Time to examine Osborne's "500,000"

Chancellor's claim on job creation is highly misleading.

Writing on the Spectator's Coffee House blog earlier this week, the editor, Fraser Nelson, trumpeted: "George Osborne was right to boast in the Commons that Britain has the second-highest rate of net job creation in the G7." This is highly misleading.

My conclusion is that Nelson and Osborne are playing fast and loose with the truth, as the vast majority of these jobs were created before any of the coalition's economic policies took effect. Furthermore, things are likely to worsen soon, as indicated by the recent increase in both ILO unemployment and the claimant count.

Osborne did make the claim Nelson attributes to him. When parliament was recalled on 11 August, the Chancellor boasted: "Some 500,000 new private-sector jobs have been created in the past 12 months."

And Osborne repeated that claim during questions, insisting that the UK was doing better than the US. This was his answer in response to a question from Michael Meacher:

The British economy is growing and it is the assessment of the Bank of England and the Office for Budget Responsibility that it will continue to grow. The growth in the last six months has actually been stronger than in the United States, and half a million jobs have been created in the private sector in the last year.

Later, in the same debate, he repeated the claim in an answer to a question from Geoffrey Clifton-Brown:

Small businesses are, of course, the engine of job creation in our country. As I have said, 500,000 new jobs have been created in the private sector over the last year. That is the second highest rate of job creation in the G7.

Then, he repeated it yet a third time in an answer to a question by Dame Anne Begg.

It's time to examine these claims. Here is the data from the latest release from the ONS (Table 4), which reports employment in the private and public sectors:

It is clear that there has been a growth in private-sector jobs over the past year of over 500,000. The past year, however, refers to the period March 2010 to March 2011. Given the coalition didn't take office until May 2010 -- and its policies would not have taken effect until much longer after that date -- it is entirely disingenuous for the Chancellor to claim credit.

Let's be generous and take the data from June 2010. Here, the number is reduced from 520,000 to 208,000. That wipes out most of the claimed success.

Of course, it takes quite some time for the coalition's policies to feed into measured job creation; being charitable, we could measure the growth from December 2010, which means that only 100,000 private-sector jobs were created. Even less to boast about.

This raises another issue -- we are now in August, not March, so this data is way out of date. Why is that? The data come from the Labour Force Survey, which is a sample of individuals that is collected monthly. (Identical surveys are used in every EU country.) The trouble is, the sample size for the UK survey is so small -- due to underfunding and simple incompetence -- that the ONS feels unable to report monthly.

Instead, it generally pools three months of data together. The result? We find ourselves in the crazy position of comparing unemployment in April to June with unemployment in January to March. This makes analysis of underlying trends difficult, because, each month, a new month is added and another is dropped. This makes the moving average move -- but slowly. Plus, it makes little sense to report private- and public-sector jobs every three months, when it should be reported monthly.

The ONS needs to publish labour market data every month in a timely fashion, just as every other major advanced country does, and if it has to put more resources into it and move to bigger samples, so be it.

Today's data release by Eurostat of unemployment data for July for the EU27 countries plus Norway, the US and Japan illustrates the point. Of the 30 countries, data is available for July for 22 of them. Data up to June is available for a further five -- Denmark, Estonia, Lithuania, Norway and Japan. The UK joins Greece and Latvia as the only countries whose latest unemployment data is from May or earlier. How dumb is that?

Data lag or no data lag, Nelson is wrong: Osborne really doesn't have much to boast about on the job-creation front. He is trying to take the credit for jobs that Alastair Darling created.

Let's wait for a few months and reconvene on this one, shall we?

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

Photo: Getty Images
Show Hide image

The Fire Brigades Union reaffiliates to Labour - what does it mean?

Any union rejoining Labour will be welcomed by most in the party - but the impact on the party's internal politics will be smaller than you think.

The Fire Brigades Union (FBU) has voted to reaffiliate to the Labour party, in what is seen as a boost to Jeremy Corbyn. What does it mean for Labour’s internal politics?

Firstly, technically, the FBU has never affliated before as they are notionally part of the civil service - however, following the firefighters' strike in 2004, they decisively broke with Labour.

The main impact will be felt on the floor of Labour party conference. Although the FBU’s membership – at around 38,000 – is too small to have a material effect on the outcome of votes themselves, it will change the tenor of the motions put before party conference.

The FBU’s leadership is not only to the left of most unions in the Trades Union Congress (TUC), it is more inclined to bring motions relating to foreign affairs than other unions with similar politics (it is more internationalist in focus than, say, the PCS, another union that may affiliate due to Corbyn’s leadership). Motions on Israel/Palestine, the nuclear deterrent, and other issues, will find more support from FBU delegates than it has from other affiliated trade unions.

In terms of the balance of power between the affiliated unions themselves, the FBU’s re-entry into Labour politics is unlikely to be much of a gamechanger. Trade union positions, elected by trade union delegates at conference, are unlikely to be moved leftwards by the reaffiliation of the FBU. Unite, the GMB, Unison and Usdaw are all large enough to all-but-guarantee themselves a seat around the NEC. Community, a small centrist union, has already lost its place on the NEC in favour of the bakers’ union, which is more aligned to Tom Watson than Jeremy Corbyn.

Matt Wrack, the FBU’s General Secretary, will be a genuine ally to Corbyn and John McDonnell. Len McCluskey and Dave Prentis were both bounced into endorsing Corbyn by their executives and did so less than wholeheartedly. Tim Roache, the newly-elected General Secretary of the GMB, has publicly supported Corbyn but is seen as a more moderate voice at the TUC. Only Dave Ward of the Communication Workers’ Union, who lent staff and resources to both Corbyn’s campaign team and to the parliamentary staff of Corbyn and McDonnell, is truly on side.

The impact of reaffiliation may be felt more keenly in local parties. The FBU’s membership looks small in real terms compared Unite and Unison have memberships of over a million, while the GMB and Usdaw are around the half-a-million mark, but is much more impressive when you consider that there are just 48,000 firefighters in Britain. This may make them more likely to participate in internal elections than other affiliated trade unionists, just 60,000 of whom voted in the Labour leadership election in 2015. However, it is worth noting that it is statistically unlikely most firefighters are Corbynites - those that are will mostly have already joined themselves. The affiliation, while a morale boost for many in the Labour party, is unlikely to prove as significant to the direction of the party as the outcome of Unison’s general secretary election or the struggle for power at the top of Unite in 2018. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.