Oh my word!

Cable, the public\’s current choice for chancellor, according to polls, said it was highly plausible that as many as 120,000 public sector jobs would have to be lost, and suggested that voters were \”in for a nasty shock\”.

Gosh, that is a shock isn\’t it? If there are 6 million public sector workers (a little on the low side but the right order of magnitude) then we\’re talking of a whole 2% of the public sector workforce.

Which is, err, around and about the average annual productivity improvement in the economy as a whole.  In order to stand still therefore we would expect any organisation (well, yes, I know, national averages don\’t quite translate to individual companies: productivity tends to grow in leaps and spurts in certain industries or firms rather than generally across everyone but still…when we average up over 6 million people it\’s rather more fair) to be reducing its headcount by 2% a year while providing exactly the same output.

These 2% of people pushed out by rising productivity go off and do something else which means that we\’ve all got the new production of these 2% of people each year to enjoy which is what makes us all richer.

So this \”nasty shock\” is in fact just what we expect (and observe actually) private business to do year in and year out without breaking into a sweat. Increase the productivity of the labour force.

Shows quite how insulated the public sector is if this is a \”shock\” really.

2 comments on “Oh my word!

  1. Lets be clear about this: increasing productivity in the private sector “naturally” makes 2% per annum redundant so the public sector should do the same. Right! and the private sector is expanding like mad at the moment,thanks to the sterling work of the wholly private Financial Services Industry and banks which the private sector Tory party and right-wing entrists into the Labour party spent decades bulling up as a replacement for” old-fashioned metal-bashing”.
    This country works off a mixed economy where the failings of one sector are offset by the other’s positive contributions.As a leftie who was constantly being told to piss off to Russia ( I would have preferred Cuba ;the weather’s better) I feel justified in denouncing anti-mixed economy free-market fundamentalists as downright unpatriotic and suggesting they might be happier in another country.(Oh I forgot that’s already the case in one significant instance.)

  2. Ah but the private sector also increases its output to offset this effect. The opportunities for increasing public sector output are much less (only so many people get sick, only so many kids need teaching) so unlessyou want the state to increase its interference in everyone’s lives, redundancies ARE necessary.

    Personally I was going t point out that the public sector has ben increasing by about 1% per annum over the past 13 years. Combine that with the increased productivity we should expect and that gives us an initial target of a 39% reduction in the size of the civil service.

    The numbers being bandied around at present indicate that each public sector worker costs about 50k per annum. Using Tim’s 6 million headcount I think we’ve just found a 117 billion quid annual saving.

    Who said solving the deficit crisis was difficult?

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