Are employment levels one of the “better stories” of the Coalition, as Fraser Nelson claims? Not really.

The Spectator’s editor Fraser Nelson is — rightly — very hot on politicians being accurate in their use of stats. For instance, he’s — rightly — called out both Nick Clegg and David Cameron for confusing (whether accidentally or deliberately) the terms ‘debt’ and ‘deficit’, claiming the former is falling when they mean the latter.

However, Fraser is sometimes a bit casual with facts himself — for instance, wrongly claiming that an old report for the Department for Education ‘proved’ the pupil premium was flawed when it did no such thing.

And today he makes a point of highlighting what he calls the “better story” of employment levels under the Coalition:

The truth is that, while there is much to worry about in Osborne’s policies, employment has been one of the better stories as the graph below demonstrates:

spectator employment graph may 2013

But, despite what Fraser implies, raw numbers are NOT the best way to understand what’s happening in the labour market. What matters most is the employment rate — ie, what proportion of people of working age are currently in employment.

And that graph (from the ONS) tells a much more sobering story of the past five years. The employment rate remains significantly below where it was in 2008, the opposite of Fraser’s happy graph:

ons employment rate - may 2013

To understand the current jobs market even better it’s well worth a look at this graph of under-employment in the UK — ie, the extent to which workers are willing to supply more hours of work than their employers are prepared to offer — devised by David Bell and David Blanchflower and published by NIESR:

niesr under-employment rate - may 2013

As NIESR highlights:

Underemployment is particularly concentrated among the young, where unemployment rates are close to 20 per cent. In 2012, 30 per cent of those aged 16 to 24 that did have jobs wished to work longer hours. This means that the labour market for the young is even more difficult than the raw unemployment rates imply. Even if there was an upturn in demand, employers would likely extend the hours of existing workers before taking the risk of hiring new young employees. Ethnic minorities also have high rates of underemployment, particularly those that describe themselves as Black or Black British.

There will always be lies, damned lies and statistics. But I hope we can agree that using absolute figures (like the numbers employed) without also offering the context (the numbers available to be employed) is unhelpful.

* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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10 Comments

  • mike cobley 6th Jun '13 - 2:24pm

    Yes, true. Also, would be more helpful to get a breakdown on actual numbers working full-time and part-time and how those have varied over the last decade. Bit like when ministers talk blithely about GDP, when that one big number is really a customised amalgamation of several output indicators which, separately, would be far more informative that the Big Number.

  • Nick T Nick Thornsby 6th Jun '13 - 2:40pm

    You are right to point out that the other figures are probably more valuable, but looking even further at the context I am slightly more upbeat.

    Public sector employment has, necessarily, fallen back dramatically – the civil service is the smallest it has been since the second world war.

    For the private sector to both offset those job losses and pick up the slack that already existed in the labour market in the relatively short period since the coalition was formed would have been a big ask. But the private sector has created around a million jobs in that period, which is pretty extraordinary considering that in the 12 years between 1997-2009, during an economic boom, a similar number were created.

    So while the significant increase in private sector employment has not changed the overall unemployment rate, which is still too high, those figures mask a rather extraordinary story.

  • Liberal Neil 6th Jun '13 - 3:32pm

    Even your second graph suggests that employment levels are on the up.

    The story might not be quite as positive as Fraser Nelson suggests, but it’s still positive.

    Also – it’s surely better to have lots of people in work but underemployed than to have more people fully unemployed?

  • paul barker 6th Jun '13 - 7:37pm

    I think you are also missing the Political context. There were widespread predictions of Unemployment reaching 4 or 5 Million. The “Big Story” is surely that Mass Unemployment didnt happen ?

  • Well clearly the elephant in the room here and the main reason why we have not had a recovery in employment rates is because the workforce has increased relative to the number of jobs available. And guess why it has increased. Because of immigration.

    Since the first quarter of 2008, according to the ONS, the number of UK workers in employment has fallen by 403,000 but the number of foreign born workers in employment has risen by 576,000.

    If you refer to pre-2008 levels of employment of 73.0% and compare them with current levels of 71.5%, we are presumably saying that we are missing jobs to the tune of at least 1.5% of the workforce, which with a total working age population of 40m is 600,000. The similarity between this and the figure above is striking.

    What the mechanism of the displacement is is another matter, but the fact is that given a limited number of jobs in the economy, it is clear that UK employers are preferring to recruit overseas born workers to UK born ones. It is not due to a lack of demand overall that employment rates have failed to recover, it is simply a lack of demand *for UK workers*.

    Unless we can invest even more in improving skills and making UK workers more productive and better educated, particularly at the lower wage end of the spectrum, then no amount of demand boosting and fiscal stimulus is going to solve this problem. UK employers will carry on taking on workers from other countries.

  • Agree with the other posters that this is indeed actually quite a good story. Given the huge number of jobs shaken out of the public sector in the last 3 years, the fact that overall jobs have gone up is remarkable. This is what makes the current situation so very different to the Depression, despite the nominal GDP Figures actually looking quite similar to the Depression.

  • Michael Parsons 8th Jun '13 - 10:23am

    Posters disagreeing withy the comment seem often to make odd assumptions.
    Why is it better, either for the people involved or for society, to have people employed or underemployed in the “private” sector (e.g. as part-time shelf-fillers, or in gambling services) rather than usefully in the public sector?
    Why it better to continue the UK’s decline into a low-wage, low-skill economy in which markets rule, public services dwindle and the gulf between rich and poor widens? Especially when social progress is being reversed because of the Government’s inability/failure to bring the banks under control and apply the criminal law to them, and its persistent creation of money used to revive financial speculation instead of the real economy?

  • A Social Liberal 8th Jun '13 - 11:15am

    Personally I would like to see how many of those jobs are temperary contracts, zero hours contracts and part time /full time work .

  • You criticuse a man for accuracy because the evidence doesn’t support an argument he didn’t make? If he is talking about Osbournes policies then 2010 should be the start point, unless he is somehow responsible for the job losses when Labour were in power. If we look at raw numbers or percent both are up during Osbournes time so the graph demonstratex what he claimed it did

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