Tuesday, 8 June 2010

Two legs, four legs

Around a quarter of the workforce in Wales is directly employed in the public sector. Nobody doubts that cuts in public expenditure will reduce the number employed in the sector, although by how many is still an open question. It would be a mistake to assume that the private sector will somehow 'pick up the slack'. It would also be a mistake to assume that the private sector will be immune to public sector cuts. It's not always straightforward to differentiate between the two sectors.

As an example, I work freelance through a limited company which I use to invoice customers, pay my own suppliers, and pay myself a regular salary out of irregular income. Very private sector. But a lot of my work comes from the public sector.

Sometimes, I get work passed on from other companies which have sold more services than they are able to supply in-house. Those companies are also very much in the private sector – but an awful lot of the end customers are in the public sector.

It's one small illustration, but there are many thousands of employees in Wales who appear to be working in the private sector but who are actually heavily dependent on public expenditure for their livelihood.

My point is two-fold. Firstly, if anyone working for a private company is sitting there thinking that public sector cutbacks will only affect other people's jobs, they may well be deluding themselves. And secondly, we need a better understanding of the complex relationship that exists between sectors in our economy, rather then the Public Bad, Private Good mantra which many seem happy to chant.


Anonymous said...

what you say will always be the case as long as the public sector remains the dominant driving force in Welsh economic terms.

Until there is a more than mere lip service paid among the ruling political class that Wales would benefit from a better balance of public and private sectors then then any debate about shrinking the public sector will always be one of pain and blame for others, rather than one that include the opportunities it would present or potential new way of doing things.

Welsh politicians and the general public are a long way from even engaging in that debate.

John Dixon said...


Clearly you start from the view that Wales would benefit from a 'better' balance between the sectors, by which I assume that you mean a smaller public sector and a larger private sector.

But I'm not entirely convinced that concentrating on the balance between the sectors is the right place to be looking. Someone like myself can happily sit in either sector, and perform the same function for the same cost. Which sector I sit in makes no real difference to my contribution to GDP, for instance.

The challenge facing us is about how we address the GDP gap between Wales and the UK average. There are good reasons for encouraging a more vibrant private sector as part of that, but it doesn't have to come at the expense of the public sector.