FactCheck: Has Cameron hit the million mark?
The claim
“Since this government took office over 1 million new jobs have been created in the private sector – that’s more, net, than in the last two years than Labour managed in 10 years.”
David Cameron, 10 October 2012
The background
It was not a speech over-burdened with policy detail, but the Prime Minister’s keynote address at this year’s Conservative Party conference did contain a robust defence of the government’s economic record.
One of the key claims was that private sector employment has soared under the coalition.
There’s a lot riding on this one – it was a central plank of government economic strategy that private sector growth would cancel out the pain of a shrinking public sector.
Mr Cameron may have received rapturous reviews from the party faithful, but does he pass the FactCheck test?
The analysis
The “million new jobs in the private sector” line is an old one, based on the latest Office for National Statistics (ONS) employment data.
We can all agree that there were 23,896,000 people employed in the private sector in the second quarter of this year – the latest period for which we have data.
The natural comparison is with the same quarter, April to June, of 2010, and that’s the comparison the prime minister appears to be inviting us to make when he says “in the last two years”.
The magic number in quarter two of 2010 was 22,826,000 so Mr Cameron’s right, on the face of it. A rise from 22,826,000 to 23,896,000 is an increase of just over a million jobs.
But the ONS has been at pains to flag up the fact that a big recent rise in private sector jobs comes from a change in classification.
Some further education and sixth form colleges were reclassified as private sector institutions from April 2012, so 196,000 people who had previously been counted as government workers suddenly switched sides.
If we take these out the new private sector jobs total since June 2010 falls to 874,000, making Mr Cameron wrong.
We know from previous dealings with number 10 on this issue that Mr Cameron in fact prefers to start the clock ticking earlier when reviewing the performance of this government.
In the past, his spokesmen have suggested that the first quarter of 2010 should mark the starting point, so the achievements of the next three months – April, May and June – are taken into account too. That helps the government as the earlier total is much lower – 22,519,000 instead of 22,826,000.
The problem is that the general election that brought Mr Cameron to power falls smack bang in the middle of that quarter, on 6 May 2010. Official ONS figures are only available for the whole quarter and we don’t think it’s fair to attributed jobs created before the election to the present government.
But if you agree with Mr Cameron on the earlier starting point, the coalition’s private sector jobs tally is much higher: 1,377,000 jobs over two years. Now the issue of further education jobs doesn’t matter – it’s still more than a million jobs even after you take the 196,000 college staff away.
How does this compare to Labour?
Again, where you draw the start and the finish line matters – a lot. Counting from quarter two 2010 to quarter two 2012 gives us a grand total of 769,000 private sector jobs.
If you count from quarter one (as Mr Cameron would presumably want us to), it’s only 470,000.
Remember that Mr Cameron is comparing two years of the coalition to a decade of Labour, so even if he’s wrong on the details, his point stands: the rate of private sector job creation has been far higher than under the previous government.
Of course that’s not the whole story of jobs under Labour. The public sector expanded too – by 650,000 jobs from 2001 to 2010. Contrast that with the coalition’s record of dropping almost the same number of posts over the last two years.
This fact explains why total employment rose by 1,419,000 in Labour’s last 10 years. In the last two years the total number of people in work has gone up by a more modest 440,000.
Self-employed, temporary and part-time workers
There are also fears that this big headline rise in private sector employment has masked a fall in the “quality” of the jobs.
Not all of these new posts are permanent, secure jobs with pension rights, holiday pay and so on.
In the last year, the number of employees working full-time has dropped 0.4 per cent and part-time employees have gone up 2.3 per cent. The numbers of self-employed workers, both full- and part-time, has gone up by more than 6 per cent.
Also in the last year, the number of temporary workers has gone up 5 per cent. The number of temps and part-timers who said they had been forced to take work of that nature after failing to find permanent or full-time work have all risen significantly.
The ONS has speculated that this may be the reason why productivity has been falling. GDP has been falling faster than employment since the 2008 crash, a very unusual state of affairs which suggests the average worker is less productive.
The statisticians think a move towards self-employed, temporary and part-time work could explain this. So even as the number of jobs rises, the average number of hours worked per job falls, something that could undermine the recovery.
The verdict
Mr Cameron could be technically wrong or right depending on when you start the clock ticking and whether you count out those 196,000 education workers who have suddenly appeared in the private sector figures.
Even if he’s wrong on the details, though, there’s no getting away from the fact that private sector employment has risen to record levels on Mr Cameron’s watch.
And it’s risen as a percentage of the workforce, meaning that Conservative rhetoric about “rebalancing” the economy really does seem to be coming to pass, for better or worse. In 2010 just over 78 per cent of the workforce was private and nearly 22 per cent was public. Now the ratio is closer to 81 per cent private and 19 per cent public.
But we will need to keep a careful eye on the details of the private sector jobs “boom”, particularly the shift towards temporary and part-time jobs, if we want to be sure that the apparent good news on employment will translate into real economic growth.
By Patrick Worrall
There are 15 comments on this post
Errm… FullFact’s analysis of this said even taking the 200k-odd FT jobs out of the equation the number is at least 950k-ish.
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Can’t see it on their site Tommy – do you have a link?
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The majority of these private sector jobs are low paid 4 hour contracts. The Conservatives big idea is to have more of us working on casualisrd contracts with poor terms and conditions. They’ve got this idea from America, but they forget that in most of America the cost of living food fuel and consumer goods is far far lower. My £400 iphone cost something like £150 equivalent in the US, factor in the cost of petrol and even buying a car and you realise that their sums are utterly wrong.
On the other hand Labours call for a reduction in VAT is wrong because the rising Yen and Euro cancelled out much of these savings last time around.
A more sensible way to reignite demand would be that Britons earning under 60K only pay income tax on 10 months out of 12 months pay, a tax holiday in June and December would power the high street and keep people in work in the service sector. Simples.
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This demonstrates that there is much more to consider that just headline statements, which often conceal the complexity of issues. A significant concern is that it can be difficult for those without ready access to all the facts and knowledge of how these are presented to separate hyperbole from reality.
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Cameron’s “1 million” extra private sector jobs is not just a matter of re-classifying nearly 200,000 f.e. and 6th. form college jobs to the private sector.
Job reductions and rising pressure on essential public services also mean that emergency cover on jobs (in health and social care for example) will now be provided by the private sector at higher cost (sometimes using already displaced workers now without benefits).
Productivity has, in fact as well as “statistically”, gone down and this will continue as more part-time private sector workers are recruited without any gain in GDP.
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How many people out there are out of work but not counted as unemployed like me who is self employed and on pension credit?
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“Remember that Mr Cameron is comparing two years of the coalition to a decade of Labour, so even if he’s wrong on the details, his point stands: the rate of private sector job creation has been far higher than under the previous government.”
Under much of the last 10 years of Labour, the unemplyment rate was viewed by the IMF and OECD as representing full employment. They then put pressure on Labour to reduce spending so as to keep unemployment above about 5.5% for fear of inflation.
This unemployment rate is called the NAIRU (non-accelerating inflation, rate of unemployment) and can still be found today in the OBR’s assumptions.
If, during most of this 10 year period, the economy was understood to be already at full employment, then it is only natural that government would not be able to stimulate further to provide more net new private sector jobs.
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Cathy/Patrick,
And there you have it:
“Full employment” is defined by the IMF as having 2.6 million unemployed.
That’s the future, people, for you and your children and grandchildren. Unless you do something about it…….
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Philip,
Just so you understand, I don’t think that 5.x% unemployment corresponds to full employment, I think it is more like 2%, but I think it is important that people know that governments deliberately maintain a high level of unemployment just to avoid inflation.
And then those same governments have the cheek to say most unemployed people are lazy!!
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Another problem is that there’s a difference between “private sector” and “wealth creating”. Atos, for example, are private sector but in terms of bringing money into the economy they’re the same as the state sector they replaced – they’re paid from the public purse to do what is, essentially, public sector work. When people say “private sector” it’s erroneously assumed that this always means businesses making money by operating in a market, with the farming-out of monopoly government work to private firms this isn’t necessarily so. And remember that’s something this government is very keen on.
The way to determine whether the economy is improving is, well, if the economy is improving. Actual proper businesses that make money and hire people need a good economic environment to grow and thrive in and that’s not happening under the current government.
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@Jez
“The majority of these private sector jobs are low paid 4 hour contracts. The Conservatives big idea is to have more of us working on casualisrd contracts with poor terms and conditions. They’ve got this idea from America, but they forget that in most of America the cost of living food fuel and consumer goods is far far lower.”
I was unemployed until recently and this is very true – many “new” jobs are often either short-term and poor hours/pay or re-jigged old jobs with poorer hours, pay and job security. Incidentally, the reason the US idea is poor is about more than cost of living. Job insecurity causes multiple problems on a macroeconomic level because it discourages people from spending and saving and increases problems associated with debt (which leads to social and health problems too). If you get people into stable, secure jobs then people have less debt problems, are more likely to become homeowners and are much more comfortable with spending and saving (including pensions). All of these things ultimately help the economy and relieve the burden on the welfare state in the long run.
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Instead of thinking in terms of “private sector jobs” people should be asking: what are these jobs? Are they long-term and do they pay a living wage? What kind of businesses are creating them? Are they desirable and sustainable economically? Are they improving Britain’s manufacturing and exporting in order to *properly* rebalance our economy away from the financial sector?
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It’s all very well proclaiming the rise in private sector jobs, but how many will be doing the work of displaced public sector employees? What will be the standard and quality? And how much will it remove from the monies provided by the remaining taxpayers?
Or, more to the point, how much will service users be required to pay in fees and other new charges (even incidental ones like travel or phone calls) for services they believe they have already paid for via their taxes?
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“Self employment” is being used to get people off JSA and means that Housing Ben can still be paid. Also particularly useful to reduce long term unemployed stats … check out how many A4E clients have become “self employed”
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The Office for National Statistics (ONS) produces estimates of those in employment at a given period of time, which is based on the Labour Force Survey sent out to 90,000 households per three-month period and returned by approximately 50%. Their own guidance note ‘Interpreting Labour Market Statistics’ makes clear ‘A common misinterpretation is to report that the estimates show how many jobs have been created or how many job losses have occurred. ONS does not produce any estimates for job creation or job losses.’
Unless the Government have other sources to verify this claim, it is not possible to verify how many private sector jobs have been created.
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