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The coalition Budget’s toll on jobs

Ben Chu
40932337 budget6 150x150 The coalition Budgets toll on jobs

Good for jobs?

Interesting to see the Treasury projections for estimated public and private sector redundancies as a result of the Budget cuts in The Guardian. The estimate is 1.1m to 1.3m jobs to go by 2015 (500,000 to 600,000 in the public sector, 600,000-700,000 in the private sector as a result of lost government contracts etc).

Many of those jobs would, of course, have gone under Labour’s plans too. But we can now  make a rough calculation of the number of these job losses which can be attributed  to George Osborne’s decision to cut further and faster.

Labour planned spending cuts of £52bn by 2014-15. The coalition  say they will cut £84bn. That’s a 61% increase. So assuming that the coalition job losses by 2015 will be 61% greater than under Labour’s plans, that works out as between 417,000 and 493,000 more jobs losses as a result of Mr Osborne’s avoidable austerity.

The Treasury point to the Office for Budget Responsibility forecast of overall unemployment falling over the five years. But this is based on the assumption that the private sector will start creating jobs at a faster rate than the public sector is cutting them. But such a surge in private sector job creation is far from certain. The public sector job losses, on the other hand, will certainly materialise if Mr Osborne swings the axe in the manner he laid out in the Budget.

  • wit_and_wisdom

    That statistical analysis is nonsensical, since jobs don’t equate exactly to pounds in the government’s coffers. It is absurd to say that a 61% increase in cuts will mean a 61% increase in the number of jobs lost. You need to clarify this.

  • BenChu

    I suppose it’s possible that the coalition could cut public spending by £32bn more than Labour would have but cut no more (or only slightly more) jobs. But I don’t think it’s very likely.

    As I said, this is a rough calculation. But I think it’s reasonable to assume that an increase in spending cuts will result in a roughly proportionate increase in job losses.

    But if you’ve got a compelling argument to say why this is nonsensical I’d be very pleased to hear it.

  • GutlessWonder246

    Somewhere I read that the projected job creation total by the private sector as is hoped for by the coalition for the year ending 2015 is at least approx 2.5 million.

    And if say the government lays off as is projected by official stats at least 1.5 million which when you do a little arithmetic comes out as Government Target total of around 1.5 million unemployed on the books so to speak by the year 2015….

    And all these jobless, employed statistics of a final jobless total of 1.5 million etc is of course what the Government is hoping will be the final tally when it goes in to another general election in 2015.

    But that ain’t going to happen ,the final tally of 1.5 jobless that is. I mean if because of tight fiscal policies the private sector gets no where near 2.5 million jobs created ..what then ?

    My personal tally is maybe 300,000 jobs created by the private sector by the year 2015.
    if you factor in tight fiscal company budgets and a lock-down on extra hiring .
    So doing some basic arithmetic here a final Government tally of 1 million jobs lost by 2015 add that figure to the jobless figure we have now which in all likely hood might not change then you have maybe 4 million unemployed.

    But no matter which way you cut it the government is quite prepared to except maybe even 5 million unemployed by 2015 because the Government is only concerned about the AAA credit rating. Of course by then the official jobless figures will have been tweaked so as to reflect a much lower figure than anyone now can project.

    But I don’t think the future is looking at all rosy for anyone..I think personally we are heading for the mother of all Crisis’s in a few years time what I call The Convergence…or to use a meteorological euphemism the ” Perfect Storm ” and no amount of clever arithmetic will help.

    But any way that’s another comment..

  • http://profiles.yahoo.com/u/KAB6KTTBPAWX4UKQYQA2KQBJXY John R

    The reality is more complex, mainly because much of the rest of the world – G20, Eurozone- is adopting the rhetoric of fiscal austerity, with the US being the only exception – for the moment.

    This is in my view a disastrous development which, if the rhetoric is converted into real overalldeficit reductions, risks throwing us into a major depression, and Osborne carries a heavy responsibility for this nonsense.

    However two things are far from clear. First will the global austerity prevail? If it does then it is very hard for the UK to step back from it unilaterally without losing very heavily on the indebtedness front for very little gain at home. (Even the US is starting to worry about this effect.) Second are the assumed departmental cuts credible for police, prisons, welfare? Or is it just posturing from which our government will retreat rapidly as governments globally discover that their policies are not working?

  • http://www.independent.co.uk/ Ben Chu

    It’s theoretically possible that the coalition could cut £32bn more than Labour planned and yet no more jobs. But I’d say it’s extremely unlikely.

    I think it’s a reasonable assumption that the job losses will increase in proportion with the increase in public expenditure cuts (ie 61%).

    But if you’ve got a powerful argument why this is a false assumption I’m all ears.

  • http://profiles.yahoo.com/u/KAB6KTTBPAWX4UKQYQA2KQBJXY John R

    The reality is more complex, mainly because much of the rest of the world – G20, Eurozone- is adopting the rhetoric of fiscal austerity, with the US being the only exception – for the moment.

    This is in my view a disastrous development which, if the rhetoric is converted into real overalldeficit reductions, risks throwing us into a major depression, and Osborne carries a heavy responsibility for this nonsense.

    However two things are far from clear. First will the global austerity prevail? If it does then it is very hard for the UK to step back from it unilaterally without losing very heavily on the indebtedness front for very little gain at home. (Even the US is starting to worry about this effect.) Second are the assumed departmental cuts credible for police, prisons, welfare? Or is it just posturing from which our government will retreat rapidly as governments globally discover that their policies are not working?

  • Pingback: The coalition Budget’s toll on jobs – part 2 | Ben Chu | Independent Eagle Eye Blogs


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