Effects of government orientation on civil service employment and office demand

Received wisdom tells us that the number of civil servants tends to decrease in periods of centre right compared to centre left governments. Following this year’s election, the new government’s likely impact on the size of the public sector and, by extension, the office market has again come to the fore.  We put to the test what could be expected by overlaying historic public sector employment with the government of the day.

The main points of the report include:

·         Past trends indicate that core civil service employment is more resilient than generally assumed under a centre right government, although it is less expansionary than under centre left governments. 

·         Whether this holds true in the coming National led coalition government remains to be seen.  Early indications show a stronger rhetoric from the coalition partners, which has already resulted in civil service responses such as apparent cuts planned by MBIE. 

·         This may be a precursor of things to come, although, under previous governments, cuts resulting in a shrinking civil service in a given year have been offset by growth overall during any administration’s era.

·         While the government sector is the largest single occupier in the Wellington office market, our analysis overlaying occupancy trends on civil service employment changes indicates that other market disrupting variables have had a more material impact on occupancy.

·         In this regard, the economic cycle and occupier approaches to how and where office-based work is undertaken will likely remain the most important variables determining the quantum and shape of office market occupancy patterns.