Britain ‘to see jump in jobs but not wages’

Severe job losses in the public sector will be outstripped by employment created in the private sector as the economy attempts to emerge from the financial crisis.

An analysis of labour market trends carried out by accountancy firm PwC predicted that total public sector employment will fall by 877,000 across the UK by 2017-18.

That, however, will be offset by a rise of 1,740,000 in private sector jobs, giving an overall rise of 864,000 by 2018.

A similar trend was forecast for Scotland, with public sector employment falling by 85,000, which would be offset by a private sector rise of 146,000. In Scotland, the overall rise would be 61,000.

Although the employment growth rate in Scotland was predicted to be 2.5 per cent, it would not increase as dramatically as in London, the East of England and the East Midlands.

According to PwC, London employment growth would be 263,000 – a rate of 6 per cent.

The East of England would see a 101,000 increase in employment, the equivalent to a percentage change of 3.8.

The employment growth rate in the East Midlands was predicted to be 3.6 per cent (75,000).

Scotland, however, is expected to outperform other devolved nations, with Northern Ireland seeing a 9,000 increase in employment (a growth rate of 1.2 per cent) and Wales seeing growth of 12,000 (0.9 per cent).

Although the research predicted “solid” overall employment growth, it warned that real wage growth is likely to be more subdued than in previous economic recoveries.

The “Living with Austerity” report noted that many of the new private sector jobs may involve part-time or temporary work, while the public sector job losses are more likely to be better paid, full-time positions.

Coupled with the tight constraints on public pay, PwC said this would contribute to continued subdued growth in average real earnings growth over the next three to five years.

John Hawksworth, PwC’s chief economist, said: “The official data shows the young (16-24) have been worst hit so far on jobs, while the rise in employment for the over-50s has been a notable plus from the past three years.

“The latter bodes well for our ability to adjust to an ageing population, but it also points to the need for increased investment in measures to boost youth employment.

“Our analysis suggests this broad pattern will remain in place for five years, with solid total employment growth, and a slightly falling unemployment trend despite continued public spending cuts.

“However, real wage growth is likely to remain more subdued than in past economic recoveries.”