Monday, Aug 16, 2010
Areas where the state is a big local employer are likely to see the largest falls in property values
Guardian: Public sector job cuts to hit house prices
Analysis by research group Hometrack for the Guardian shows those areas of the country with the highest proportion of public sector employees are already seeing homes sell significantly further below their asking price than elsewhere. Hometrack says the findings are an early indicator of stagnating and even falling prices in areas such as Aberystwyth, Rhyl and Morpeth in Northumberland.
The Chartered Institute of Personnel and Development thinktank estimates the spending cuts will make 750,000 public sector workers unemployed and push the national jobless total close to 3 million for the first time since the early 1990s.
Posted by mark @ 08:51 AM (1633 views) Add Comment
31 Comments
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1. hpwatcher said...
Is anyone surprised?
2. Jace said...
Its also gonna hit house prices in areas of high benefit claimers, thats if the goverment does man up to the problem and get it sorted.
3. sibley's love child said...
Anecdotally, me and two colleagues run a careers service for our NHS Trust (an unpaid aspect of our job-roles); we've seen a definite spike in the number of staff coming to us as their posts are being 'disestablished'. Interesting times indeed.
4. uncle tom said...
There is something uniquely depressing about towns that have a high dependance on public sector employment.
The work tends to attract boring and blinkered people, and if you have too many of them in one place, the whole community becomes bereft of soul..
Better not to have such ghettos, so that those who work in the public sector are reminded that it is their neighbours who are the ones that pay their wages..
5. nickb said...
UT
What do you suggest? Axe the few remaining jobs in those areas, which are public sector, and that will improve things? i would suggest that is an empirically flawed vision. Also people in the public sector pay taxes too you know! Probably with a lot less scope for evasion and avoidance.
N
6. letthemfall said...
My God, uncle tom, you really show your prejudices in those remarks. You are more intelligent than that. Who pays your wages? The fairies?
7. mark wadsworth said...
As I've said many a time...
1. Out of eight million taxpayer funded jobs, barely two million are "front line" (coppers, prison officers, social workers, teachers, nurses, doctors, ambulancemen, dustbin men, soldiers, coastguard etc), let's be generous and give them another two million as back up staff (cleaners, payroll ladies, cooks, receptionists, maintenance men etc) and that leaves us plenty of scope for cuts.
2. The 750,000 figure is still only the tip of the iceberg - ten years ago there were 'only' six million taxpayer funded jobs, so getting rid of 750,000 is only a third of the increase since then.
3. The idea that London and the South East is a hive of private economy and 'the regions' all live off handouts, I have also read that one-in-four working adults in London work for the state. So with a bit of luck, prices will tumble in London as well.
4. Statistics show that creating one public sector non-job destroys 1.5 to 2 wealth creating jobs (i.e. lost output from that one extra public sector worker plus the deadweight costs of the taxes needed to fund it).
5. Of course (and in the interests of political neutrality), we can bracket large sections of the banking sector into the taxpayer-funded wealth destroying category. And the NIMBYs.
8. mark said...
Any time I have had the misfortune to deal with anyone who worked in a council always had the same result banging your head against a brick wall, it seems to be standard procedure to fob the public off, even though we pay their wages, it is also common practice to treat the public as if they are a thick as Sh** , I would be happy to see 70% of council staff fired... All i can see from personal experience is most of them are a waste of time and space, some are not even qualified for the jobs they undertake, only a little training course, how does that replace a degree related to the work they will do!
9. nickb said...
Mark,
Where do you get your figures from (8:1)? What is this ration in the private sector(s)? After all they have admin and management too. Are you suggesting the public sector have no admin & management etc? How much resources would you allocate to that and why?
On another level, I once attended a talk by an academic chap researching the NHS. He bemoaned the excessive bureacracy and management, as you'd expect, but you might not expect his explanation. The internal market reforms introduced under the last Tory government implies services that used to be planned and administered within the same organisation were replaced by contractual arrangements between distinct administrative units. This created a need for people with the expertise to draw up contracts, and staff time to monitor and enforce them, along with enhanced audit trails necessary to do so, related records systems and so on. In other words, the deadweight loss of administration was a direct result of trying to make it more like the private sector.
Nick
10. mark said...
If you are talking about the NHS I have a very good friend who is a doctor, he says the management is bloated and useless, he thinks it eats into NHS budgets not just in cost of employing but in cost of poor decisions too
11. tyrellcorporation said...
Spot on UT!
However prepare to be labelled a homophobic, racist, holocaust denier who eats babies.
Our thoughts are with you...
It's well documented that the booming public sector has all but snuffed out private companies in the North East as they simply cannot compete with wages, conditions, perks, pensions, flexitime, employment protection, holiday entitlement, etc, etc.
12. mark wadsworth said...
@ NickB, 8. The figure of eight million is from official UK Labour Force Survey, Table 5(2) (please note, table 5(2) is missing from the latest editions of this fine publication!!), category "Education, health, public admin" and knock off three hundred thousand for private schools, hospitals.
I neither know nor care what the ratio in the private sector is because
a) it sure as heck isn't 3 admin staff to 1 front line person and
b) I don't pay for waste in private sector, I just pay for the value of the goods and services provided. So if the private sector really employs 3 unproductive staff for every productive one, I only pay for the wages of the productive one.
13. techieman said...
some of the most intelligent people i know work in the public sector. also within the NHS are some of the most hard working and dedicated people i have ever come across, although thats just anecdotal personal experience. And it must be said that the NHS has improved over the last few years - whether the improvements equate to value for money - i doubt if may on this board know enough to comment intelligently.
Having said that i am having an operation shortly undertaken by a NHS consultant in his private capacity. Thats a time issue btw.
However my perception of council workers is they do seem to get some kind of bloated prejudices as part of their training. I dont agree with UT - i dont think they are completely blinkered people i have kind of moved more toward LTFs position. I think areas should all have balance with people working in all sectors and all contributing. That actually extends for me across racial and religious boundaries - but thats a different issue. Of course people can get radical on all sides - perhaps that explains peoples "them and us" public / private sector attitudes.
It does seem that the public sector has got bloated. Although i am sure the private sector has bloated areas too - as MW says, competition means that we are unlikely to pay for those (at least in the long run - perhaps banking excepted). I think the private sector has taken some pain as it wasnt insulated from the "real world" by Gordy. The simple truth is we cant live beyond our means - and everyone must contribute to this whether private or public sector.
14. titaniccaptain said...
70% of workers in Wales are public sector............guess what will happen to the Welsh housing market..........
15. rumble said...
"people in the public sector pay taxes too you know!" -- isn't it more like returning a library book?
16. nickb said...
MarkW
If the private sector has too many admin staff (or has too high executive remuneration?) this will contribute to their costs and will be reflected in their pricing. So you should care, clearly.
N
17. nickb said...
hmm let me think of top of head about what public sector provides to private:
schools
roads
hospitals etc for staff
education of workforce (primary schools through to unis)
refuse collection
fire services
police
subsidised postal service
regulatory bodies (clearly too much of that in view of the financial crash)
not much really, so yeah let's scrap it all.
N
18. techieman said...
nick - its not what they provide its how they provide it. Dont know who is saying scrap it all - just saying it should be leaner and meaner , and was allowed to get too? bloated.
19. mark said...
subsidised postal service should be scrapped totally
20. mark wadsworth said...
Nick B, comment 15. If an inefficient private company demands higher prices, it will be undercut by an efficient one. As to management taking ludicrous salaries, this is more akin to profit share than actual cost, so does not impact prices. It's like dividends to shareholders - they are only paid out if the business is efficient and makes profits - you cannot add dividends to the cost base when calculating the prices you can charge.
Nick B, comment 16. I totted up the number of people actually involved in providing "schools, roads, hospitals etc for staff education of workforce (primary schools through to unis), refuse collection, fire services, police, subsidised postal service" and arrived at a figure of about two million "front line workers".
Now, all of the things on that list are Good Stuff, hurray to all that, I am thoroughly in favour of the state providing core functions, universal benefits and a cheap mass-insurance system. (the three categories overlap), and if it takes two or three million people to provide them, then that's absolutely fine by me and I am not complaining.
What I want to know is what the other five million do all day long.
21. uncle tom said...
"What I want to know is what the other five million do all day long"
- Exactly.
22. mark said...
UT and MW I know of a council worker who spends a good proportion of his day sleeping in his car, boy this makes me angry and I have told him many times, he says he is going on site and a lot of people do it. that accounts for 1 lol
23. nickb said...
MarkW
See my post at 8.
In my experience the public sector has already been cut to the bone, apart from the kind of malarchy indicated at 8, so i would personally be surprised if there were easy efficiency savings without substantial reorganisation of the whole sector along more rational lines. And that may mean away from market led lines, not towards them. I agree that local councils are uninspiring btw, but they have almost no local autonomy. The fault for that lies with central government.
Nick
24. nickb said...
@Mark at 19
Even in economic theory it depends on the structure of the market the extent to which firms can be expected to be "efficient" or whether they can simply milk consumers. And back in the real world, after Enron, Parmelat and so on, before we even mention the scandals of the financial sector, it surprises me that people can be so blase about the supposed virtues of private sector businesses.
N
25. letthemfall said...
These articles always bring out those who are fed their opinions by the tabloids, led by uncle tom and mark wadsworth, both of whom throw their thinking caps into the corner on this topic. mark's careless quotes of certain statistics do not back up his view that the majority of public sector workers are freeloaders. As I've said many times, no doubt some are, but the private sector is capable of it's own freeloading, and there are many examples (outside the banks). The notion that we don't pay for inefficiencies in the private sector is plainly false, even if you pass over the example of the banks.
MW: "Statistics show that creating one public sector non-job destroys 1.5 to 2 wealth creating jobs.. "
Such an unconvincing and meaningless sentence, mark.
Oh well, at least nickb and techieman contribute something sensible.
26. mark wadsworth said...
Nick B, LTF, I do not get my opinions from the tabloids, I just quote readily available government statistics on
(a) the number of front line staff and
(b) the total number of taxpayer funded jobs.
and draw my own conclusions.
Nobody has ever yet made any attempt to explain what the other five or six million do that is actually of benefit to the general public. If either of you could be bothered to do some proper googling and adding up and come up with an good explanation, then I might well change my opinion.
@ Nick B, can you prove that the customers of Enron overpaid for their electricity? And even if they did, did Enron not go bankrupt? Is Enron still fleecing its customers (as opposed to fleecing its investors, which it quite clearly did)? Can you prove that the customers of Parmalat overpaid for their sliced ham? I suspect not.
And I am sick and tired of people saying "ah but the banks are taxpayer-subsidised rip-off artists". Of course they are! I have never disputed that! I have railed against the Home-Owner-Ist coalition at length as well, they and the public sector freeloaders are as bad as each other and two wrongs don't make a right.
And the fact that a taxpayer-funded non-job reduces economic output by the value of 1.5 productive jobs is beyond dispute. it is a simple observable fact backed up by logic. Taxes on incomes and output have deadweight costs and the simple fact of raising taxes in this manner destroys wealth (as opposed to taxes on land values, which have no deadweight costs...)
27. letthemfall said...
mark w
No I don't believe you get your opinions from the tabloids, but others on this site do and your comments feed them I think.
Your premise is that a large number of public sector jobs are redundant because they are not "front-line", an arbitrary definition surely. As for googling, trawling through stats is not the way to settle such an argument. The matter is surely most complex and would require more than a few posts here to begin to resolve. My position is that there is no inherent difference between the intrinsic efficiency - a word which can have different meanings - of the private and public sectors. You cannot ask me to prove a negative. Rather the onus on you is to show the difference, and not simply use phrases like "beyond dispute" as in your final paragraph (can you prove that a public employee - define 'non-job' - reduces o/p of 1.5 other jobs?). It all smacks of strong political slant.
We agree over the banks, but I keep pointing out that the cost of their shenanigans (billions) probably dwarfs the waste in the public sector, and that's just one private sector. But then since I don't know how exactly much is wasted I can't prove that.
28. mark wadsworth said...
Nick B,
1. Most people are pretty much agreed what is "front line" and what isn't.
2. You provide a handy list at comment 16 which I am happy to merge with my list at 8.1. I have trawled through all the statistics and arrive at about two million "front line" workers. As a taxpayer, I am more than happy to pay for this.
3. There are approx. eight million taxpayer funded jobs. That leaves us a huge great gap of five or six million "non-frontline" workers. That is a simple, verifiable fact.
4. Whether these are more or less efficient than private sector would be is a minor issue and a separate debate. Let us get the facts straight before we worry about politics. Can you please explain to me why one teacher or one copper needs three back up staff - managers, civil servants, public relations advisors etc?
5. It is also a fact that if you raise £25,000 in taxes from the prductive sector, you reduce output of productive sector by rather more than £25,000 (the figure might be £30,000, it might be £40,000). These are called deadweight costs. If the money is spent on keeping somebody tied up in a pointless job, then the value of that person's output is £nil. He or she is not contributing to the economy. Whether than is a BBC manager on £500,000 salary or a street football coordinator on £25,000 is neither here nore there.
6. Rather strangely, it is only the socialists and the Home-Owner-ists who deny that high taxes on incomes have no deadweight costs. The socialists deny it because they say that taxes don;t make people poorer; the Home-Owner-ists deny that the concept of deadweight costs even exists, because they don't want to admit that Land Value Tax has no deadweight costs.
7. Sure, the banks and the Home-Owner-Ists are just as bad for the economy and swallow vast sums of money from productive sector. Ballpark, the two groups (public sector non-jobs and Home-Owner-Ists) probably wreak the same amount of damage on the economy, let's say £150 billion a year each. But two wrongs do not make a right and that is an entirely separate issue.
29. mark wadsworth said...
Oops, my last comment was replying to Letthemfall, not NickB.
30. shipbuilder said...
11. tyrellcorporation said...
"It's well documented that the booming public sector has all but snuffed out private companies in the North East as they simply cannot compete with wages, conditions, perks, pensions, flexitime, employment protection, holiday entitlement, etc, etc."
But if the public sector attracts boring and blinkered people, surely the private sector should be getting the cream of employees??
31. bellwether said...
More pertinently perhaps, this seems to be evidence for the deflation argument.
I think most would agree that some sort of wage spiral is needed for inflation ie a money supply expansion that reaches the hands of those who might spend it, and creates a viscious cycle.
Plainly this is not going to happen within the private sector, and increasingly it looks as if it is not going to happen in the public sector either. In which case it is not going to happen at all, and inflation will be unable to get a grip.