As we move towards the budget we will be hearing more and more warnings about the impact of further cuts in public sector employment. One line, pursued repeatedly by the TUC and the Fawcett Society since Mr Osborne’s first budget, is that such cuts will particularly impact on women. As the public sector employs more women than men, it is argued, the cuts mean higher unemployment for women. It has even been suggested that an Impact Assessment along these lines would conclude that public sector cuts breach the Equality Act.
I don’t know about that. But it is worth pointing out how difficult it is to assess the impact of public sector ‘cuts’ on unemployment.
First, the definition of the public sector (which includes commercial banks which the government has taken over, but does not include universities) is constantly shifting as work is contracted out or taken back in house. One big change last year was that 196,000 further education college jobs were reclassified as private sector, even though they are very largely publicly-funded.
Second, you have to bear in mind that people leave jobs all the time for a variety of reasons. Annual turnover rates (conventionally defined as the number workers leaving during a year divided by the average of employment at the beginning and end of the year) are between 10-15 per cent in the public sector even in normal times. A high proportion of people leaving jobs do so by choice — they get new jobs, they retire, they have babies, they emigrate, they win the lottery. Others leave, sadly, through illness and death. Turnover rates are typically higher for women than men. If these jobs are not replaced, public sector employment falls but it is not at all clear that unemployment rises.
Third, voluntary redundancy accounts for more of the ‘cuts’. In my experience, the opportunity for voluntary redundancy usually attracts large numbers of people eager to go, many of whom have alternative job prospects already lined up or are happy to leave the workforce. Indeed the apportionment of voluntary redundancies can itself raise equality issues: I once had a female member of staff claim discrimination because she wasn’t allowed to take redundancy when we were happy to let a rather less competent male colleague go.
Again unemployment need not rise as a direct consequence of voluntary redundancy. Involuntary redundancy is more problematic, but a significant proportion of those made redundant against their wishes find new jobs quickly, retire or enter self-employment. They certainly do not all become unemployed.
This article originally appeared on Spectator Coffee House. Continue reading here.