Fewer Public Sector Job Losses Expected

The new independent Office of Budget Responsibility (OBR) has lowered its estimate for the number of public sector job losses over the next 5 years.  It is now expecting that 160,000 fewer public sector jobs will be cut.

George Osborne, the Chancellor of the Exchequer, predicted in the Comprehensive Spending Review in October that there would be 490,000 job losses in the public sector by 2014-15. The OBR has now revised that forecast down to 330,000 or less because of the decision the Chancellor took to switch more of the spending cuts from Government Departmental budgets to reducing welfare benefits.

According to the OBR, economic growth will be higher in the UK this year than it had previously forecast, but will be lower next year.

Unemployment is likely to increase early next year as growth slows down but job creation is expected to pick up from the middle of next year onwards.  However, employment growth is expected to be slower than previously predicted, with an estimated 1.1 million jobs created by 2015, compared to the previous estimate of 1.3 million.

Dr John Philpott, Chief Economic Adviser at the CharteredInstitute of Personnel and Development, described the prediction of a lower level of public sector job cuts as “clearly very optimistic”.

“The OBR estimates of likely public sector job losses is far lower than indicated by managers on the ground and it will be interesting to see if optimism in the public sector workforce now starts to pick up,” he said.

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