150701 Private and public sector jobs
  • The amazing rebalancing act… One of the most astounding economic rebalancing acts of the past five years has been in the make-up of our workforce. Public sector employment has gone down by 7 per cent, or roughly 415,000 jobs, over that time. But this has been more than compensated for by a rise in private sector employment of 2,435,000 jobs. Which is to say, for every public sector job lost, businesses have provided an extra six.
  • …coming to a town near you, or maybe not. But this rebalancing hasn’t been spread equally. The above graph shows how employment has changed in each region of the country over the past five years. You’ll notice that London is far ahead of the others when it comes to private sector jobs: it accounts for an extra 627,000. Whilst the North West leads on public sector job cuts: it has lost 65,000.
  • London’s lead. Another way of putting it is that London has added an extra 27 private sector jobs for every public sector job that it has lost. This invites a particularly stark comparison with the other regions. The closest competitor to our capital is the South East, which has created 10 jobs in the private sector for every one relinquished in the public sector. At the bottom of the list is the North East, where the ratio is 2. Here’s the full league table for completeness’ sake:

1. London: 26.9 private sector jobs for every public sector job lost

2. South East: 10.0

3. East of England: 9.1

4. West Midlands: 5.5

5. Scotland: 5.4

6. East Midlands: 5.4

7. Northern Ireland: 4.6

8. Yorkshire and the Humber: 4.1

9. South West: 4.0

10. North West: 3.5

11. Wales: 2.5

12. North East: 2.0

  • Regional divides. Of course, these differences between the regions are because the regions are very different. The public sector is generally a bigger part of the workforce in those at the bottom of the list than in those at the top. It currently accounts for 20 per cent of jobs in the North East, compared to just 15 per cent in London. The capital is simply better positioned to create private sector jobs.
  • Can they be closed? The question is: will London always be so dominant? Or can the general rebalancing of jobs from public sector to private sector be rebalanced towards the north? There are, admittedly, signs that the latter is happening. As I’ve written before, employment growth has been speeding up in regions such as the North East and North West, even before Osborne’s powerhouse policies take hold. But the graph at the top of this post is a reminder of the distances yet to be travelled.