Public sector job losses 'worse than forecast'

The CIPD questions whether the private sector is capable of compensating for public sector job cuts

The current rate of public sector job losses is far greater than official projections and suggests total job cuts in the sector will be 50% higher than forecast, researchers say.

Since April, the public sector shed jobs at five times the rate predicted by the Office for Budget Responsibility, the Chartered Institute of Personnel and Development (CIPD) said.

The body called on the government to halt public sector job cuts.

The Treasury said the cuts were needed.

A spokesman said: "Risks in the global economy make it even more essential to stick to the government's essential deficit reduction plan, which is supported by the International Monetary Fund, the OECD and the CBI.

"This plan is essential for sustainable growth and has helped deliver record low interest rates for families."

A Treasury source told the BBC it was sceptical of the CIPD's projections as it had previously overestimated the UK unemployment peak.

More losses

However, the CIPD said the public sector job cuts could be far greater than the OBR's latest projections.

In June 2010, the OBR forecast that the government's spending cuts, designed to reduce its budget deficit, would lead to 610,000 public sector job losses between 2010/11 and 2015/16.

However, in November last year it reduced this projection to 410,000.

The CIPD said that, based on the current rate of job cuts, the actual number of jobs lost in the public sector was likely to be 610,000 - "exactly the same as the initial OBR projection".

As a result, it called on the government to "call a halt to public sector job cuts while the economy and labour market remain in the current fragile condition".

A number of economists and opposition politicians have called on the government to rethink its programme of spending cuts given the weak recover.

Figures released last week showed that the UK economy grew by 0.1% between April and June, slightly less than the previous estimate of 0.2%.

'Strength sapping'

The body also questioned whether the private sector was capable of compensating for public sector losses, as the government is hoping.

"Especially worrying is that public sector job losses in the second quarter of 2011 far exceeded net private sector job creation, which suggests that the slowdown in economic growth since the autumn of 2010 is gradually sapping the strength of those parts of the economy that were creating jobs in the initial part of the recovery," the CIPD said.

Therefore it would be "sensible to delay all further job cuts to the end of this parliament and, if necessary, into the next".

However, the government said private sector job creation would more than outweigh losses in the private sector.

"Half a million private sector jobs were created last year and the independent OBR has forecast that there will be 900,000 more jobs created in the private sector than lost in the public sector by 2015," the Treasury spokesman said.

The OBR is a government-appointed body formed last year to make an independent assessment of the government's finances and of the economy.