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Cath Everett

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Up to 14 years to recover from lost public sector jobs


The UK risks sliding into a double-dip recession before the end of the year as business leaders resolve to slash recruitment and rein in expenditure in response to the coalition government’s proposed austerity measures.

But even if private sector employment growth continues at the last decade’s average of 0.7%, it is expected to take 14 years to create the 2.2 million public sector jobs lost as a result of promised budget cuts.
Accountancy firm BDO warned the Guardian today that confidence among UK companies has been hammered in recent weeks, with business now at its least optimistic since the depths of the recession last year. As a result, the company believes that the economy is likely to start contracting as early as the fourth quarter of this year.
But Peter Hemington, a BDO partner, said that private sector retrenchment would be a mistake as the real pain of spending cuts would not be felt until 2012 and beyond.
“What’s so disappointing is that businesses seem to be convincing themselves that things are going to get really tough in 2011, and are deferring new hires and investment decisions as a result. Much of this comes from the hype around the government’s spending cuts,” he said.
While 2011 would not be easy for many businesses, the UK was set for reasonable growth, with low interest rates expected to continue for some time and sterling likely to remain relatively low, he added.
The firm’s Output Index, which tracks the sales expectation of UK firms, fell from 99.8 in July to 97.8 in August, suggesting sluggish economic growth between July and September, following strong growth of 1.2% between April and June.
According to the TUC, however, with the Office of Budget Responsibility forecasting a 10% cut in public sector employment, it will be necessary to create 2.2 million private sector jobs if the labour market is to make up the shortfall and bounce back to pre-recession levels.
But with average job creation rates at 0.7% over the last decade, it will take 14 years to make up current losses and longer in some UK regions. For example, Yorkshire, the Humber and the North West are unlikely to return to pre-recession employment levels for 24 years if current job creation levels are maintained.


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