subject: How will public sector job cuts affect the private sector? [print this page] How will public sector job cuts affect the private sector?
It will surely be an unpopular move by the Lib-Con government so it will need to be backed by both parties to avoid political repercussions: this will be difficult to secure in a split cabinet and government.
The obvious repercussions of job cuts are all too easily described by the tabloids. The astute' observation that job cuts would lead to unemployment are shown as a real threat to the economy. This article will aim to focus on the effect of the public sector on the private sector.
The public sector and private sector are often talked about as if they're completely different job markets: in the current economic climate this couldn't be further from the case. If a civil servant was made unemployed tomorrow they could/would/should apply for any job vacancy they are suitably skilled to fill, it doesn't matter whether there employer is a top city firm or a government department.
However, it is true to say that the private sector will tend to favour people who have a history in the private sector over those who have worked for a length of time in the public sector, given two otherwise identical candidates. This is where the issue of unemployment' becomes significant. If the public sector is indefinitely cut there is likely to be a considerable time-lag between job-cuts and ex-public sector workers finding new job in the public sector. Inter-sector immobility becomes especially prevalent in economies where there are already job shortages.
To briefly dabble in some economic theory a swift increase in the supply of labour would surely push the wage level in the economy downwards which is arguably not the best way for the government to influence the economy at the moment. I read an interesting article recently which claimed that by not streamlining' the economy YET (not never, YET) is possibly one of the most valuable fiscal policies the government could adopt in the next couple of years. I question whether this is entirely true, considering the amount of people who'd be made redundant by the public sector job cuts, the reduction in government expenditure, and the rise in taxation revenue forecast over coming years.
Nobody likes job cuts, especially when they are through no fault of the employees themselves. However, we're in hard times. The private sector has had to take a hit which is much larger than that of the public sector so far this is generally to be expected in a recession if you listen to any traditional job-market observers but it may well have got to the point now where there is no alternative.
