From the TUC

Why the Prime Minister’s job creation claims are questionable

13 Jan 2011, by in Labour market

Earlier this week the Prime Minister claimed that “300,000 private sector jobs have already been created over the last 6 months alone”. While it is correct that employment levels rose between March – September 2010 (although the most recent data show that between August – September 2010 there was a 64,000 fall in the employment level) ONS data on workforce jobs presents a very different picture, showing that across the UK the number of jobs has fallen by 27,000. How can this be?

The Prime Minister’s statement refers to the net change in the number of people in private sector employment between March to September of 2010. The data come from the Labour Force Survey, which is based on responses from households across the country. This is the last six months we have this data for (although not technically the last six months), and the Prime Minister is correct that over this period employment levels rose considerably, increasing by 312,000 in total (compared to a fall of 59,000 in the number of people employed in the public sector).

ONS don’t publish further information on which industries these private sector staff are working in or what types of work they are doing. However, ONS’s overall employment data (which represents people working in both the public and private sectors) can be broken down by various other characteristics, which gives us a good sense of what sorts of jobs these are likely to be. This analysis shows that over the six months in question:

  • there was a 62,000 increase in the number of people working full-time, compared to an increase of 162,000 in the number of people working part-time;
  • the number of part-time workers who could not find full-time work rose by 79,000;
  • 199,000 more people were working as employees while 33,000 more people were working as self-employed and 18,000 more people were working as ‘unpaid family workers’;
  • 84,000 more people were in temporary work (with an increase of 55,000 in the number of people in temporary jobs seeking permenant employment).

So, around 78 per cent of the employment increase can be accounted for by a rise in people working as employees, with the rest a result of self-employment or unpaid jobs. In addition, 64 per cent of the rise comrpises part-time work and 33 per cent of the increase was in temporary employment.

Net change in the number of people in work is not quite the same as net change in jobs, as one person can have many jobs and it’s also possible to be in employment without having an employee job (for example this could be the case for some people who are self-employed or for people who are working under an employment programme such as the New Deal). So, ONS also publish information on the actual number of jobs that have been created across the economy – data which is based on an employer survey. It is this survey which shows that over a broadly comparable period (Q1-Q3 2010 rather than March – September 2010) the number of jobs fell by 27,000. Once the public sector is removed from the analysis the picture becomes worse, showing a fall of 52,000 in the number of private sector workforce jobs nationally. Although there are some sectors where the number of jobs rose, these increases (e.g. construction saw a 30,000 increase and retail saw a rise of 34,000) are accompanied by falls in other areas (e.g. a drop of 51,000 in administrative and secretarial posts and a fall of 38,000 in manufacturing jobs).

ONS are as yet unable to tell why the jobs data and the employment data are showing such contradictory trends (although they have produced a useful paper on the issue here). An optimistic interpretation is that data collection issues are at fault, and that the jobs figures will soon start to improve to reflect rising employment levels. But the fear has to be that the workforce jobs data is more accurate (as it is based on employers’ reports of actual jobs in their workplaces rather than households’ reports of what they do with their time) and that a significant proportion of the rise in the employment level may be accounted for by casual and insecure work. For example, an unemployed worker undertaking a few hours cash in hand cleaning or a self-employed designer undertaking a one off contract would be likely to tell Labour Force Survey researchers that they were working without their work showing up in a survey that asked employers about how many jobs they have created.

The Prime Minister is right to note that employment levels are increasing – but in future months he may live to regret being quite so positive about the private sector’s potential to create jobs as opposed to low-paid and casual work.

One Response to Why the Prime Minister’s job creation claims are questionable

  1. ppi claims
    Jan 13th 2011, 2:46 pm

    Many jobs were shed before the new year and claims that the job market is recovering is in my opinion premature.