March 22, 2013 2:01 pm

Public sector share of jobs to plunge

The public sector’s share of the workforce is set to fall by 2018 to its lowest level since the welfare state began in the 1940s, according to a leading labour market economist.

John Philpott, director of the Jobs Economist consultancy, said the public sector would have lost 700,000 jobs during the current parliament and 1.1m between 2010 and 2018. The projected total fall will have cut the public sector workforce by a fifth.

The public sector’s share of total employment will have fallen from 20 per cent to 15 per cent, by which time “the 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”, Mr Philpott said.

Mr Philpott said the focus on private sector job creation in this week’s Budget overshadowed the wider implications of the latest projections for public sector employment by the Office for Budget Responsibility, the fiscal watchdog.

Mr Philpott said a structural change in the employment base of the economy in such a relatively short space of time represented a “seismic shift” in the underlying labour market.

The OBR said this week that it expected private sector employment to rise by 2.4m by 2018 compared with the start of 2011, more than offsetting a fall of 1m in public sector jobs.

Mr Philpott said the impact of the public sector cuts was “masked by the surprising and most welcome strength of private sector employment growth”.

However, he said the qualitative effect of such a shift should not be underestimated given that the public sector employs relatively skilled workers on 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 deindustrialisation of the labour market in the 1980s and 1990s.”

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