Keeping it private

Despite the sluggish economic recovery, employment figures continue to surprise on the upside. With the public sector rapidly being cut back, all of this employment growth is of course coming from the private sector. But what does the picture look like across the different parts of the UK?

The green bars in the chart below show the proportional change in public sector employment in each Government Office Region in the period from Q4 2008 to Q3 2012. Unsurprisingly, it shows falling employment across the country, with Scotland, the North East, South West and North West being particularly hard hit. In direct contrast, the pink bars show that private sector employment has increased over the same period in all regions other than the South East.

Prior to the start of the current round of public sector job cuts, the concern was that those areas with particularly high concentrations of public sector workers would suffer most and potentially be pushed into downward economic spirals. Yet the chart makes clear that overall employment recovery shows little connection to the size of the public sector jobs hit. For example, while public sector employment fell by 10.2 per cent in both Scotland and the North East over the period, overall employment growth fell by 2.3 per cent north of the border, but increased by 2.1 per cent in the North East. The difference? The size of the private sector jobs boost: while such employment increased by just 0.4 per cent in Scotland, it jumped by 6.3 per cent in the North East.

Notes:         Estimates are based on where people are employed. English further education colleges and English sixth form college corporations were classified to public sector from 1993 to 31 March 2012 and to the private sector thereafter. The figures shown here count them as being in the private sector for the full duration of the period considered. UK rates based on total employment that includes overseas employees, those who did not state their region of workplace when surveyed as part of the Labour Force Survey and public sector employees that could not be assigned to a region. Estimates of public sector employment for Northern Ireland will differ to those published by DETINI. The ONS figures include HM Forces personnel.

Source:       ONS, Public Sector Employment Q4 2012

Obviously, these employment figures take no account of the split between full-time and part-time work, nor do they tell us anything about the employment rate in each region (which will also depend on population trends). More generally, the positive news on employment has been offset in part by continued real wage reductions. Nevertheless, the evidence from across the regions and countries of the UK reinforces the primary importance to local economies of encouraging private sector development and job creation in the coming years.