The loss of hundreds of thousands of public sector jobs has led to a "seismic shift" in the labour market, according to an expert.
John Philpott of The Jobs Economist said the Government is on course to shed 700,000 public sector jobs during the current parliament, rising to 1.1 million by 2018.
The projected fall will have cut the public sector workforce by a fifth and reduced its share from 20% of total employment to 15%, said Dr Philpott.
This would represent the lowest proportion of people working in the public sector at any time since the dawn of the welfare state in the 1940s, said the report.
Dr Philpott said: "A structural change in the employment base of the economy in such a relatively short space of time represents a seismic shift in the underlying labour market.
"The numerical impact of this is masked by the surprising and most welcome strength of private sector employment growth.
"However, the qualitative effect of such a shift should not be underestimated, given that the public sector employs relatively skilled workers on relatively decent rates of pay and has traditionally been considered a source of 'good work' in terms of training, staff development, flexible working and equal opportunities.
A Cabinet Office spokesman said: "We are in a global race and we have to make sure Britain is fit and as well placed as it can be. This is about delivering a cultural change and a less bureaucratic, faster civil service that is more focused on outcome, not process."