Where previous recessions have been characterised by a “north-south divide”, the current one is developing into a split between the public and private sector, according to economists.

Under the scenario, the role played previously by comfortable Southerners has been taken on by those employed by the State, from teachers to nurses to policemen.

Put-upon Northerners become the battered employees of the private sector, from the City to the construction yard.

“The public sector is at present an entirely ‘recession-free zone’,” said John Philpot, chief economist at the Chartered Institute for Personnel Development. Whereas recessions of the 1970s, 1980s and 1990s were all marked by a regional divide, the dividing line this time was between sectors, he said.

“What the government could and should do, is put a clamp on public sector pay rises. With the private sector in dire straits, and inflation for now giving way to deflation, there is no labour market necessity or strong economic justification for public sector earnings to rise faster than private sector earnings.”

The new trend was highlighted yesterday by new figures reflecting the growth in the number of State empoyees compared with carnage in the financial services sector.

A huge increase in NHS staffing underpinned a buoyant period for the public sector in the last three months of 2008. The number of health service jobs rose by 21,000, mainly matrons, midwives and school nurses. During the same period, schools have quietly taken on about 1,000 teachers and an extra 1,000 policemen or community support officers have been hired.

The new figures also show the creeping rise of recruits to the public sector from nationalised banks. Although the Office for National Statistics (ONS) does not break down the data and excludes RBS personnel, it records several thousand staff from Bradford & Bingley and Northern Rock.

The public administration workforce, which also covers quangos but excludes civil servants, went up by a total of 5,000 in the last three months of last year to include the entry of financial whiz-kids into public employment, the ONS figures show.

The financial sector led the rollcall of bleak news for the private sector, suffering a record number of job losses in the last three months of 2008.

Some 102,000 jobs were cut in the financial and business service sector, which includes bankers, accountants and lawyers and IT workers. This was the biggest drop since the office began collecting data in 1974, and brought the total number of job losses in the sector last year to 220,000.

Some estimate that high street banks and other lenders cut 10,000 jobs between October and December and while experts predict that the pace of job cuts may ease this year, they say that the pain is far from over.

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