Student Jobs and Government Claims

According to the Office for National Statistics the number of university students in the UK has fallen from 38% to 26%.  The reasons for this are both perhaps that there are fewer ‘student jobs’ available, but also because there is more competition from non-students for what would have traditionally been ‘student jobs’.

Typically ‘student jobs’ tend to be in service industries that require staff on a part time outside of ‘office hours’, e.g. retail, catering, bars.  In recent years this has extended to include activities like call centres, paid charity fundraising, leafleting and direct selling.

There are currently around 2.5 million university students in the UK, 12% of that number represents around 300,000 students who are not gaining work experience.  

As students are counted as primarily economically inactive, while someone who is working part time in what might otherwise have been regarded as a ‘student job’ is regarded as primarily ‘employed’ this has potentially moved up to around 300,000 jobs into the private sector from not being counted, which further calls into question the Government’s claims about job creating by the private sector over the last three years.

The Chancellor's Response to My Enquiry

My MP has forwarded to me the response she received to the enquiry I requested she put to the Chancellor regarding the basis of the Government’s claims of growth in private sector employment since May 2010.

Since I received the response, a few days ago, I believe I have heard John Redwood on Any Questions on BBC Radio 4 claim that 1.5 million jobs have been created in the private sector since May 2010, a 50% increase on claims made only weeks before by the Chancellor and Prime Minister.

The response was supplied by Lord Deighton Commercial Secretary to the Treasury.

The figures supplied were a sample of the figures published by the Office for National Statistics at: www.ons.gov.uk/ons/search/index.html?newquery=EMP02dealing with the years 2010 to 2013.

There was no attempt to provide any breakdown by region, by employment sector, or by type of contract (e.g. full time, part time, zero hours, temporary, etc.).  But looking at the notes included at the bottom of the table, and not referenced by Lord Deighton:

•       I am reminded that public sector employment was increased by the reclassification of the employees of Northern Rock (October 2007), the Bank of England (February 2008), Bradford and Bingley plc (September 2008) and the Royal Bank of Scotland and Lloyds Bank (October 2008) as public sector.  Northern Rock employees have since been reclassified back to the private sector (December 2011).
•       From June 2012, some 196,000 people employed by further and sixth form colleges were reclassified from the public to the private sector.
•       Numbers are based on estimates; public sector employment is based on estimates by public sector organisations, private sector based on the limited data provided by the Labour Force Survey up to 2010, there is no indication of the basis of private sector employment estimates after 2010, but if it is based on the same, or similar survey data, then the sample is limited, so limited that at a regional or employment sector level the sample may not be reliable.   

Lord Deighton's letter also refers to the Private Sector Employment Indicator (PSEI) on the BIS website for February to April 2013 and refers to a one percent increase in private sector employment nationally:

www.gov.uk/government/publications/private-sector-employment-indicator-february-to-april-2013 

Similar growth in employment is claimed for each region.  That growth is of course from different baselines.  The Infographic at:

www.gov.uk/government/uploads/system/uploads/attachment_data/file/226388/Private-Sector-Employment-Indicator-Infographic-Q1-2013.pdf

This I note divides England into two sectors; The Greater South East (London the South East and East of England) with private sector employment at 61.3% of the working age population, and The Rest of England with private sector employment at 56.6%.  It is interesting that that each of these groupings includes one of the regions that has seen greatest growth in private sector employment (London, and Yorkshire and Humber) and one of the two regions that has seen a small decline in private sector employment (the East of England and the East Midlands).

The rationale for this division into two groups of regions is to minimise the effect on the data of commuting.  One wonders whether a significant amount of inter-regional commuting actually takes place other than the broader London commuter hinterland which would include areas of the South East and East of England.

The Government’s concerns are to demonstrate growth in private sector employment and a re-balancing of employment from public sector to private sector.  It is less concerned with evidencing what sort of employment is being generated (e.g. full time, part time, zero hours, etc.) and in what employment sectors (e.g. manufacturing, hospitality, financial services, etc.).

Conclusion:

I do not feel much trust can be placed in the Government’s headline figures or that the Government knows, with accuracy, how much private sector growth there has been, or that it is much concerned with what quality of employment is being generated by the early stages of recovery.  They are concerned to give the best interpretation of what they do know.

What sort of Recovery ?

According to the monthly assessment by the Chartered Institute of Purchasing and Supply (CIPS) / Markit the Purchasing Managers Index (PMI) rose in July to its highest level in two and a half years.

The PMI is made up of various measures of industrial performance; orders, output, employment, stock levels and inflationary pressure.  CIPS / Markit said orders and output were growing at their fastest pace since the summer of 1994, a period when the UK was recovering from the last recession.  But costs like fuel have also risen.

Where is the demand coming from ?

Much of the demand is domestic and funded by borrowing, much of the rest is from those parts of Europe that are emerging from recession.  How secure that recovery is, is surely uncertain while many Eurozone member state economies remain in recession and issues demand to be addressed in the stronger economies; many Netherlands’ homeowners have been plunged into negative equity, more Germans are becoming intolerant of the low pay that has helped make and keep Germany competitive.

The export led recovery to the BRICs has not happened:

• China seems to have achieved a soft landing economically rather than a catastrophic bursting of its property bubble and industrial output rose again in August
• India’s economy is faltering and Indians are dealing with sudden and significant inflation
• Brazilians are restive wanting the benefits of economic progress more evenly distributed among the population
• Russia is unusual, not truly one of the rising economies, nor one of the original G7 industrial economies, with an economy based primarily on exploiting vast natural resources rather than industry
• The other rising economies have yet to achieve global significance 

Most employment growth appears to be in the service sector and much of that growth appears to have been in the form of insecure zero hours, part time or temporary employment.  This is probably more indicative of uncertainty about the economy and recovery and insecurity on the part of employers rather than any ‘capitalist vindictiveness’,  though some no doubt will see it in those terms.

So far the 'recovery' is neither strong nor certain and it may take years for recovery in the economy to translate into recovery in the labour market.