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

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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland