KPMG and the Chartered Institute of Personnel and Development have just published their quarterly Labour Market Outlook survey of over 700 employers from the private and public sector. It paints a bleak picture. Despite the UK’s emergence from recession, it predicts more redundancies and a substantial fall in employment intentions in the public sector for the next quarter.
There are signs that some private sector employers are emerging from the recession with intentions to increase staffing levels, but the overall net balance between the percentage of employers expecting to recruit and those expecting to cut staff across all sectors of the economy is still negative (-5%).
What is more important, the findings show that this negative growth is almost wholly down to a bleak quarter ahead for the public sector, where public administration and the defence sector look set to be hit particularly hard.
A public sector fall in employment now is a reality as it feels the impact of the longest recession in modern times.
These figures clearly show that the starting gun for a public sector recession has been fired. It is now only a matter of time before we are faced with the deepest and most prolonged cuts in public expenditure that anyone can remember.
In fact, many public sector bodies have already started to feel the pain and are drawing up clear and radical plans to reduce costs. By definition that means identifying those services that are of lower priority and must be scaled back or terminated altogether.
Reducing the pay bill, whether through a pay freeze or headcount reductions, or both, is an obvious way to cut costs quickly. Other options that need to be seriously addressed include: consolidating operations to improve efficiency and release property and other assets for disposal; and reconfiguring service delivery in order to reduce costs while maintaining quality.
Some of this can be achieved quickly, but many of the changes that are needed will require careful planning. Plans need to be made now, so that the public sector is ready to respond immediately, whenever the incoming government decides it is time for the axe to fall.
Alan Downey is KPMG head of public sector
