Wednesday, 30 June 2010

Impact of cuts: 1.3 million jobs to go

Larry Elliott has an exclusive for The Guardian:

'George Osborne's austerity budget will result in the loss of up to 1.3m jobs across the economy over the next five years according to a private Treasury assessment of the planned spending cuts, the Guardian has learned.

Unpublished estimates of the impact of the biggest squeeze on public spending since the second world war show that the government is expecting between 500,000 and 600,000 jobs to go in the public sector and between 600,000 and 700,000 to disappear in the private sector by 2015.

The chancellor gave no hint last week about the likely effect of his emergency measures on the labour market, although he would have had access to the forecasts traditionally prepared for ministers and senior civil servants in the days leading up to a budget or pre-budget report.

A slide from the final version of a presentation for last week's budget – seen by the Guardian – says: "100-120,000 public sector jobs and 120-140,000 private sector jobs assumed to be lost per annum for five years through cuts".

The job losses in the public sector will result from the 25% inflation-adjusted reduction in Whitehall spending over the next five years, while the private sector will be affected both through the loss of government contracts and from the knock-on impact of lower public spending.'

Elliott goes on to report that the Treasury assumes 'growth in the private sector' will generate 2.5 million new jobs in the same period. But he also notes how the current state of the economy doesn't necessarily support the prognosis.

Whether any new jobs are created from economic growth or not, the fact is these 1 million-plus jobs will be lost. It will be devastating for those put out of work, rip into both the public and private sectors, and have a negative effect on the consumer spending of those made jobless - thus damaging the prospects for recovery from the most severe recession since the 1930s.

TUC general secretary Brendan Barber offers a good response in the Guardian report:

"With Treasury figures revealing that spending cuts will hit private sector jobs harder than those in the public sector, it is absurd to think that the private sector will create 2.5m new jobs over the next five years. This is not so much wishful thinking as a complete refusal to engage with reality. Much more likely are dole queues comparable to the 1980s, a new deep north-south divide and widespread poverty as the budget's benefit cuts start to bite. Many will find that a frightening prospect."

The Treasury's rosy outlook is torn apart by the Chartered Institute for Personnel and Development's chief economist, who says: "There is not a hope in hell's chance of this happening [the creation of 2.5m new jobs]. There would have to be extraordinarily strong private sector employment growth in a … much less conducive economic environment than it was during the boom."

The CIPD actually estimates an even higher level of job losses in the public sector than the Treasury, suggesting 725,000 will be slashed by 2015. The really striking thing, however, is the scale of losses in the private sector. It highlights a massive effect of the cuts that I suspect most people are utterly unaware of.

In fact it explodes the myth of the public/private sector divide. We're told the key division in society is between public sector and private sector - or, more particularly, between the workers in each sector. Private sector workers are encouraged, by press, politicans and 'business leaders', to rally behind the government's slashing of the public sector, especially the pay and pensions of those working in it.

These new findings indicate why public and private sector workers must make common cause and reject divide and rule tactics. We are all affected by the cuts, as workers and as public service users. We will need maximum unity and co-operation in mounting a mass campaign to stop the cuts.

Also see:
Budget: poorest tenth to suffer over 20% cut in income
Cuts: what weapons do we need to fight back?

EXTRA: Larry Elliott's 'Slashing the budget deficit will have a dire effect on the North'


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