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Private sector can absorb public sector fallout

Private sector can absorb public sector fallout

In what seems to be a contradiction of other recent reports, the latest quarterly job survey from the CIPD and KPMG claims that public sector redundancies will be more than offset by new private sector jobs.

The latest Labour Market Outlook recorded a figure of +11. This figure is a based on the number of employers planning to increase their workforce compared to those who plan a decrease. Whilst the public sector recorded a negative figure of -44, the private sector registered +39. In the summer the balance was +2 and we have now seen three consecutive quarters with a positive balance.

The chief economic adviser for the CIPD, Dr John Philpott, said there are now encouraging signs of increased buoyancy in the private sector job market. However, he did point out that it remains to be seen whether this will continue after the pre-festive season jobs surge and he didn’t go as far as to rule out a rise in unemployment next year.

Sectors that expect to increase recruitment levels during the final quarter of the year include manufacturing (+51), IT private sector services (+71) and consultancy (+44). Decreases are expected in central and local government (-95 and -65 respectively) and transport and communications (-39).

41% of public sector bodies will be making redundancies before the end of 2010 and these are expected to affect 14% of their employees. Whilst the average cost of making an employee redundant is £12,000, in the public sector it is £19,600 as opposed to £9,350 in the private sector.

Obviously everybody hopes that the latest LMO data is concrete evidence that we are witnessing a sustained improvement that will enable the private sector to absorb the public sector fallout.

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Image: run from the red flower by badjonni

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