New Times,
New Thinking.

  1. Business
  2. Economics
12 March 2013

Too much austerity: the public sector begins hiring again after “over-firing”

The loss of 370,000 public sector jobs since 2010 has left some departments struggling to provide basic services.

By George Eaton

The next time that you hear someone on the right claim that there has been “no austerity” since George Osborne became Chancellor, point them to the figures for public sector employment. They show that 370,000 jobs have been cut since the second quarter of 2010, with the public sector now at its smallest size since 2003. By 2018, according to the Office for Budget Responsibility, 1.1m will have gone. In the words of the usually restrained Chartered Institute of Personnel and Development, we are witnessing “a tectonic shift in the underlying structure of the labour market”.

So great have the cuts been that Whitehall is now recruiting again, with public sector job creation expected to outpace that in the private sector in the next three months. The recruitment firm Manpower reports: 

We’ve seen the number of people leaving public sector employment slow as they reach the minimum they need to provide services, while some have gone too far and seen they need to begin re-hiring.

For the Tories, cutting public sector jobs is a matter of politics as well as deficit reduction. While in opposition, the party frequently complained that Labour’s “client state” made the election of a Conservative government impossible, so, in office, they have reduced it.  As one senior Tory told the Spectator’s James Forsyth, “You create a bigger private sector, you create more Tories.”

The polls certainly suggest as much. Polling by Ipsos MORI shows that while Labour has a 21-point lead among public sector workers (49-28), it leads by just four among their private sector counterparts (38-34). Logic says that if you reduce the former group and expand the latter (the OBR forecasts an extra 2.4 million private sector workers by 2018), the Tories will benefit. A smaller public sector means fewer people with a vested interest in high levels of spending. But as the Tories have found, there are limits to how far the state can be rolled back. 

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