Public sector cities

I was in Sheffield last weekend. The city centre skyline there is very public sector, with lots of buildings adorned with logos like UfI and Sheffield Hallam, alongside the massive DWP and DCSF base at Moorfoot (pictured).

Sheffield has seen a 55% increase in public sector employment over the last decade - just one of the findings in our latest report.    

Over the past decade, the growth of lots more UK cities has been boosted by big injections of public cash. Almost 70% of the 1.2 million net additional jobs created in UK cities between 1998-2007 were public sector jobs. Right now, the public sector provides one in four jobs in UK cities - even more in cities like Swansea.

Our latest report Public Sector Cities warns that UK cities are too dependent on the public sector. Over one-third of jobs in Swansea (38%), Barnsley (35%) and Hastings (42%) are now public sector jobs. Sheffield (31%), Newcastle (32%) and Ipswich (33%) are not far behind.

Over the last decade, public sector job creation has outpaced private sector job creation in cities like Hastings, Ipswich and Newcastle. In Barnsley, for example, 6k net additional jobs were created in the public sector (1998-2007) and 6k net jobs were lost in the private sector.   

Given that public spending is going to contract from 2011 onwards, the current size of these cities' public sector workforce is untenable. Public sector employment is bound to shrink. Gus O'Donnell gave strong hints about that in The Times today.

We're projecting that 240k-290k public sector jobs could go in UK cities, between now and 2014 - and that's a conservative estimate. Here's a side paper, explaining how we got to that projection.

Cities like Swansea and Newcastle are going to be most vulnerable to these public sector job cuts. Instead of assuming permanent large public sector employment, these cities should start planning for a smaller public sector.

Our report today is a wake-up call to cities that have depended too much on the public sector. The public sector cushion will get smaller over the next spending period 2011-14 and beyond. All three parties need to acknowledge that public sector downsizing is around the corner. And cities will need to find ways to support more private sector job creation.

See coverage of today's report in the FT, Independent and BBC Online.

Comments

[Manu Fernandez]

Quite interesting this post. I recently wrote about Sheffield from a different perspective (http://www.naider.com/ateneo/articulo_blog.asp?id=453) and (http://www.ciudadesaescalahumana.org/2009/06/desarrollo-economico-local-cuenta-tu.html) and did not consider the resilience problem on depending too much in public sector jobs.

[frederick]

It certainly sounds alarming 200-300k jobs, but might be less alarming and less impressive if you looked at the demography of public sector employment and occupations.

If you looked at the age profiles of public sector workers (from the ONS's data on public sector employment trends), you find that 29.8% of public sector employees are aged 50+. The public sector workforce is older than the private sector workforce. In 2004, around 72 per cent of public sector workers were aged 35 and over compared with 62 per cent of private sector workers.

Its probably the case that a policy of recruitment freezes and voluntary redundancy would meet the headcount targets that you illustrate.

So is there any need to panic?

[Dermot Finch]

Glad you found it interesting, Manu - your links on Sheffield don't seem to work, though.

Good point about age profile, Frederick. Two comments back:

(1) Many of us will need to work well into our 50s and 60s, so not sure that voluntary redundancy will deliver the required reductions in public sector employment.

(2) Recruitment freezes mean fewer vacancies, and fewer job opportunities for school-leavers and graduates, which in turn pushes up unemployment.

[frederick]

Maybe not. In the public sector, 90% of employees still have defined Benefit arrangements with retirement ages defined at 60. There's been suggestions to extend the retirement age, but not the actions.

What has become more difficult to do is to retire early - the benefits for those retiring before 60 have been slashed. So maybe you are right.

[John Charlesworth]

As one from Sheffield, and still an occasional visitor, I am impressed by Sheffield these days. THe Centre is excellent and litter free (on the days I go anyway). The heavy steel industry has gone so thank goodness that jobs have been created. What is most important is that this Country overall has the skills necessary, and the right mix of private enterprise and public duty, to make us work efficiently: don't put too much emphasis on public v private on a city by city basis.

[Dermot]

I'm impressed by a lot of what Sheffield has done. It's definitely better than when I first visited in 1985. The train station is getting sorted, Urban Splash are doing up Park Hill, the city centre is more lively.

Most importantly, its economy added lots of new jobs. The number of people in employment in Sheffield is about 250k - up 10% on a decade ago. But it is worrying that most of these new jobs were public sector jobs, especially given the fiscal squeeze coming.