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?