Saturday, November 29, 2008

Job Stats Of The Damned

"It is not the arithmetic of statistics but the fabric of people's lives.

When we talk about three million more people in work since 1997 - that's not just a number, that's a life that's been changed - three million times over. That's the young woman laid off in the mid 90's who's now built a booming business of her own. Three million new jobs not by accident, but by our actions."

When it comes to statistical distortion, Brown has always plumbed the slithery depths, and his boasts on job creation are no exception.

In particular, he likes to suggest that the vast bulk of "his" 3m new jobs have come from Labour's super-dynamic post-neoclassically endogenised private sector - young women laid off by the evil Tories in the mid 90's who've now built booming businesses of their own. The jobs reflect Labour's success in revitalising the economy.

But it simply isn't true. In reality, most of the jobs are being paid for by taxpayers, and far from being a reflection of economic success they are a drain on Britain's wealth producers.

This week, the FT published a fascinating analysis comparing the growth of jobs funded by taxpayers with those funded privately (see here, here, and here - HTP HJ). In a stinging editorial they summarise:

"Two out of three jobs created between 1998 and 2006 have been in sectors dominated by public services: health, education, social work and public administration. Some of these workers - agency nurses, supply teachers and public policy consultants - may legally have private employers, but they depend on the state.

This should lead to a profound reassessment of New Labour's legacy... the surge in employment in the penumbra of the public sector, which between 1998 and 2006 has been 25 per cent or more in much of the country, is no recipe for efficient public services.

Whatever the merits of public sector workers, they are not an investment. They provide services that must be paid for, and in the coming recession it is hard to see how."

What the FT has done is to use figures from the Office for National Statistics' Annual Business Inquiry to calculate job growth across the main industrial sectors of the economy (the underlying stats are all available on the ONS website here).

Overall jobs increased from 28.8m in 1998 to 31.3m in 2006, a rise of 2.5m or 8.5%. But of that 2.5m increase, 1.7m came in industrial sectors dominated by the public sector, either as the direct employer, or the employer of subcontractors and temps - education, health, public administration, police, defence, social services, etc etc (Standard Industrial Classifications L-O).

Hence the FT's conclusion that 2 in 3 of Labour's new jobs are being funded by the public sector.

Or to put it another way, whereas public sector jobs have increased by an eye-watering 21%, private sector jobs have grown by just 3.6%.

And all too predictably, the growth of public sector jobs has been concentrated in LAbour's heartlands. The Mail picked up the story and produced this neat map showing the regional variations (private sector jobs growth on the left, public sector on the right):

Some pretty familiar features there, including - once again - munificent spending North of the border.

So against this evidence, why is it that Brown/Darling are constantly able to claim that most of "their" new jobs have been in the private sector?

The answer is that the official ONS count of public/private jobs uses a different approach. It concentrates on how many people public and private employers directly employ. And on that methodology, whole rafts of public sector workers are counted as being in the private sector.

For example, GPs are not directly employed by the NHS so don't count as public employees. University staff are also not counted because universities are supposedly "arms length". Contract cleaners don't count, even though they may spend all day "cleaning" NHS hospitals, or state schools. Agency nurses don't count, supply teachers don't count, etc etc. And Labour have made a speciality of moving employees off the direct public payroll, especially under the hopeless Gershon "efficiency" programme.

So the official ONS figures give a very misleading picture. In fact, if we didn't know better, we'd almost imagine they were being deliberately fiddled.

But there's something else even worse than the fiddling.

Although the FT report looks at the 1998-2006 period, the ONS numbers actually allow us to look at a much longer period, right back to 1978. And the overall picture is pretty shocking. (Yes, I'm sure there are a few statistical discontinuity gremlins lurking therein, but I'll bet the big picture is right).

Over the whole 30 year period, 1978-2008, the UK has created a net 4.8m extra jobs. But - and you'd better sit down - no fewer than 3.3m of them have been in these same sectors dominated by the public sector. So actually, that ratio of 2 in 3 new jobs being in the public sector is not just a NuLab phenomenon. It's representative of our entire post-70s history.

And that's pretty scary.

Because it suggests that even at the height of the Thatcherite adrenaline rush, job growth actually depended more on the public sector than the private.

Which means that looking forward into the gloom of our high debt, high tax, spending restrained future, there are going to be an awful lot of people without jobs.

We truly have been living a fantasy.


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