A recruitment freeze combined with reduced spending could see public sector headcount cut by as much as 50,000 this year, warns Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD).

Following yesteday’s announcement by Chancellor George Osborne of a £6.24bn package of public spending cuts this year, Philpott says: “Although the Treasury document makes no explicit reference to the impact of today’s package of cuts on public sector employment, the combination of a civil service recruitment freeze and reduced spending in other areas is likely to reduce total public sector employment by around 50,000 in the current financial year. In addition there will be knock-on effects into the private sector on businesses that undertake contract work for the central and local government and other public bodies, plus the wider impact on demand for labour in the economy as a whole resulting from lower net public spending of around £6bn. Given the current weak state of the labour market this is likely to have a detrimental impact on unemployment.”        

Adrian Slater, director, public sector at Alexander Mann Solutions, predicts that job cuts and wider organisational restructuring, are far more likely than in previous years. Slater adds: “It is essential that any restructuring is carried out responsibly and with a long-term strategy in place. Public sector organisations need a clear view of where the talent and specialist skills reside within each team or department, so they can identify employees they can least afford to lose and make sure that any cuts are part of an intelligent, holistic approach, rather than a knee-jerk response.”
 
David Frost, director general of the British Chambers of Commerce (BCC), says he is particularly pleased to see a freeze on new civil service recruitment – and urges the government to go further with a freeze in the total public sector wage bill and a clear plan to reform public sector pensions.
 
“We will, however, scrutinise cuts carefully to ensure that investment that supports business growth is not a casualty of the spending squeeze. We will analyse new cuts to business, transport, and local government spending to ensure that these do not undermine investment and job creation. While action to eliminate lower value spending is necessary, we must not axe investment in productive infrastructure.”

But Edward Winterton, recruitment finance spokesperson for Bibby Financial Services, says the recruitment freeze may, however, have a number of positive benefits for agencies operating in the private sector. “The freeze could prompt a number of high quality candidates who may previously have targeted public sector vacancies to look further afield.”