The coalition government is largely flying blind on the damage public sector workforce cuts could be doing to the labour market, despite making cuts at a faster rate than either the Thatcher or Major governments, a report from the Work Foundation has warned. The report also raised concerns about the impact on public sector skills, with the possibility that cutbacks could be leaving key areas with a shortage of essential abilities and experience.
The report said that under the Thatcher and Major governments, cuts fell on the public industries and administrative services. Yet if the Office for Budget Responsibility’s (OBR) forecasts of public job losses through to 2017 are correct, public sector employers will have to make significant reductions in priority service areas of education, health and social services and the police on a scale not previously seen in the UK.
The Work Foundation said that the coalition had very little knowledge of the impact of workforce cuts on this scale, in these areas and over this time period. So the report called for the government to take immediate steps to begin monitoring the impact of workforce cuts with a view to identifying major labour market problems as they arise. In particular, the report showed that many of those leaving the public sector were moving into inactivity rather than remaining active in the labour market. This could have long-term consequences for economic growth.
Ian Brinkley, director of The Work Foundation, said: “The government has some major blind spots around the impact of its public sector workforce cuts. These cuts are progressing at a rate not yet seen in the UK, yet the government appears to have little knowledge of what this is doing to the labour market or the skills and experience of the public sector workforce.”
He added: “Our analysis of previous public sector cuts shows that the UK labour market is capable of absorbing large scale reductions in the public sector workforce without high levels of unemployment – but only if there is strong and sustained private sector jobs growth. With doubts around the sustainability of the recovery, it is imperative that the government monitors the effects of its cutbacks on the labour market more effectively. If there are major problems – such as a deterioration in the skills base or fewer opportunities for women workers – then we need to identify them early so that policymakers can respond.”