An increase in the number of people in part-time or temporary work will drive a rise in employment levels over the next five years, according to a new study.
The report by professional services firm PwC forecasts a rise in employment of more than 850,000 by 2017/18.
The research suggests that public sector job losses as a result of the Government’s spending squeeze will be “more than offset” by a rise in private sector employment.
But the report said many of the new jobs would be lower paid than the lost public sector posts.
Using Office for Budget Responsibility forecasts, the report predicts the public sector will shrink by 877,000 over the five years to 2017/18 but PwC’s central estimate is that more than 1.7 million jobs will be created in the private sector.
The report said: “We estimate a net gain in total UK employment by 2017/18 of just over 850,000 in our main scenario, which should be consistent with a slight downward trend in the unemployment rate.
“All regions should see some net job gains, but the largest proportional rises would be in London and the East of England, with the smallest net gains projected in Wales, Northern Ireland and the North West.
“Many of the private sector job gains may be part-time or temporary employment, however, and could be at lower pay and benefit levels than the public sector jobs lost.”
Chancellor George Osborne will set out his cuts for the first year of the next parliament – 2015/16 – in the spending review next week and the PwC report suggested austerity will continue for a long period after the general election.
“There is clearly still a lot of pain to come in this spending review,” the report said.
“Moreover, current plans seem to imply even faster real cuts in departmental spending in the two years beyond 2015/16, with implied real cuts in departmental expenditure limits of 3.5% to 4% per annum in 2016/17 and 2017/18.
“The scale of this further squeeze could be moderated if taxes rise and/or welfare benefits are cut back further after the next general election, as almost all incoming governments have done in the UK for the past 20 years.
“But it is clear that significant further doses of austerity will now extend well into the next parliament.”