From the TUC

Private sector job creation: it’s good, but it isn’t that good

20 Mar 2013, by in Labour market

In his Budget speech, George Osborne said

“We’ve helped business create not a million new jobs, but one and a quarter million new jobs.”

The reality is that private sector job creation has been good, but not that impressive. As it happens, new statistics on public and private sector employment have been published today, so we can look in some detail at this claim. These figures are published four times a year; the most recent are for December 2012 and the nearest to the May 2010 elections are for March 2010.

Budget 1

It looks as if the performance is even better than the Chancellor claimed, but there are some adjustments needed. Firstly, 196,000 jobs in further education were re-classified from the public sector to the private last year; to take account of this we need to reduce the public sector losses and private sector increase by this amount: Budget 2

Next, it isn’t reasonable to include all the gains in between March and June 2010. For one thing, the new government hadn’t had sufficient time to have much effect on these figures and in any case they weren’t elected till May. This sounds like a niggle but it isn’t: March – June 2010 was a very good quarter for employment, with 293,000 private sector jobs added, and just 17,000 public sector jobs lost, a net increase of 276,000.

Today’s monthly employment figures indicate that since the three months April – June 2010, total employment has grown 757,000 – substantially less than the 890,000 figure in the tables above. The increase in private sector employment that could possibly be the result of the current government’s policies is almost certainly more like a million than a million and a quarter.

And even this figure rather over-states the improvement. Forty per cent of the overall (public and private sector) increase in jobs has been in self-employment, government schemes and other unpaid work and thirty per cent has been in part-time employment – the increase in the number of employees working full-time has been just over 400,000:

Budget 3

The irony of all this is that if the government and its defenders could have avoided the temptation to over-egg the pudding, they would actually have quite a good story to tell: an increase in private sector employment of about a million, total employment up more than three quarters of a million, 400,000 extra employees working full-time – these are all reasonable results at a time when growth has stalled.

But a decent picture wasn’t good enough, it had to be a masterpiece; unfortunately, the reality simply isn’t as rosy as they want us to believe.

One Response to Private sector job creation: it’s good, but it isn’t that good

  1. What does the Budget tell us about the Chancellor’s economic approach? | ToUChstone blog: A public policy blog from the TUC
    Mar 21st 2013, 1:02 pm

    […] came when the Chancellor celebrated the private sector’s job creation rates. While these were slightly overstated, it is the case that private sector employment has been rising relatively strongly. But while this […]