The jobs gap

Remember Danny Alexander's "gaffe" on the eve of the Spending Review? The Chief Secretary to the Treasury allowed cameras to catch sight of a "confidential document" showing that the government expected 490,000 public-sector jobs to be lost by 2014-2015. In fact, the figures had been publicly available since June, but that didn't stop almost every newspaper splashing on the story. Since then, almost unnoticed, the Office for Budget Responsibility (OBR) has predicted that there will be 180,000 fewer public-sector job losses than expected.

In November, it revised forecasts down to 330,000, a reduction explained largely by George Osborne's decision to cut more from welfare and less from departmental spending. In the March Budget, it reduced this figure again to 310,000. However, there is much evidence to suggest that public-sector workers are being laid off at a faster rate than expected.

“General government employment" fell by 132,000 last year, according to the Office for National Statistics, more than twice the OBR's forecast. Which means the government is reliant on a significant increase in private-sector employment to prevent years of mass joblessness. In March, the OBR forecast that there would be 1.3 million more jobs in the private sector by 2015 - 200,000 fewer than previously thought - and it now predicts that unemployment will fall to 8.1 per cent in 2012, 4 percentage points higher than expected.

For Osborne, increased private-sector employment is a political as well as an economic imperative. He believes that the Tories will benefit as more people enter the "wealth-creating" sector. With 77,000 private-sector jobs created in the last quarter, his gamble may yet pay off.

George Eaton is political editor of the New Statesman.

This article first appeared in the 04 April 2011 issue of the New Statesman, Who are the English?