FactCheck: Private sector jobs pain for PM
The claim
“Over the last three months, for every job being created in the private sector, 13 are being lost in the public sector.”
Labour leader Ed Miliband, Prime Minister’s Questions, 14 December 2011
The background
The arrival of the latest unemployment figures from the Office of National Statistics, although misery for millions in human terms was, in political terms, something of an early Christmas present for Ed Miliband as he looked to score political points in the last session of Prime Minister’s Questions of the year.
The expectation that growth in the private sector would cancel out the inevitable job losses in the public sector brought about by coalition budget cuts has been an important plank of the government’s economic strategy.
Mr Miliband reminded MPs of the Chancellor’s optimistic assessment at the time of the spending review in November last year. George Osborne said at the time that private sector job creation would “far outweigh” cuts in public sector employment.
But have those high hopes – based on forecasts from the independent Office of Budget Responsibility, been dashed?
The analysis
Mr Miliband claimed that between July and September for every job being created in the private sector – 13 were lost in the public sector. And he’s right - 67,000 jobs were lost compared to 5,000 gained in the private sector – that’s a ratio of around 13 to one.
And the situation has deteriorated considerably in comparison to the previous quarter, where the ratio was about 2.5 to one. Some 111,000 jobs went in the public sector and around 41,000 were created in the private sector between April and June.
So we’re heading increasingly rapidly in the wrong direction, something even the Prime Minister eventually acknowledged, despite deploying his classic “move the start line” defence to make the situation sound a lot less bleak than it is.
Mr Cameron said: “Since the election, in the private sector, there have been 581,000 extra jobs. In the public sector, he’s right – we have lost 336,000 jobs.”
Regular readers will recognise this immediately as a well-worn ploy we’ve taken issue with before.
What Mr Cameron habitually does is pull the time-frame back to before the election to cover the changes that took place in the second quarter of last year – when there was a massive spike in private sector growth.
But as the election came in the middle of that quarter, we don’t know how many of those jobs were created before Mr Cameron can reasonably claim the credit.
If we look at the most recent year-on-year trend, we see that private sector jobs are up 262,000 compared with the third quarter of 2010, and public sector employment has decreased by 276,000. So that’s a net loss of 14,000 jobs over the last 12-month period for which we have figures.
At the end of PMQs Mr Cameron offered a more frank assessment when he said: “The reason that unemployment is going up is because we’re losing jobs in the public sector and not growing them fast enough in the private sector, so we need to do everything we can to get our economy moving.”
The verdict
Mr Miliband is right about the failure of private-sector growth to make up for the effects of slashed budgets for public bodies, and Mr Cameron didn’t argue with his numbers.
There’s a lot less optimism around on the coalition front bench now than in November last year, when the government’s cuts plan was backed by 35 business leaders.
In a letter to the Telegraph at the time, the group of CEOs and chairmen said: “The private sector should be more than capable of generating additional jobs to replace those lost in the public sector.”
FactCheck wonders how many of these captains of industry would put their names to a similar letter now?
By Patrick Worrall
There are 13 comments on this post
On a day where Ed Miliband was trounced in PMQs like never before (and he’s had many many bad weeks) only FactCheck & Ch4 could come to his rescue.
Question need to be asked as to why the UK doesn’t have the opposition our taxes pay for, unemployment up, growth looking more distant, major splits in the coalition… to all intents & purposes the country falling apart & still Ed couldn’t land a blow. We need a new opposition leader & quick so we can hold this Gov to account & not let them off the hook when many aspects of their policies are being proven to not be working… such as this example pointed out by FactCheck
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A whole succession of Tory leaders used to ‘trounce’ Tony Blair @ PMQs. Especially William Hague: he was masterful.
Fat lot of good it did them.
Westminster village is a tiny place.
Mass unemployment talks louder than anything.
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We are down in the weeds here. C4 should focus on the causes most other Politicians and wont touch….more real-time data/information and interviews with the more radical economists in order to expose the real situation. Take 2 recent interviews:-
Steve Keen on BBC Hardtalk a few weeks ago. Watch the whole interview
http://www.bbc.co.uk/iplayer/episode/b018ksby/HARDtalk_Steve_Keen_Economist/
If you saw Newsnight last night you begin to see some economists (all women in the Studio i might add) who are now seeing the light. View from 32m.30s and watch the debate
http://www.bbc.co.uk/iplayer/episode/b018b9jz/Newsnight_13_12_2011/#programme-info
The OBR figures are already out of date. There is a week by week/month by month deterioration that should be reported at least monthly/. 3 monthly/6 monthly figures are too far behind
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Thanks for the link to Steve Keen interview, Citizen Smith. I saw the all-female Newsnight debate as it was broadcast and also the one the night before with male economists including Richard Koo who pointed out that this recession doesn’t conform in any way to the assumptions underlying economic theory as it is taught in universities, which explains why so many economists seem so clueless. Interestingly, Jon Stewart was pushing the same idea as Steve Keen (the government to give the public the money to pay the banks back, thus assuaging their private debt and the banks’ positions) loudly, publicly and repeatedly on The Daily Show at the time that TARP was being legislated in the US but his being a satirist rather than an economist meant the powers that be were free to ignore him. Sadly I think Steve Keen will be ignored too – and no amount of street demos will shift government thinking away from their paymasters, whether that be the financial hierarchy (in this instance) or the military industrial complex (in the case of the Iraq war). Millions could be marching peacefully and Cameron would buddy up to his old schoolfriends in the City until doomsday dawned.
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Jon Snow and team should now start to following this topic after this latest story in the pres today..
http://www.channel4.com/news/lagarde-warns-of-return-to-great-depression
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Worse than that: Lord Snooty and his gang misread the international banking crisis. He didn’t know that it was centred in New York, not the UK.
Which might be why Lord Snooty claimed the problem was ‘overspending’ when it was and is the collapse of tax payments from Banks.
Nor did he appreciate that RBS & Bank of Scotland got into trouble because their posh boards took huge gambles. Which he ignored. Like everyone else.
Lord Snooty also didn’t know then that banks all over Europe and their governments were in trouble too. It’s INTERNATIONAL not UK!
Those failures to understand the real problems facing our nations, led him to lead a charge against the public sector that is misplaced. Unless there’s an end to this recession, banks will continue to lose money and not pay the taxes we need to reduce the deficit.
The correct prescription is what any business or family would do when faced with loss of income: get more income from other sources! Don’t cut tax revenues by pushing the jobs & economy into recession!
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Capitalism only works if you create customers as well as goods. Those who run companies have always hoped that someone else would provide the money customers need to purchase goods and services while paying their own staff as little as they can get away with. The public have been bridging this gap with high levels of borrowing but now the music has stopped and the customers have evaporated. It’s no coincidence that Thatcher relaxed borrowing rules at the same time she set us on this low pay/too many hours road we all have to travel these days. Now it’s going from low pay to no pay. The inevitable consequence of years of hidden decline in the real value of the average persons pay packet.
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Ed Miliband must go. I voted for him and I bitterly regret it, as I know many other Labour supporters do. We have no effective opposition; it’s embarrassing, unacceptable and very dangerous. The party, together with Labour MP’s need to stop making excuses for our current ‘leader’ and start the process to elect someone capable of taking down the arrogant gang now tearing our society apart. I’m sure he’s a ‘nice guy’ with his heart in the right place, but he’s no leader.
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The preent unemployment situtaion in the UK is clearly bad with little prospect of good news for many months. Could the Factcheck team examine how other countries have successfully tackled unemployment issues in the past. My recollection may be through rose tinted spectacles, but I remember way back at the time of the miner’s strikes that a comparison was drawn between the action taken by the UK government and that of Germany. Basically, the UK government took on the mining unions and closed pit after pit, with little regard for the affect on the communities affected. The German approach to the same issue was apparently a well planned, Government led, initiative, which allowed for a well timed job transition for thousands of miners who were given access to good training, and the contruction of new commercial and industrial enterprise zones in the districts affected by the downturn in the mining industry to encourage new industries into these areas. Apparently this tactic succeeded.
Are we disadvantaged in the UK by poor long term planning. Do UK Governments lack the confidence and ability to really take on a challenge like high unemployment?
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I have been manufacturing in the UK since 1985 and have been maintained our workforce with only one redundancy at the start of the credit crunch. In 1995 we reduced our overheads by having product made in India, often at 40% saving compared with our UK costs which meant increased sales so we retained employees.
We discovered that Customs officers in India were taking our products from the shipping containers, along with our contact details and selling them to other manufacturers within India who subsequently approached me to become our suppliers. This is part of the corrupt Indian system, and perhaps we should learn from it.
Our UK Customs & Excise people have access to every product and every invoice accompanying those products which comes through our ports. If, for example, they see 10,000 Landrover brake discs coming in, at say £30 each, this information should be made available to UK producers, and if necessary, tax concessions given to any business who can take on the work ensuring increased employment.
Recovery in the UK can only come from manufacturing, not by retailing imported goods. I have found that the UK can still produce better quality goods, competitively now.
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I agree with chris regarding the weak labour party attack, rather tame considering the plight of the coalition, the only point i would disagree with is appointing a new leader. Its a new peoples party thats wanted altogether as you have a labour leader that wont stand on the same platform as a union leader. some labour leader.
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So Cameron agrees that what is needed to create jobs in the private sector is growth but refuses to alter his policy which is stifling growth.
As I’ve blogged elsewhere, it is ludicrous to make older people work even longer right now because it is just blocking jobs that the ever growing number of young unemployed could be filling.
Cameron and Osborne continue to crow that their age of austerity means that the government can borrow money at record low rates. The problem is that they are only borrowing to pay things like unemployment benefits.
They are borrowing more than they said they would so even they must realise that they have got it wrong but are just too arrogant to make any changes.
Still, according to the World at One, Iain Duncan Smith managed to pull some strings and a young guy who had only had one interview in ten months, suddenly got three in a day and a part time job after meeting IDS.
So it’s still not what you know but who you know in toryland.
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Public sector jobs are dissapearing? Isn’t this a natural effect of ‘pairing down’ thousands of non-jobs created by the previous administration? Admittedly this has a Keynsian effect.
This country needs homes & better transport not useless job creation in admin.
We require less non-productive ‘chiefs’ behind a desk & many more hands on tools.
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