West Midlands particularly vulnerable to public sector job cuts

Public sector employment has grown significantly in recent years across the UK and has been the key driver of the economy’s expansion. But proposals announced by the government to make £83bn worth of cuts in public sector spending are forecast to lead to the loss of up to 600,000 public sector jobs across the UK over the next 6 years, according to a study1 by Oxford Economics.

The West Midlands economy is particularly vulnerable to the impact of the cuts. Between 1998 and 2008 (latest available figures), the West Midlands saw the most significant increase in dependence on public sector employment in the country2.

The share of jobs accounted for by the public sector increased from 22% in 1998 to 27% in 2008, a rise of 5 percentage points, bringing total public sector employment to some 637,000.

We forecast that between 2010 and 2016 there will be a net loss of nearly 50,000 jobs across the West Midlands and, based on the ratio of the number of private sector jobs dependent on public sector spending and the associated supply chain nationally, a further 310,000 jobs are at risk at private sector firms directly or indirectly reliant on public sector spending3.

There are areas within the West Midlands that have become particularly reliant on public sector jobs and are likely to see the most significant job losses.

For example, in Birmingham some 21,000 public sector job losses are expected. The figures are around in 3,600 in Wolverhampton, 3,400 in Dudley, 3,400 in  Stoke-on-Trent, nearly 2,200 in Stafford, more than 1,500 in Shrewsbury and 1,600 in Worcester.

Several of these areas lack the resilience to withstand tougher economic times as they lag behind in areas such as adaptability of local businesses, levels of wages, skills among the workforce and the extent of social and economic deprivation.

Some already have unemployment rates above the West Midlands and national average and employment prospects are likely to worsen further as a result of the cuts.

Data sources

  1. Research by Oxford Economics. More details on FT.com.
  2. Office for National Statistics Annual Business Inquiry.
  3. Customised scenario using the West Midlands Regional Observatory’s policy assessment model and reported in Regional Skills Assessment 2010 briefing paper one: the local impact of public sector cuts (pdf, 309kb).
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