Local government has again borne the brunt of public sector job losses, shedding 32,000 posts in the last quarter of 2012 compared with a 4,000 fall in the civil service workforce, official figures released today have shown.

Overall public sector employment decreased by a further 20,000 posts between October to December 2012 to just more than 5.7 million staff, figures issued by the Office for National Statistics today reveal.

However, while this marks more than four years of consecutive public sector job losses, the workforce reductions were balanced by a central government employment hike of 11,000 jobs and 1,000 new staff taken on by public corporations.

Official figures also indicated unemployment and employment levels both increased, a quirk attributed to a reduction in the number of people deemed ‘not in the labour force'. 

This meant an increase in people in employment – which increased by 131,000 and 29.7m people some 71.5% of the population aged between 16 to 64. Balancing this, unemployment increased 7,000 taking the proportion of people out of work, available and seeking jobs to 7.8%.

Neil Carberry, CBI director for employment & skills, said:  ‘Unemployment has dropped over the past year but the pace of progress has stalled due to sluggish economic performance.

‘This emphasises the need for the Government to deliver growth-enhancing measures on housing, infrastructure and access to finance,' Mr Carberry added.

Ian Brinkley, director at The Work Foundation, said ‘there are clear warning signs that the run of exceptionally good news from the labour market may be coming to an end.'

‘Unemployment remains stubbornly high, the rate of new job creation has slowed, and real wages are still falling,' said Mr Brinkley.

‘Youth unemployment is already rising. With every expectation of a "cross fingers and hope" Budget announcement later today, adult unemployment is also likely to rise in the rest of 2013.'