More Tory disinformation on the economy

Now, Iain Duncan Smith is at it.

By David Blanchflower Published 06 March 2011 22:24

More misinformation from another cabinet minister at the Tory jamboree in Cardiff. Iain Duncan Smith told the conference that unemployment was less of a problem than some have suggested. "It's short-sighted to say there aren't any jobs at the moment. The fact is, there are around half a million vacancies in the economy at the moment," he said. "It's not the absence of jobs that's the problem. It's the failure to match the unemployed to the jobs there are."

OK, let's take a look at this dumb claim. It is true that there are two and a half million unemployed people and half a million vacancies; so there are five unemployed people chasing each recorded vacancy. But to put that in context, exactly two years ago, there were two million unemployed and 677,000 vacancies -- or one vacancy for every three unemployed people. So, at the very least, it is harder to find a job than it was two years ago, as there aren't enough jobs. Doesn't take a rocket scientist to work that out.

It turns out that capitalist economies need some unemployment to allow for the rebalancing away from goods that people don't want to goods that they do. That means there is an available pool of labour for these new firms to hire from. It is also efficient for an economy to allow people to move between jobs they don't like to ones that they do. That is why we subsidise search. The problem comes when unemployment durations lengthen, as they have recently. Today, a third of the unemployment durations are more than 12 months long, compared with 22 per cent two years ago. Skills deteriorate when no jobs are available, which is why recessions hurt.

A further problem is that there is a mismatch between the skills the unemployed have and those required for the vacancies. There is also the problem that the vacancies are in one place and the unemployed live elsewhere. There are jobs available as experienced brain surgeons in London but the unemployed are 22 years old, with no experience and no qualifications and live in Middlesbrough. Nearly a million of the total stock of unemployed people are under the age of 25. How exactly are they going to fill the vacancies that require experience? The only way to get a job is to have experience but the only way to get experience is to have a job.

Over the past two years, overall employment fell by 210,000 while employment of those aged between 16 and 24 fell by 351,000. In contrast, the employment of those aged between 25 and 34 increased by 171,000, while that of those who are 35 and over fell by 30,000. This doesn't look like a failure to fill available vacancies. The jobs have gone. Plus, the government is reducing funding for training, so that is going to make it harder to solve the mismatch problem. And there is a public-sector hiring freeze. Too many unemployed, chasing too few jobs.

The problem is the lack of vacancies, not the fact that the unemployed don't want to get on their bikes. It is not their fault, as much as you might like it to be. The unemployed are there involuntarily and not by choice. Sorry Iain, back to the drawing board. There just aren't enough jobs at the moment and things are going to get much worse -- and soon.

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23 comments

Wed, 2011-03-09 00:46 — jie4v7i14

Eddy S - they come over as a group, and rent a house, twenty in one.

Maybe there should be a government tv pifs how to do that, for north of Watford Gap? Rather than how to cross the road properly,
http://www.youtube.com/watch?v=1BrivBSv20Y

Tue, 2011-03-08 09:41 — Dominic Lynch O...

He always been at it!...But no-one listened before because he was the Quietman of British Politics!

Let keep it real, he was not the cause of this mis-info, and we can't be blame him for making the water muddy in the last 13 years!

@ IDS 'Respect IDS for trying to game it up!' from my mate jock

Mon, 2011-03-07 08:07 — Luddite (not verified)

David, what do you know about out of work folks. There are two kinds of unemployed one desperate to find work, because thats what they have always done and those that don't want to work and are quite happy spending their time at the local Witherspoon's.

Wed, 2011-03-09 07:58 — andygcc (not verified)

Lies damn lies and statistics but of course any high unemployment figure is indicative of an economy not working well.

Funny, I cannot help thinking of Alistair Campbell and his multitude of lies, on the economy or otherwise......

Fri, 2011-09-09 07:39 — Dakota

A susbstantail number of the unemployed are illiterate and innumerate, they were let down by 10 years of labour government who wanted snappy education slogans of success so let standards fall through the floor. Do not blame this government, labour abandoned these people and anyone who pretends otherwise is a disgrace.
http://www.diyhomeprojects.org/

Tue, 2011-03-08 12:22 — Graeme (not verified)

Calling himself the "quiet man" was cringeworthy.

Mon, 2011-03-07 10:07 — Spelling Nazi (not verified)

Final paragraph, 2nd line. You used there instead of their.

Mon, 2011-03-07 10:56 — Graeme (not verified)

IDS has never been much good at numbers. And, honestly, who would give HIM a job?

Tue, 2011-03-08 12:57 — Sev (not verified)

People also seem to forget that a very large proportion of theese jobs offer very few hours a week. Part time jobs, thanks to having to declare with the job centre (if under 16 hrs per week), are simply more bother than their worth

Thu, 2011-03-10 06:10 — Mr Woogy (not verified)

@More Tory disinformation on the economy

David are you trying to teach us that political parties, even the Tories, who at least have honest faces, give out false information? Get away with you, I may be a simple Irishmen, but I am not that easily fooled.

Tue, 2011-03-08 13:54 — Imposter Pope

In response specifically to David Blanchflower's Economics Column (New Statesman 28 Februray 2011 'America's Tea Party of the left is a warning to the coalition'), he cites Iain Duncan Smith's inaccurate view of the housing benefit system. Unfortunately, we don't need to wait for parliament to legislate cuts in this sector. Local authorities can alter housing benefit rates through their use of the Local Housing Allowance and its manipulation of the Broad Market Rental Area statistics. Unable to find any private tenants whose rent has gone down, they might still decide that individuals should receive less benefit.
This decision is made by the Valuation Office Agency, a branch of HMRC that is not required to offer any explanation of its assessment to local authorities, or their residents. In a specific example, a self-employed benefit recipient declaring an annual income of £6781 saw last week that their housing benefit had immediately been cut by 9.26% (details of this case available on request).
Deep cuts are already being made. This deceptive practice enables cuts to services and allowances that will be felt by the most vulnerable in society without any recourse to parliamentary checks and balances, or indeed to any due democratic process.

Tue, 2011-03-08 15:35 — suburbanmonk

My previous job, before I was made unemployed a couple of years ago, was working with individuals to get into work from a broad spectrum, even under labour a majority of the funding was linked to 'into work targets' little was focused on training now there is none, if you include university places thats a 80% reduction on top. This country is so backward at forward thinking.

Tue, 2011-03-08 16:33 — tim6

Maybe we should ask, why is it that there are so many unemployable people in this country. A susbstantail number of the unemployed are illiterate and innumerate, they were let down by 10 years of labour government who wanted snappy education slogans of success so let standards fall through the floor. Do not blame this government, labour abandoned these people and anyone who pretends otherwise is a disgrace

Tue, 2011-03-08 16:52 — Dave C (not verified)

tim, UK literacy rates are high and they've got better over the decades. There's plenty of work to be done, though.

Mon, 2011-03-07 15:57 — crabstix (not verified)

IDS was the Tories Ed Milliband.

Tue, 2011-03-08 19:11 — jie4v7i14

A positive idea would be to give yearly train travel discount cards for, say two thirds discount on train travel, when those from areas of high unemployment who are willing to work in an area of low unemployment, say SE England, so that they can afford to travel back to see their families at weekends.

But that takes imagination. Also, government should stipulate to employers to give those workers two consequtive days off during the week, if weekend work is part of the job. But again, takes imagination to do that, not cheap usual waffle by IDS and his friends.

Another problem is the sky-high rental/B&B charges in those areas of low unemployment for said people who are willing to get on their bikes.

Wed, 2011-03-09 15:24 — zsremrxc

Iain Duncan Smith is a stick at nought good for nothing liar... ! verily he has had his reward...its high time now for his punishment, for them that lie to the people are also lying to God.

Mon, 2011-03-07 20:16 — Graeme (not verified)

IDS was the Tories William Hague and Michael Howard.

Sun, 2011-03-06 23:30 — Lou (not verified)

IDS's comments sound like a pitch for the likes of A4e in this new enterprise zones malarkey they are wheeling out.

I really anticipate that in Osborne's budget when he details the enterprise zones, we will also see some sort of announcement of the reintroduction of schemes like the YTS and Community Programmes of the Thatcher years.

IDS won't be able to play with the unemployed figures, like Thatcher did, by moving people on to different types of benefit such as invalidity. The only way they are going to get those figures down for the forseeable future is by massaging them in some way and I think it will be through the sort of programmes mentioned earlier.

Osborne, Cameron, now IDS - do any of them know what they are doing? They are totally clueless and divorced from reality.

Fri, 2011-03-11 20:28 — DeusExMacintosh (not verified)

"NOW, Iain Duncan Smith is at it."?

What part of him blaming people on benefits for the national deficit [in the Sun interview] did you not notice, Mr Blanchflower?

Mon, 2011-03-07 21:12 — matthew fox (not verified)

Out of work folk seems to be voting for Miliband, he's two for two.

Tue, 2011-03-08 22:15 — Eddy S (not verified)

a very simplistic article:

"There are jobs available as experienced brain surgeons in London,but the unemployed are 22 years old with no experience and no qualifications and live in Middlesbrough."

how do you explain the thousands of east europeans working in many parts of the country as labourer's (i.e. as builders, tilers, painters, hotel workers etc etc).

Mon, 2011-03-07 00:56 — Ivan Miletitch

Well this is typical Tory rethoric! I remember previous Tory chancellors (Lamont & Lawson) saying pretty much the same 15 years ago. For the Conservatives, the situation is simple, if their plan puts many (of the most vulnerable) on the dole, so be it - what is new is that (the dole queues are already getting larger) they also cut benefit at the same time (to 'encourage' people back to work....only there aren't any jobs!!!)