Job creation under the Coalition government

There is plenty of devil in the detail of its ‘1000 jobs a day’ claim

Jason HeyesSince George Osborne’s Autumn Statement in 2014, senior figures in the Coalition government (and particularly those from the Conservative Party) have repeatedly claimed that the government has created, on average, 1000 jobs for every day it has been in power. The statistic has been trotted out frequently during the general election campaign, but has not received much critical scrutiny.

Does the claim hold water?   Precise up-to-date calculations cannot be made, given that the most recent publicly available figures for workforce jobs relate to December 2014.  But the data do enable us to make some reasonable estimates.  Subtracting the total number of UK workforce jobs in June 2010 (the month after the 2010 general election) from the total in December 2014 gives a figure of 2,103,000, which, when divided by the number of days between the formation of the Coalition government on 12 May 2010 and the end of December 2014 (1695 days in all), produces an average of 1240.7.  On that basis, the government’s ‘1000 jobs a day’ claim can be considered broadly accurate or even an underestimate.

However, the workforce jobs measure is not a measure of people in employment – it is a measure of the number of jobs in the economy.  Workers who hold more than one job at a time appear more than once in the workforce jobs data, which implies that the number of additional people in employment since May 2010 is somewhat less than the number of additional jobs created.  Comparing Labour Force Survey (LFS) data from April-June 2010 and October-December 2014 we find that total employment increased by 1,704,000 over the time period, which, when divided by 1695 days, represents an average daily growth of approximately 1000 per day. This is, presumably, how the government would support its claim.  Bear in mind, however, that the LFS figures are estimated averages for the time periods concerned.  If we compare the May-July 2010 average (arguably a more accurate starting point) with that of November 2014-January 2015 and divide by the number of days in office to the end of January 2015, the average number of people in employment added per day falls to 935.

It could still be argued that this figure is close enough to the Coalition’s ‘1000 jobs a day’ claim as to be not worth disputing.  The devil, however, is in the detail.

In addition to including employees, the total employment figures include workers on government-supported employment and training programmes, unpaid family members and the self-employed.  Self-employed persons account for one-third of the additional employment created between April-June 2010 and October-December 2014 (and substantially more than one-half of the net growth in employment since the pre-crisis peak). As the Resolution Foundation has shown, a great many of those workers who have recently joined the ranks of the self-employed would prefer to have an employment contract.  Much of the new self-employment is low-paid and precarious and the recent collapse of City Link has highlighted the vulnerable position of self-employed people working as contractors.

While the government has talked up its record on unemployment, it has had little to say about the growth of underemployment that has occurred on its watch.  The proportion of ‘involuntary’ part-time workers (those who cannot find a full-time job) remains stubbornly above its May 2010 level and the increased proportion of graduates in ‘non-graduate jobs’ is indicative of credential inflation, skills mismatches and displacement of less well-qualified young people, who have joined the ranks of the unemployed.

On the whole, governments do not directly create jobs – employers do.  Only in the public sector is it meaningful to talk about the government directly creating (or eliminating) jobs and here employment has fallen substantially since May 2010.  Public-sector employment was affected by the partial nationalisation of financial institutions, notably Lloyds Bank, Royal Bank of Scotland and Northern Rock, during the early stages of the financial crisis.  If these and other reclassifications from the private to the public sector (and back again) are discounted, public sector employment fell by 397,000 between the second quarter of 2010 and the fourth quarter of 2014.  Put another way, this represents a loss of approximately 234 public-sector workers for every day the Coalition government has been in office, up to the end of December 2014.

It is also important to appreciate regional differences in the rate of job creation.  Almost half of the growth in employment since the Coalition took power has been concentrated in London and the south-east of England.  In London, employment increased by around half a million between April-June 2010 and October-December 2014, an average daily growth rate of approximately 279 for every day the Coalition had been in power to the end of 2014.  The employment rate has increased and the inactivity rate has fallen.  By contrast, in October-December 2014 the employment and inactivity rates in the north-east of England and in Northern Ireland were virtually the same as they had been when the government came to power, while the number of workforce jobs had fallen in both regions.

Important though it is to subject the government’s ‘1000 jobs a day’ claim to scrutiny, discussing the quantity of jobs is not enough: job quality must also be considered.  The spread of low-paid and insecure work, including the increased use of zero-hours contracts, is, for understandable reasons, not part of the government’s job-creation narrative.  But the fact is that it has nevertheless occurred.

Well-being, a concept which appeared to appeal to David Cameron in the early ‘Big Society’ days of the Coalition government, has also disappeared from the government’s lexicon as far as the labour market is concerned.  The recent report of the All-Party Parliamentary Group on Well-being Economics (2014) has, however, highlighted the negative consequences of the shifting labour-market structure and workplace power-balance for workers’ well-being and has set out a number of objectives for policy, including the promotion of shorter and more flexible hours of work and the requirement that large firms publish information about the ratio between the highest and lowest paid and between top and median pay.  This is a helpful intervention and we can only hope that policy makers, whoever they turn out to be, will take heed after 7 May.