Be afraid. Be very afraid.

by Vault Consulting Editors | July 16, 2009

  • My Vault

Prepare to be terrified. Having read this article relaying KPMG's findings on the "Effects of the downturn on the public sector," I'm pretty much convinced that civilization as we know it is coming to an end. Or something like that. What other message is one supposed to take when reading the likes of the following?

 "Unless many governments act now, public services as they are currently provided are likely to simply become unaffordable."

Ratcheting the hyperbole up to 11, the piece also claims that "This time it's not a false alarm. The wolf really is at the door."

So what's this all about? Well, apparently some folks at KPMG got together and decided to have a good look at the state of public sector provision in the coming months and years, and the likely effects of the global recession upon it. Their conclusion: apparently things aren't looking too good. In addition to becoming complacent about the economy following years of economic growth, the piece alleges that public sector organizations are in danger of waiting too long to take action. Or, as the article puts it: "one of the major risks, is that some managers in the public sector will wait for the crunch to arrive before taking action." Far be it for me to question the report but, really? Are there still people out there "waiting for the crunch to arrive?" Because everywhere I look these days, I'm seeing evidence that it arrived a while ago, camped out on the couch and, despite the strongest possible hints, isn't showing any signs of leaving any time soon—kind of like that one kid with the hygiene issues who used to show up uninvited at all the dorm parties in college.

The reasoning behind KPMG's argument is that "the public sector recession will lag a year or two behind the recession in the economy. This is because governments are committed to a short-term increase in public spending, to help ease their national economies out of the downturn."

The firm's survey also threw up some stats that give pause for thought: despite evidence of the one- to two-year lag in the recession hitting the public sector "63 percent of respondents are unlikely to change their strategy I the next year as a result of the current global economic downturn." As a resident of New York State who relies on public transportation for my commute, I can testify as to the chaos and impact on the consumer that comes from unexpected budget shortfalls at public service providers (yeah, I'm looking at you, MTA). If what KPMG is saying turns out to be true, and that sector hasn't even seen the worst of what's to come, it may indeed be time to head for the hills.

--Posted by Phil Stott

Filed Under: Consulting

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