Public Sector job cuts and Yorkshire and Humber
Mismanaging public sector cuts could wreck a decade’s worth of job creation in Yorkshire and Humber
Up to 146,000 jobs could be lost in Yorkshire and Humber by 2017 through reductions in public expenditure but risks to the region could be minimised by allowing for greater local control, according to recent research from The Work Foundation.
Local Government Yorkshire and Humber (LGYH) commissioned the report, Managing Change: Responding to reduced public expenditure in Yorkshire and Humber, to assess and anticipate the future impact of spending cuts and identify ways of mitigating their impact on local economies. It reveals how public sector cuts could affect employment in all sectors in the region – with real risks to private sector growth – and outlines in detail what could be done to reduce damage to the local economy and job market.
The report demonstrates the pivotal role the public sector played in driving employment growth in the region over the past decade. Of the 186,900 net new jobs created between 1998 and 2008, 76.7% (142,600) were in publicly funded employment whilst only 23.3% (43,300) were in the private sector. Today, 29.1% of the region’s jobs are in publicly funded activities, comparing unfavourably with a national average of 27.5%.
Katy Morris, co-author and researcher at The Work Foundation said, “Public sector job creation in Yorkshire and Humber represented more than three-quarters of all new jobs created. This higher than average dependency on publicly funded employment is exacerbated by relatively weak private sector growth – part of which was previously supported by public spending that will no longer exist. This makes Yorkshire and Humber one of the English regions most vulnerable to public spending cuts.”
Modelling the regional impact with the help of Oxford Economics, a scenario assuming significant public spending cuts would be made over the next five years showed that this could lead to the net loss of 65,000 jobs in the public sector and as many as 81,000 jobs in the private sector in Yorkshire and Humber by 2017 when compared with 2008.
Katy Morris added, "The report shows the complex symbiotic relationships between the public and private sectors and wider economic growth. Reducing the public deficit requires all parts of the UK to reduce public expenditure and increase economic growth.
“But public procurement of goods and services is a vital source of revenue for many private sector businesses: IT and construction will be hit hard by the spending crunch. Spending by public sector employees also helps to support regional employment in a wide range of sectors such as retail, tourism and leisure. Cuts need to be managed with regard to the impact on the local labour market so that economic growth can be supported.”
The report argues that local authorities should be given the autonomy to manage how cuts are implemented. Within Yorkshire and Humber, the challenges vary enormously from area to area: in Selby, for example, only 19.2% of jobs are dependent on public funding as opposed to 34.5% in York. This means it is vital for local authorities to take a lead because they have the most in-depth knowledge about their local areas and economies and will be able to mitigate the impact of cuts more effectively.
Cllr Roger Stone OBE, Chair of LGYH and Leader of Rotherham MBC commented “The impact will be felt across the entire economy, not just in areas funded by the public purse. The way to tackle these cuts is for local authorities to be given autonomy to manage them. Councils know their own backyard and we are already working with our business partners and neighbouring areas to reduce costs and try to support private sector growth.
“Decentralising decision making and devolving a genuine mandate to councils to manage the nature of public sector cuts is a much more effective way to support private sector recovery, based on what local areas, businesses and citizens really need.”
Managing Change - Responding to reduced public expenditure in Yorkshire and Humber
Managing Change - Responding to reduced public expenditure in Yorkshire and Humber
EU 2020 Going Local Newsletter April 2012. Available here.
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