult for the Government to meet its fiscal deficit reduction timetable.

The Institute contends that this is a dubious argument and it calls on the Government to announce a temporary halt to further cuts as part of any broader plan to stimulate economic growth and combat rising unemployment.

The Institute’s Work Audit report Public sector job cuts revisited, shows that the public sector shed almost a quarter of a million jobs in the Government’s first year of office, with public sector job losses in the first quarter of the current financial year (2011-12) already five times greater than projected by the Office for Budget Responsibility (OBR) for the entire year. Taking figures on actual public sector job losses together with the existing OBR projection, this implies a total loss of more than 600,000 public sector jobs between 2010-11 and 2015-16 – a third more than ministers say they expect.

Dr John Philpott, Chief Economic Adviser at the Chartered Institute of Personnel and Development (CIPD), said: “”With the economy and labour market in such a fragile condition, it is worrying that public sector job losses are turning out to be much greater than ministers have previously been suggesting. Public sector job cuts in this context are a false economy, adding to unemployment and in turn hindering rather than helping the task of fiscal deficit reduction. A more sensible course would be to delay public sector job cuts to the end of this Parliament and if necessary into the next, thereby enabling them to be absorbed more easily without nasty macroeconomic side-effects. The Government’s plan for growth must rightly contain measures to stimulate private sector job creation but the Chancellor should also avoid the own goal of cutting public sector jobs at a time of high and rising unemployment.”