As CIPD says cuts are untenable, PCS questions independence of Office of Budget Responsibility

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The government should stop cutting public sector jobs if it wants the economy to recover, according to a report published today.

With quarter of a million jobs shed last year and five times the projected figure for this year already surpassed in the first quarter, the Chartered Institute of Personnel and Development (CIPD) questions whether the coalition’s narrative stance on public job cuts is tenable.

CIPD chief economic adviser Dr John Philpott said: “With the economy and labour market in such a fragile condition, it is worrying that public sector job losses are turning out to be much greater than ministers have previously been suggesting.

“Public sector job cuts in this context are a false economy, adding to unemployment and in turn hindering rather than helping the task of fiscal deficit reduction.

“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.

“The government’s plan for growth must rightly contain measures to stimulate private sector job creation but the Chancellor should also avoid the own goal of cutting public sector jobs at a time of high and rising unemployment.”

The projected figures in the report come from the Office of Budget Responsibility (OBR), a body whose independence has been questioned by PCS.

The CIPD report says 610,000 jobs are likely to go over the next four years – the same figure given in a leaked document from the OBR in June 2010.

Later that year, however, the OBR revised down its published estimates to 490,000 then 330,000.

PCS says this calls into question the OBR’s independence and suggests political pressure has been brought to bear to deflect criticism of the government’s spending cuts.

PCS general secretary Mark Serwotka said: “This report shows that the initial analysis by the OBR, which is supposed to be independent of ministers, was spot on.

“It is now seems its figures have been massaged to show an unrealistic picture of the grave problems facing our economy because of government policy, as part of a worrying pattern of ministers obscuring the facts behind rhetoric and half-truth..

“Instead of ploughing on regardless and cutting hundreds of thousands of jobs, the government should invest to help our economy to grow by putting people into work and putting money in their pockets.”

UNISON welcomed the report but said  job losses should not simply be put off until the next parliament, as the CIPD argues – they should not be happening at all.

General secretary Dave Prentis said: “The government’s cuts policy means that public sector job losses are heavier than expected.  Every redundancy is a personal tragedy and despite Government claims, the private sector is not able to come to the rescue.  There are simply not enough jobs to go around.

“UNISON warned from the start that hard and fast spending cuts would be a disaster for the public and private sectors – and for our economy. Sadly this has proved true, and economic growth has shuddered to a halt.

“But we don’t agree that public sector job losses should simply be put off until the next parliament – they should not be happening at all. What we need is for the government to ditch the cuts and come up with with a workable plan B. This must include a plan to stimulate growth, using money raised from a tax on bank bonuses and on transactions.”

 


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