The Guardian had an eye-catching splash this morning warning that the Budget would “cost 1.3m jobs”. Particularly striking was the premise that more would be lost in the private sector than the public sector over the next five years as a result of cutting the deficit.
Read the story in detail, however, and it also emerges that 2.5m jobs will be created in the private sector in the next five years. The result (even presuming no new public sector jobs): a net increase of 1.2m jobs. This explains how the Office for Budget Responsibility can still predict unemployment to peak this year at 8.1 per cent and then fall to 6.1 per cent in 2015. (You may or may not find this all a little optimistic).
Every year – with or without recession – there is “churn” in the workplace. That is, some companies and institutions take on thousands of staff. Others axe posts. Therefore we should not necessarily be quite so alarmed.
As John Philpott, chief executive of the Chartered Institute of Personnel and Development, tell me:
The rule of thumb answer is that in a ‘normal’ (i.e. trend growth) year around 500,000 jobs will be lost (as a result of productivity improvements) to the economy and about 750,000 created, enabling some amount of net job creation.”