Press Release

Further increases in worker mobility needed as public workforce cuts accelerate

Date: 16 June 2015
Authors:
Publisher: Institute for Fiscal Studies

The pace of public workforce cuts is likely to accelerate over the new parliament. Conservative party plans outlined in their manifesto imply a further reduction in the public workforce of 580,000 between 2014–15 and 2018–19, unless the government imposes further public pay restraint. The last parliament saw many public sector workers move into private sector employment. This movement into the private sector will need to grow to prevent former public workers spending a significant amount time out of work.

These are among the conclusions of a new Briefing Note from the Institute for Fiscal Studies (IFS). The researchers, funded by the Joseph Rowntree Foundation and the Economic and Social Research Council (ESRC), looked at the movement between jobs, or ‘mobility’, of workers in the public and private sectors.

There were large cuts to the public workforce over the last parliament during a period of fiscal consolidation. The public workforce fell by 375,000 between the start of 2010 and the end of 2014. Initially, these falls were quite sharp with a fall of 2.9% between 2010Q2 and 2011Q2, and many former public sector workers were unable to find new jobs in the private sector. After 2011, the pace of public workforce cuts slowed somewhat and former public sector workers were almost fully absorbed by the private sector.

In particular, the researchers found that:

  • The initial sharp cuts in 2011 were partly delivered by a reduction in the number of private sector workers joining the public sector (inflows from the private sector comprised just over 3% of the public workforce after 2010 compared with around 5% of the public workforce each year during 2000s);

  • Although there was a small increase in workers leaving the public sector to find new jobs in the private sector in 2011, movements between sectors cannot fully account for the reduction in the public workforce in 2011. Instead, the combination of reduced public sector recruitment and public sector workers moving out of employment amounted to a net reduction of 3% in the public workforce in 2011;

  • After 2011, public sector workforce cuts were delivered with relatively few people moving out of employment. This is because the pace of cuts slowed and because the proportion of public sector workers finding new jobs in the private sector increased. About 5% of public sector workers in 2013 moved to the private sector, the highest level since the early 1990s;

  • Cuts to the public workforce have been smallest in the protected areas of the NHS and education and largest in public administration, which includes administrative workers in various areas of the public sector (e.g. civil service, local government, Job Centre Plus).

Other findings on public and private sector mobility include:

There was an increase in mobility from public to private sector after 2010, but a decline in mobility within the public and private sectors to historically low levels. This decline in mobility across firms in the private sector is widespread and is potentially concerning if it reflects barriers to workers shifting from less productive to more productive jobs. Understanding the root causes of this decline in private sector job mobility is an important area for future research.

The geographical mobility of public sector workers is low compared with the private sector. Around 5–6% of men and women in the private sector moved to a job in another part of the country in 2013. That is about double the proportion of public sector workers changing region (about 2–3% in 2013). Public sector job losses may require workers finding jobs in the private sector within their current region in order to prevent workers moving into non-employment.

Luke Sibieta, a programme director at the IFS and an author of the report, said:

“Given the historically large cuts to the public sector workforce over the last parliament, it is encouraging to see increases in the numbers of public workers managing to find new jobs in the private sector. With the pace of workforce cuts set to accelerate in the coming years, the capacity of the private sector to absorb former public sector workers will need to increase further to prevent them spending a significant amount of time out of work.”

 

Notes:

1. In 2014, the NHS made up 27% of the public sector workforce, education made up 29% and public administration made up 18%. Public administration includes administrative workers across various areas, including the civil service, Job Centre Plus, local government and other areas. The rest of the public sector (26% of the public workforce in 2014) comprises the Police, HM Forces, social care and other smaller areas of the public sector.

2. Our estimates of the mobility of public and private sector workers is based on the Annual Survey of Hours and Earnings Panel dataset made available by the Office for National Statistics. This allows us to follow a 1% random sample of employees over time and track their occupational histories. More details can be found in the data and methodology section of the briefing note.