PUBLIC SECTOR DOMINATES UK JOBS GROWTH SINCE 1997

The Sunday Times business section refers to a fascinating paper from Manchester University’s Centre for Research on Socio-Cultural Change.

Entitled “UNDISCLOSED AND UNSUSTAINABLE: PROBLEMS OF THE UK NATIONAL BUSINESS MODEL”, the paper presents new arguments and evidence about public and private employment creation in the UK.

Its measures of public sector employment count state employees and estimate para-state employees whose private employment is state supported.

On this basis, state and para-state (S&PS) since 1998 account for more than half the job creation nationally in the UK and for much more in the ex-industrial regions.

For example, in London and the South, S&PS accounts for no more than 38-44% of employment growth between 1998 and 2007; while in the Midlands, North, Wales and Scotland S&PS accounts for more than half of the employment growth over the same period.

In Wales, 55 per cent of all new jobs in the decade between 1998 and 2007 have come from the S&PS sector as compared to 45 per cent from the private sector.

Whilst some of the conclusions of the report are contentious, the one point of real discussion is whether public sector expenditure has essentially been hiding a low performing business sector. i.e. that the UK government has been propping up a feeble and untransformed private sector whose problems are now horridly aggravated by bank failure and market crisis which was caused by the financial sector.

If that is the case, then it is clear that the next government, of whatever political colour, must focus its efforts not only on public sector expenditure reduction but, more importantly, on improving the competitiveness of UK businesses.