How Many Public Service Lay Off's Will There Be?

[ralphmalph]

So there has been a lot of talk about how the coming public sector layoffs are going to be so massive they will result in Britain ceasing to be a functioning economy at all (copyright - a testicular chap).

I was listening to R5 Live this morning and a couple of union non entities were spouting off, but one made a comment that since day 1 of the new governemnt there has been a hiring freeze in his department and this mean that they were short staffed (Oh yeah). Also another bit of info came to light this morning that Cleggy said that the cuts would be 6% per year until 2014.

So lets see if we can work out the cuts.

Total public sector employment in the UK is about 6,070,000 (source ONS 2009). Does anybody know if Quangos are in this figure?

So this got me thinking how many retire every year because they hit retirement age. Assumptions - work start age 18 work finish age 62.5 (allows for men at 65 and women at 60 (eventhough police and army retire at 50 I believe). So this gives a working life of 44.5 years.

A very simplistic calculation of the number of people that will retire in any one year is 6,070,000 / 44.5 = 136,404

6% cut (If applied equally to staff and spending programs) would mean 6% cut in staff so 6,070,000 x 6% = 364200 every year until 2014.

This would mean 364,200 - 136,404 = 227,796 per year forced redundancies.

But seeing as the public sector pensions are paid out of current tax revenues and are about 50% of salay (for a full lifetime of work) this means that the retirees only lower spending by 50% so we have to add half the number of retirees per year to the forced redundancies to make sure we are saving the full cost.

So now forced redundancies per year will be 227,796 + (136,404 /2) = 295,998 say 300K for simplicity.

Quick sanity check to see if we are on the right lines. Average salary say 25K so cost of emplyeing these people is 50K per year (office space, puter, elecy, etc)

300K x 50K = 15 billion quid. So this sounds about right add in capital spending program reductions and you get to the figures the govt are talking about - 57billion over 4 years).

So what effect will this have on the housing market.

Owner occupiers are 67% in the UK so this means at the maxium 300K x 67% = 201K would be potential distressed sellers.

Obviously some will have partners that can pay, or savings to tied them over, or very small mortgages so what is the figure for house to be dumped on the market.

If it is 25% then it will be 50K or one months demand

50% would be two months demand.

IIRC at the peak of the redundancies in America they had 12 months worth of distressed sellers on the market hence HPC big time.

So on my very basic analysis the coming public sector job cuts are not going to cause a HPC on thier own.

[koala_bear]

So there has been a lot of talk about how the coming public sector layoffs are going to be so massive they will result in Britain ceasing to be a functioning economy at all (copyright - a testicular chap).

I was listening to R5 Live this morning and a couple of union non entities were spouting off, but one made a comment that since day 1 of the new governemnt there has been a hiring freeze in his department and this mean that they were short staffed (Oh yeah). Also another bit of info came to light this morning that Cleggy said that the cuts would be 6% per year until 2014.

So lets see if we can work out the cuts.

Total public sector employment in the UK is about 6,070,000 (source ONS 2009). Does anybody know if Quangos are in this figure?

So this got me thinking how many retire every year because they hit retirement age. Assumptions - work start age 18 work finish age 62.5 (allows for men at 65 and women at 60 (eventhough police and army retire at 50 I believe). So this gives a working life of 44.5 years.

A very simplistic calculation of the number of people that will retire in any one year is 6,070,000 / 44.5 = 136,404

6% cut (If applied equally to staff and spending programs) would mean 6% cut in staff so 6,070,000 x 6% = 364200 every year until 2014.

This would mean 364,200 - 136,404 = 227,796 per year forced redundancies.

But seeing as the public sector pensions are paid out of current tax revenues and are about 50% of salay (for a full lifetime of work) this means that the retirees only lower spending by 50% so we have to add half the number of retirees per year to the forced redundancies to make sure we are saving the full cost.

So now forced redundancies per year will be 227,796 + (136,404 /2) = 295,998 say 300K for simplicity.

Quick sanity check to see if we are on the right lines. Average salary say 25K so cost of emplyeing these people is 50K per year (office space, puter, elecy, etc)

300K x 50K = 15 billion quid. So this sounds about right add in capital spending program reductions and you get to the figures the govt are talking about - 57billion over 4 years).

So what effect will this have on the housing market.

Owner occupiers are 67% in the UK so this means at the maxium 300K x 67% = 201K would be potential distressed sellers.

Obviously some will have partners that can pay, or savings to tied them over, or very small mortgages so what is the figure for house to be dumped on the market.

If it is 25% then it will be 50K or one months demand

50% would be two months demand.

IIRC at the peak of the redundancies in America they had 12 months worth of distressed sellers on the market hence HPC big time.

So on my very basic analysis the coming public sector job cuts are not going to cause a HPC on their own.

Some others to add:

Real terms: 6% + costs inflation means you need to save more than 6%!

Pay Freezes?

You are assuming they are on a pay freeze? If not an increase in line with CPI that would be circa half the annual saving target extra to find...

Promotion freeze?

A freeze on promotions would also help, probably around another 1%. It would only need to be for 2 years to produce beneficial drag for many years into the future

No bonuses?

Shave a bit more off the compensation bill

Combine the above with retirements and you could have public sector slashing with relatively low job cuts!

This is very unlikely of course as it is equivalent to the most expensive turkeys at the top will not be voting for Xmas;)

I reckon that lots of places will try to axe CapEx so they can save avoid letting people go, so lots of the pain will end up being in the private sector not the public sector. (and leaving planety in the public sector twiddling thumbs as they have no capital projects to over see...

[Executive Sadman]

None, the parasite has gained control of the host, only a matter of time until each and every Connaught PLC becomes Connaught HMG

[Johnny Storm]

So on my very basic analysis the coming public sector job cuts are not going to cause a HPC on thier own.

I think thats become quite apparent these last couple of months, lots of talk about cuts but no actual cuts. Now we hear we are only going to cut 6% a year. Pointless. If they ever actually happen, which I am starting to doubt.

Well, I have given the torys the chance I told myself I would. If things are no better in 5 years time, ill be voting and canvassing for BNP or maybe UKIP from then on.

[OnlyMe]

Not sure whether they mean anything, but there are a few articles about that are giving some indications of how the cuts are being split across regigional areas - intersting if someone can piece these together and see if tere is any consistency with the claims of major cutbacks.

For example, how does this compare with Scotland's overal budget.....

http://www.google.com/hostednews/ukpress/article/ALeqM5iRndGi9gwwlLdolUracnYh6QcPAw

Labour called for the Finance Secretary to set out his spending plans for next year when an estimated £1.7 billion will be cut from Scotland's Budget while the Tories warned many services will disappear or be reduced.

What is the welfare bill now in comparison?

http://www.bbc.co.uk/news/uk-politics-11253616

The government is planning to reduce the annual welfare bill by a further £4bn, Chancellor George Osborne has told the BBC.

He will give details of the savings, which follow an £11bn cut made in June, in October's spending review.

Edited September 9, 2010 by OnlyMe

[Can't Go Too Low]

Pay Freezes?

You are assuming they are on a pay freeze? If not an increase in line with CPI that would be circa half the annual saving target extra to find...

The pay awards in the public sector are set up so that pay awards each year are in two parts.

An inflationary uplift which the government can - to an extent - manage down to very low levels.

An incremental uplift - typically you join at a point on the scale and move up one increment every year. You might think that with some turnover and new staff joining the bottom of the scale it would be zero-sum but the reality is 'incremental drift' - i.e. a gradual increase in pay (excluding the impact of inflation) happens every year.

So - unless the government changes existing contracts - there definitely won't be a pay freeze.

One of the biggest problems - financially - trying to reduce staff numbers in the public sector are the redundancy terms and conditions. 2 years pay-off entitlement not uncommon especially in some of the professions - nursing, teaching etc. since the continuous service counts regardless which particular organsiation you work for (e.g. move from one school to another and in redundancy terms it counts as continuous employment).

[John The Pessimist]

1. How many members of the public sector are on fixed term contracts that will not be renewed? These will add to the "natural attrition" figures and they will reduce the requirement for redundancies.

2. How many are non-EU nationals that will not have their work visas renewed? Again these will be counted as natural attrition. (The home office has clamped down dramatically on visas and visa renewals since the election.) There will be no increase in the benefits bill as a result of these losses.

[Goat]

I think thats become quite apparent these last couple of months, lots of talk about cuts but no actual cuts. Now we hear we are only going to cut 6% a year. Pointless. If they ever actually happen, which I am starting to doubt.

Be fair JS, it took Broon 13 years to f*** up the country's finances, this lot have barely been in office for 13 weeks.

[interestrateripoff]

I think the govt will move and cut temp/agency workers and claim they are making big cuts.

The coalition is going to have to try and look tough without actually being tough.

[billybong]

http://www.management-issues.com/2006/5/25/blog/one-in-four-britons-work-for-the-state.asp

Almost half of all adults in Britain - 44 per cent – receive at least half their income from the state, either as public sector employees or because they depend on state benefits.

...

....the Spectator found that that Labour has increased the overall public sector payroll by 784,000 since coming into power in 1997.

....

In total, almost a quarter of the UK workforce – some 6.8 million people - now works for the State in one form or another, the magazine calculated.

Of course "management issues" will have its own slant on things but it indicates the scale of the problem and the truly VAST scope for cuts if there were to be a will for it.

It also demonstrates the huge burden the general economy has to shoulder, that along with the burden of over inflated house prices to benefit VIs and MPs property portfolios and so on.

It's really no wonder that the UK can't compete in any meaningful way with developing nations and it looks as if that is actual official policy - it doesn't look good for the future of the UK's people.

There's no harm in the safety net of course, indeed it's essential, but these days it's all getting ridiculous.

Edited September 9, 2010 by billybong

[johnycoldears]

6% cut (If applied equally to staff and spending programs) would mean 6% cut in staff so 6,070,000 x 6% = 364200 every year until 2014.

My biggest concern is that it will not be applied equally.

For example I am in the Civil Engineering industry, building and maintaining roads for a living. I can see a situation where a council saves, say, £10 miiion off its budget simpy by cutting spending on road maintainance. Let's face it we can all manage a couple of extra years with roads that don't run as smooth as billiard tables.. Applied over many departments most of the savings could be made without cutting many public sector positions. Therefore the cuts will be pushed onto the private sector, - the contractors, engineers, quarries and builders merchants. This is where the jobs will end up being lost, in the private sector.

This has how it has played out in the past ,and i can see no reason why it won't be the same this time.

[exiges]

My biggest concern is that it will not be applied equally.

My biggest concern is that it will not be applied at all.. fudging the numbers, taking inflation into account, real term cuts.. yadda yadda.

[PopGun]

FFS which would you guys rather have? A controlled detonation in parts, or dynamite thrown indiscriminately and all at once?

If the latter, then I hope you don’t work in a quarry.

Edited September 10, 2010 by PopGun

[John The Pessimist]

CIPD (shower of chancers) are estimating 604,000 jobs over 4 years. Searching for a linky.......

[Analysis]

I think thats become quite apparent these last couple of months, lots of talk about cuts but no actual cuts. Now we hear we are only going to cut 6% a year. Pointless. If they ever actually happen, which I am starting to doubt.

Well, I have given the torys the chance I told myself I would. If things are no better in 5 years time, ill be voting and canvassing for BNP or maybe UKIP from then on.

3 senior Radiographers reduced to 1 and 1 part time at my local NHS Trust. These people get you diagnosed quickly when you're in agony in A&E. Expect the '24 hours sitting in their own excrement in A&E' stories to start again sometime next year.

The truth is:

1) Cuts are already happening

2) They are affecting frontline services

3) Many people apparantly think this is a great idea

Good luck

[scud]

1. How many members of the public sector are on fixed term contracts that will not be renewed? These will add to the "natural attrition" figures and they will reduce the requirement for redundancies.

2. How many are non-EU nationals that will not have their work visas renewed? Again these will be counted as natural attrition. (The home office has clamped down dramatically on visas and visa renewals since the election.) There will be no increase in the benefits bill as a result of these losses.

I work in the civil service & apparently there are supposed to be 50% of grades earning £50K+ retiring in the next 4/5 years. Not sure of actual figures but heard this through a union rep. So, I suppose natural wastage will achieve a lot of the cuts. Where I am, they've just promoted over 100 accross the country to replace lower lever grades retiring now. There has been no recruitment for years & everyone is on a 2 year pay freeze.

[Fergie]

Despite all Dave's talk of "the Big Society", the voluntary sector is being hit hard, and will probably be hit harder. Like cutting the private companies contracts, it's far easier for councils to cut grants and money it gives to outside projects, especially if those are considered "peripheral". Trouble is, many of these voluntary sector projects are preventative: ie they prevent kids getting into crime, or older people going into hospital.

So while it saves the councils money, it costs a shit-load more on general taxation down the line when you end up with more crime, more mental health problems, more emergency hospital admissions etc. But of course the usual whingers and loud-mouths just think "councils saving money = good thing".

[South Lorne]

I work in the civil service & apparently there are supposed to be 50% of grades earning £50K+ retiring in the next 4/5 years. Not sure of actual figures but heard this through a union rep.

....makes sense ...these will be the part of the baby boomers .....

[lets get it right]

So there has been a lot of talk about how the coming public sector layoffs are going to be so massive they will result in Britain ceasing to be a functioning economy at all (copyright - a testicular chap).

I was listening to R5 Live this morning and a couple of union non entities were spouting off, but one made a comment that since day 1 of the new governemnt there has been a hiring freeze in his department and this mean that they were short staffed (Oh yeah). Also another bit of info came to light this morning that Cleggy said that the cuts would be 6% per year until 2014.

So lets see if we can work out the cuts.

Total public sector employment in the UK is about 6,070,000 (source ONS 2009). Does anybody know if Quangos are in this figure?

So this got me thinking how many retire every year because they hit retirement age. Assumptions - work start age 18 work finish age 62.5 (allows for men at 65 and women at 60 (eventhough police and army retire at 50 I believe). So this gives a working life of 44.5 years.

A very simplistic calculation of the number of people that will retire in any one year is 6,070,000 / 44.5 = 136,404

6% cut (If applied equally to staff and spending programs) would mean 6% cut in staff so 6,070,000 x 6% = 364200 every year until 2014.

This would mean 364,200 - 136,404 = 227,796 per year forced redundancies.

But seeing as the public sector pensions are paid out of current tax revenues and are about 50% of salay (for a full lifetime of work) this means that the retirees only lower spending by 50% so we have to add half the number of retirees per year to the forced redundancies to make sure we are saving the full cost.

So now forced redundancies per year will be 227,796 + (136,404 /2) = 295,998 say 300K for simplicity.

Quick sanity check to see if we are on the right lines. Average salary say 25K so cost of emplyeing these people is 50K per year (office space, puter, elecy, etc)

300K x 50K = 15 billion quid. So this sounds about right add in capital spending program reductions and you get to the figures the govt are talking about - 57billion over 4 years).

So what effect will this have on the housing market.

Owner occupiers are 67% in the UK so this means at the maxium 300K x 67% = 201K would be potential distressed sellers.

Obviously some will have partners that can pay, or savings to tied them over, or very small mortgages so what is the figure for house to be dumped on the market.

If it is 25% then it will be 50K or one months demand

50% would be two months demand.

IIRC at the peak of the redundancies in America they had 12 months worth of distressed sellers on the market hence HPC big time.

So on my very basic analysis the coming public sector job cuts are not going to cause a HPC on thier own.

A lot of people leave of their own volution. So compulsory redundancies may be well below the figure you have suggested.

I know of one public sector organisation that has had a moratorium on recruitment for the last 6 months - it has recently been lifted as they have so many vacancies through natural wastage.

[Nickolarge]

FFS which would you guys rather have? A controlled detonation in parts, or dynamite thrown indiscriminately and all at once?

If the latter, then I hope you don’t work in a quarry.

Sadly there are a lot of folk on this site who think that cuts are something that only effects other people.

There are even some that think they will benefit from a period of harsh austerity.

You only have to look at the number of posts containing "saw this coming"...."prepared my position"....etc. and yet they all seem to be relying on investments or some parasitical non job or living abroad.

The saying "Be careful what you wish for" has never been so apt.

[Nickolarge]

Despite all Dave's talk of "the Big Society", the voluntary sector is being hit hard, and will probably be hit harder. Like cutting the private companies contracts, it's far easier for councils to cut grants and money it gives to outside projects, especially if those are considered "peripheral". Trouble is, many of these voluntary sector projects are preventative: ie they prevent kids getting into crime, or older people going into hospital.

So while it saves the councils money, it costs a shit-load more on general taxation down the line when you end up with more crime, more mental health problems, more emergency hospital admissions etc. But of course the usual whingers and loud-mouths just think "councils saving money = good thing".

+1

I often wonder where some of these guys think the money comes from to pay for the infrastructure of this country. They are full of the "I don't use this service or that service" but never seem to grasp that this place is better to live in than many others precisely because a shed load of public money has been spent over many decades to make it that way.

[Si1]

Despite all Dave's talk of "the Big Society", the voluntary sector is being hit hard, and will probably be hit harder. Like cutting the private companies contracts, it's far easier for councils to cut grants and money it gives to outside projects, especially if those are considered "peripheral". Trouble is, many of these voluntary sector projects are preventative: ie they prevent kids getting into crime, or older people going into hospital.

So while it saves the councils money, it costs a shit-load more on general taxation down the line when you end up with more crime, more mental health problems, more emergency hospital admissions etc. But of course the usual whingers and loud-mouths just think "councils saving money = good thing".

I've been amazed these past few years the people in the voluntary sector with company cars

when they are simply an extension of Big Spending Government they're not exactly Big Society