Cuts will lead to private sector job losses, says PwC

13 Oct 10
Public sector cuts will trigger jobs losses in the private sector but should not derail the economic recovery, according to PricewaterhouseCoopers

By Vivienne Russell

13 October 2010

Public sector cuts will trigger jobs losses in the private sector but should not derail the economic recovery, according to PricewaterhouseCoopers.

A reportfrom the consultancy, published today, warns that almost half a millions private sector jobs could be lost following the spending squeeze. The private sector’s gross output could be reduced by around £46bn per annum by 2014/15, it adds.

Business services and construction are the industries likely to be hardest hit and Northern Ireland, Wales and the Northeast will suffer the biggest job losses as a proportion of their working populations.

PwC’s chief economist John Hawksworth said: ‘Predicted levels of public and private sector job losses will be a drag on the pace of the economic recovery, but should not derail it altogether.’

He added that the impact on private sector employment could be mitigated as companies and employees agree to reduce hours and pay.

But the report, Sectoral and regional impact of the fiscal squeeze, also highlights to potential for job creation over the coming years, particularly in the outsourcing market.

Jon Sibson, head of public sector at PwC, said this would not only be limited to back-office functions.

‘Government and public sector organisations will look to reduce their non-core and fixed cost operations by increasing the use of private and voluntary sector organisation for the delivery of frontline services.

‘Organisations with flexible supplies of labour, such as manpower service providers, will have new opportunities in future. Partnerships between government and private sector manpower providers could be put in place to performance manage and retrain staff, find new employment for them where possible, and to manage redundancies when necessary.’

Figures from the Office for National Statistics published today showed that the unemployment rate for the three months to August fell by 0.1% on the previous quarter. The number of unemployed people fell by 20,000 over the quarter to reach 2.45m. Male unemployment fell by 56,000 to 1.44m while female unemployment increased by 36,000 to 1.01m. The number of people claiming Jobseeker’s Allowance continues to rise.

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