Spending plans may cost public sector jobs

The public sector will need to shed 100,000 jobs to keep within the Chancellor’s spending plans, according to CIPFA chief economist Chris Trinder.

He said the spending plans are based on a rise in prices of 2% across the economy in 1997-98 when the official projection for earnings growth is 4%. ‘Public services are extremely labour intensive,’ he said. ‘So if the pay of public servants is not to fall behind that of workers in the rest of the economy, 2% or 100,000 public sector jobs need to be shed.’

CIPFA is concerned that job losses are not likely to be evenly distributed following the Chancellor’s proposals to pump an extra #1.6bn into health, #450m into the police and #830m into schools. ‘A two-tier public sector is likely to develop in 1997-98 with proportionately more than 2% of jobs being lost in least protected areas.’

Finance directors in the health service welcomed the u1.6bn on top of the current target of nearly #34.9bn for 1997-98. But Keith Ford, head of the healthcare financial management association, said FDs would need to exploit cashflow management techniques to avoid ward closures before the money came on stream in April.