Wednesday, June 30, 2010

‘1.3m job losses’ looks like a non-story

I think the Guardian’s ‘Budget will cost 1.3m jobs - Treasury’ scoop doesn’t really hold together. As Peter Hoskins rightly says, the report is unclear as to whether this 1.3 million (actually a range of 1.1-1.3m) is the effects of the Tory/Lib Dem plans against Labour’s old plans or against a baseline of no fiscal tightening.

Also, you have to read a bit more to find that the Treasury thinks that 2.5 million jobs will be created over five years in the private sector – which would mean a net increase of 1.3m jobs (if we take the midpoint of 1.2m losses).

And if you do a little digging, something else becomes clear. By what probably isn’t a coincidence at all, 1.3m more jobs over five years is exactly what was predicted in the published Budget report: a rise from 28.8m in 2010 to 30.1m in 2015. The measures in the Budget are reckoned to cut employment by 100,000 relative to what it would have been, which is bad enough.

But there are three real stories lurking in there. One is the projection of 500,000-600,000 public sector job cuts, and the second is the ‘churning’ in the private sector, which will shed 600,000-700,000 jobs at the same time as it gains 2.5m. The third, though (if a colourful quote counts as news), is that the Chartered Institute for Personnel and Development thinks there is “not a hope in hell's chance” of these 2.5m jobs appearing.

(All of these predictions, of course, need to be taken with enough pinches of salt to give you seriously high blood pressure.)

Update: Anthony Painter has the right angle on this story, which is to contrast the current estimate of private-sector job creation with the rate seen before the credit crunch.

Over the eight years from 1999 to 2007, the private sector workforce grew by 1.52m, or 190,000 per year.

The current prediction is for 1.85m more private-sector jobs over five years – a rate of 370,000 per year. This does seem stunningly optimistic. Even if you include the rise in public-sector employment for 1999-2007, which one might argue ‘crowded out’ private-sector growth, that still only takes the total rate to 262,000 per year. (All these numbers are net job creation BTW.)

And when you factor in the plans for immigration to be much lower than in previous years, these forecasts look even more of a stretch. The government really is investing a lot of hope in the idea that lots of public-sector job losses will stimulate an even higher job creation rate in the private sector.

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