How much will employment increase?
The claim
“The figures published today show two million more private sector jobs. They show 1.4 million more people in work at the end of this parliament. They show unemployment falling every year.”
David Cameron, prime minister’s questions, 30 June 2010
Cathy Newman checks it out
The coalition government is poised to make the biggest cuts to public spending since the Second World War. And as today’s official figures from the Office for Budget Responsibility showed, that’s going to result in more than 600,000 public sector job losses. So to claim, as the prime minister did today, that unemployment will fall every year strikes me as chutzpah of the highest order. Over to the team to see if David Cameron might live to regret what he said.
Over to the team for the analysis
The OBR – the independent public finances watchdog – put out detailed forecasts today, setting out the likely jobs picture over the next five years.
As Cameron says, the figures show employment increasing. This year there are set to be 28.89 million people in work; by 2015-16 it’s increased to 30.23 million.
So that’s 1.34 million more workers – slightly fewer than the 1.4 million Cameron rounded it up to, but close enough.
But despite that overall increase, public servants are set to lose their jobs in droves.
The OBR figures show 610,000 state jobs will go over the next five years – reducing the government workforce from 5.53 million to 4.92 million.
So for employment to carry on increasing, private firms have to step in to fill the hole. And it’s a pretty big hole.
The OBR figures expect 1.95 more private sector jobs in five years’ time (again, Cameron rounds this up slightly, to two million).
This would mean a much bigger business boom than Labour ever managed.
According to the ONS, the private sector employee count went up by just over 1.8 million between 1999 and 2008. That’s slightly fewer extra workers than the OBR expects – and over twice as long a timescale.
Add to this the fact that the global economic conditions aren’t exactly rosy right now, and according to one leading economist, there’s not a “hope in hell” that it’s likely.
“You’ve got to offset not just for a lot of public sector job losses but also private sector job losses,” said John Philpott, chief economist at the CIPD (who predicted earlier this month that up to 725,000 public sector jobs would have to go).
“Against a backdrop where we’re going to be seeing hundreds of thousands of public servants losing their jobs, and hundreds of thousands of private sector workers who are dependent on the government for contracts, it’s clear there’s going to be a major challenge for the government if it’s going to meet its employment objectives,” he said.
Cathy Newman’s verdict
David Cameron accurately quoted official figures in parliament, so he gets a green light from the factometer. But his claim that unemployment will fall every year requires a big leap of faith. He’ll only be able to meet that promise if the private sector roars ahead.
If taxes and interest rates are kept low, that might happen, but it’s a big if. Research by the consultancy Oxford Economics just this month found that 2.3m private sector jobs were dependent on state contracts in areas like IT, defence and hospitals. As public spending falls, those employees are in jeopardy.
FactCheck will be watching the unemployment count with interest.
There are 12 comments on this post
So what are facts?
Are you suggesting that if there is a statement that is merely based on faith but is in an official document then you regard it as a “fact”?
At best the factomenter should be dead centre because Cameron’s figures are based on faith and not based on verifiable fact.
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[...] Cameron insists, with chutzpah in Kathy Newman’s words, that unemployment will befalling every year this parliament. This is [...]
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600,000 public sector posts gone implies a lot of spending power leaving the high street, too. And it’s quite difficult to square the intention to “leave posts unfilled” with protecting essential services and improving the efficiency of the public sector. More like letting the cuts fall at random.
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But the numbers that Cameron is quoting are merely forecasts with considerable amounts of error built in and the OBR itself acknowledges that. There are many risks to the downside. If consumers do not spend or firms do not invest or we are unable to export our way out of trouble, this forecast will be wildly wrong and unemployment will rise. It’s as simple as that. Fingers crossed they are right but they are surely not.
The scale of job creation in the OBR forecast is unprecedented and extremely optimistic. Currently the private sector is creating 4000 jobs a month and for the forecast to be ‘correct’ it will have to average narly 50,000 a month for every month from now until the end of 2014. And where exactly will these new jobs come from?
Seems likely that Cameron’s claim that unemployment will fall steadily through this parliament will be wrong – and soon.
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[...] Newman at Channel 4 points out: According to the ONS, the private sector employee count went up by just over 1.8 million between [...]
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The private sector needs to become more involved in employing people from outside their company. There are many people interested in Engineering jobs, medical jobs and sience jobs who are fully trained but can’t get a foot in the door (especially with the NHS).
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No other country’s government in either time or space has ever managed the fast transformation forecasted for our country by this government. Not even Canada.
Maybe they were ALL wrong. Maybe it was always possible to change so much and so quickly – but maybe no other government has had the youthful chutzpah to try?
Maybe no other government was so foolish and arrogant to put into effect such a radical change without any electoral mandate?
Not to worry, there’re also Council elections next May. That’ll be the first referendum on this foolishness.
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With apologies to Alice who checked these facts, I blogged on this (as the trackback above shows) and I said it was Kathy writing it.
She’s obviously just the Mill Vanilli to your Charles Shaw.
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Thanks for blogging on the post. It was a double act – Cathy set the issue out in its political context, and gave her verdict.
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You seem to be using some very out of date statistics. Try these:
http://www.statistics.gov.uk/cci/nugget.asp?id=407
They show Public Sector employment at 6.09 million, of whom about 250,000 were added when RBS and Lloyds became public sector employers through nationalisation. Presumably if those banks can be sold off, there will be a “loss” of 250,000 public sector jobs. Looked at that way, 600,000 doesn’t seem quite as bad as it might at first glance.
Unemployment could fall if immigration is successfully controlled, with unemployed replacing immigrant labour that emigrates. More jobs isn’t the only way that unemployment can fall.
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Thanks for the comment. The OBR’s figures on refer only to general government employment, which doesn’t include public corporations (e.g. Channel 4 and Royal Mail) or the nationalised banks. That’s why the numbers are lower.
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[...] last month, the Prime Minster is going to have to do some nifty footwork given his assertion that unemployment will fall each year this Parliament; both the PM and the Chancellor have been given their [...]
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