The focus on private sector job creation in this week’s Budget statement from the Chancellor overshadowed the wider labour market implications of the latest OBR projections for public sector employment.
Adjusting for statistical reclassifications and the fact that the OBR sets Q1 2011 rather than Q1 2010 as the starting point for its projections, total general government employment is on course to fall by 700,000 during the current Parliament and by 1.1 million by Q1 2018. The projection is exactly in line with what public sector HR professionals were expecting in 2010, although it has taken a while for those not experiencing the pressure on public sector organisations first hand to accept the harsh consequences of the Coalition's spending squeeze.
The projected total fall will have cut the public sector workforce by a fifth and reduced the public employment rate – i.e. the share of public sector employment in total employment - from 20% to 15%, by which time proportion of people employed in the public sector will be lower than at any time since the dawn of the welfare state in the 1940s.
Does this matter? Commentators on the political left consider it a tragedy, neo-liberals a positive development. But either way a big structural change in the employment base of the economy in such a relatively short space of time represents a seismic shift in the underlying labour market. The numerical impact of this is masked by the surprising and most welcome strength of private sector employment growth. However, the qualitative effect of such a shift should not be underestimated given that the public sector employs relatively skilled workers on relatively decent rates of pay and has traditionally been considered a source of ‘good work’ in terms of training, staff development, flexible working and equal opportunities. The deep impact of the loss of such jobs on a mass scale could prove as significant to the British way of work as the mass de-industrialisation of the labour market in the 1980s and 1990s. The big switch from public to private sector employment amounts to far more than just a numbers game.