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Public sector job cuts hindering not helping deficit reduction, warns CIPD

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10th Oct 2011
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Chancellor George Osborne has been urged to postpone continuing public sector job cuts because they are a “false economy” that is hindering rather than helping deficit reduction plans.   The Chartered Institute of Personnel and Development today warned that the Coalition Government was cutting too far, too fast, after a survey by the organisation revealed that, in the first quarter of 2011, job losses were running five times above levels forecast by the Office for Budget Responsibility.   The problem is that public sector organisations are shedding jobs too rapidly. The CIPD forecasts that more than 600,000 posts will go between 2010-11 and 2015-16 – a third more than Ministers suggested that they expected to see.   Public sector employment fell by almost a quarter of a million in the Government's first year of office, but most experts had predicted the job cuts would be spread over the four year budget cycle rather than being front-loaded in the way they have to date.   John Philpott, the CIPD’s chief economist, called on the Chancellor to announce a temporary halt to further job cuts as part of any broader plan in his autumn Budget to stimulate economic growth and combat rising unemployment.   “Public sector job cuts are a false economy, adding to unemployment and in turn hindering rather than helping the task of fiscal deficit reduction,” he said. “A more sensible course would be to delay public sector job cuts to the end of this Parliament and, if necessary, into the next, thereby enabling them to be absorbed more easily without nasty macroeconomic side-effects.”   While the Government’s plan for growth should rightly contain measures to stimulate private sector job creation, the Chancellor should “avoid the own goal of cutting public sector jobs at a time of high and rising unemployment”, Philpott added.    

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