Thursday, 7 March 2013

Public pain, private gain

Yesterday the Office for National Statistics published figures showing change in public and private sector employment in the English regions and Wales, Scotland and Northern Ireland covering the period since the start of the recession in March 2008 and September 2012:       

The burden of public sector job cuts across England has so far generally fallen most heavily on those regions with greatest dependence on the public sector for employment, notably the North East which has already seen its public sector workforce shrink by 10% since the pre-cuts peak (see table). By contrast, London and the South East have got off relatively lightly and along with the East Midlands are actually still employing more public sector workers than before the recession in 2008. But the pattern is slightly different in the other nations of the UK with Scotland suffering a bigger percentage loss of public sector employment than either Wales or Northern Ireland which have slightly higher shares of public sector employment in their total employment pools.

Surprisingly, however, although the North East is among the biggest shedders of public sector jobs it is also the region with the highest proportionate increase in private sector employment (almost 5%) comparing 2008 and 2012. Overall, all the English regions now have more people working in the private sector than at the start of the recession, though Wales and Scotland have suffered the double whammy of a fall in both public sector and private sector employment.

The bounce-back of private sector employment in a public sector dependent region such as the North East could be evidence that private sector employers are becoming more competitive in the hiring process in areas where public sector jobs were previously plentiful and public sector pay rates relatively generous. However, the bounce back is less strong in other English regions with similar dependence on the public sector, and notably Wales and Scotland where there has been no bounce back at all, which suggests a variety of factors are at work. The argument that a big public sector crowds out private sector jobs, and hence that even bigger public sector jobs cuts would be good for private sector employment, thus remains unproven by these latest figures.

Regional change in public and private sector employment, excluding the impact of the reclassification of further education and sixth form colleges from the public to the private sectors in 2012.
                                   Public sector        Private sector
                                       % change             %change         % share public sector employment
                                     Peak to latest       2008-latest     

North East                        -10%                        +4.9%                               22.2%          
North West                         -9%                          +2%                                20.3%
Yorks/Humber                   -8%                           +1%                                20.6%
E Midlands                         -6%                           +2%                                17.7%
W Midlands                       -7%                         +1.5%                               19.7%
East                                    -8%                            +2%                              16.7%
London                               -7%                            +3%                              16.9%
S East                                 -7%                            +0.5%                           16.6%
S West                               -11%                            0.0%                            19.0%
Wales                                  -7%                           -3%                               25.7%
Scotland                             -10%                          -2%                               23.5%
N Ireland                               6%                            1%                               27.7%
Source: ONS

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