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
