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  1. Business
  2. Economics
16 March 2016updated 21 Sep 2021 4:58am

The hidden truth behind George Osborne’s record on jobs

Busting the “jobs miracle” myth of the Chancellor’s 2016 Budget.

By Harry Lambert

George Osborne will begin his seventh budget by heralding Britain’s “jobs miracle” and congratulating himself on lowering unemployment to 5 per cent.

Britain, he will declare, is reaching “full employment”. Many of those still unemployed aren’t really jobless, they’re just at a stage of inevitable churn in-between jobs.

At first glance that view makes sense. More jobs are being advertised than at any other time in the past 15 years, and the number of people claiming benefits hasn’t been this low for four decades.

But the figures Osborne will boast about hide a darker truth: in dozens of constituencies around the UK, at least one in five people can’t find work. In some areas, as many as a quarter can’t find work, while more than half of those out of work don’t claim benefits.

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The “real” unemployment rate across the UK is still nearly 12 per cent – nearly twice as great as the official rate, according to a new analysis by the New Statesman.

A real unemployment rate takes into account workers discouraged by the jobs market in their area.

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The US Department of Labor calculates a “real” rate this way and publishes it alongside its official figures; Bernie Sanders has often highlighted such a metric during the US presidential campaign.

No such figure is widely reported in the UK, but our analysis reveals that the UK’s true rate of joblessness is – and has long been – about twice as great as the official rate.

The problem with the official rate is that it falls if an unemployed worker hasn’t sought a job in the past four weeks or can’t start one in the next fortnight. Once they stop seeking work, fewer people are classed as unemployed but no jobs have been created.

These workers are instead labeled as “economically inactive”, and added to the students, stay-at-home parents, retirees and the long-term ill who haven’t recently sought work.

Five per cent of the working age population is economically inactive but say they would like to seek work.

By adding these discouraged workers back into the unemployment rate we can get a true measure of the jobs market in each constituency.

The areas suffering the most are almost all of a type. As with Blackley, they are enclaves in big cities: from Birmingham Ladywood, Bradford West, Barking and Liverpool Walton, who all have high official unemployment rates, to Westminster North, Manchester Gorton and Liverpool Wavertree.

The official unemployment rate in these three latter seats, as well as in Gravesham to the east of London and Easington in County Durham, isn’t much above the national average. But counting discouraged workers unveils the true state of joblessness in these places.

This difference, between official and real unemployment, is particularly striking in Holborn & St Pancras.

Official unemployment is less than 6 per cent in the seat, yet our true measure suggests 22 per cent of people are either unable to find or have been discouraged from seeking work in this pocket of north London, making it the twelfth worst area for jobs in the UK.

But London arguably isn’t the country’s worst affected city. While Westminster North, Barking and Holborn blight the image of a city flooded by jobs, the real rate of unemployment in a number of London constituencies is below average.

These areas are unmarked, or in white, in the map below:

Yet true unemployment is largely concentrated in major city centres, with the worst-hit seats spread across the Newcastle, Cardiff, and the Manchester-Liverpool-Leeds metropolis.

But the dramatic differences across the country paint a pitiful picture of Tory initiatives to create jobs where they’re most needed.

On the end of the spectrum, many seats have real unemployment rates of just 3-5 per cent (and official rates of closer to 2 per cent). All data comes from the Labour Force Survey’s monthly reports, with geographic data via Nomis.

These are the seats where full employment is something of a reality. There aren’t many of them.

They aren’t successes to trumpet but a reminder of the areas where unemployment is seven to eight times greater.

On the verge of Osborne’s most pivotal second-term budget, one idea would win support from sides of the House: a concentrated jobs programme for the areas long left behind by both parties.