Unemployment could hit 3m after Cameron's cuts, says CIPD

The employer group reckons public sector cuts could see the dole queues swell to about 3m.

Last Updated: 31 Aug 2010

The employment picture might be looking slightly healthier in the private sector, but it’s a very different story in the public sector. The CIPD warns today that the Con-Lib coalition’s aggressive axe-wielding plans will leave some 725,000 civil servants out of a job – pushing the total UK unemployment figure up to 2.95m by 2012. Worse still, it thinks this number will remain pretty steady until 2015, since the private sector recovery is likely to be too weak to pick up the slack. Arguably it’s right that the state sector should finally experience some of the pain felt by the rest of us in recent years – but it’s going to have some nasty consequences…

As the Chancellor puts together his emergency Budget, to be delivered the week after next, civil servants will be decidedly nervous as they wait to hear where the axe will fall. And rightly so: according to the CIPD, almost three-quarters of a million of them will lose their jobs as a result. Apparently the coalition is taking its lead from the take-no-prisoners approach adopted by the Canadian government during the 1990s, when they cut 265,000 jobs from the 3m-strong public sector. But there’s a catch for Cameron et al, warns CIPD chief economist Dr John Philpott: in Canada, redundant civil servants found work in the private sector; but given the feeble state of the UK economy (which won’t be helped if taxes go up and more people lose their jobs), that’s unlikely to happen here.

Still, it’s hard to argue against the idea that the public sector should bear the brunt of any cuts. The CBI, for instance, has just written to the Chancellor insisting there should be £4 in spending cuts for every £1 in tax rises, with the lion’s share of the money saved via job losses and a ‘radical re-engineering’ of the public sector. Since the state sector has seen budgets grow and employment rise, even as the private sector has been slashing spending and laying people off, the Prime Minister may have a point that it’s time to redress the balance.

However, that’s going to have some seriously painful consequences, particularly in those areas of the country that are heavily dependent on public sector jobs. The Trades Union Congress general secretary Brendan Barber argues that lower employment would exacerbate the problems of the worst-affected regions, and could well push them back into recession – which could mean the dreaded double-dip for the UK as a whole. Re-balancing the economy and reducing the size of the state sector might be advisable or even necessary, but it’s going to hurt.

In today's bulletin:

Obama's bashing sends BP shares to 13-year low
OFT launches new probe into big investment banks
MT Leadership Visions: Barbara Stocking, CEO of Oxfam GB
Unemployment could hit 3m after Cameron's cuts, says CIPD
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