Today (Wednesday, 14 March 2012) the
UK's Office of National Statistics released the latest
figures for the jobs market. Some commentators have noted the
net increase in private sector employment over the last quarter.
From September to December 2011, public sector employment decreased
by 37,000 and private sector employment increased by 45,000. Does
this increase back up the claims made by business leaders in October
2010 that they could "the
private sector should be more than capable of generating additional
jobs to replace those lost in the public sector"?
On the face of it, yes, the private
sector has created more jobs and filled the gap. But this is just
for the three months running up to the Christmas period, a time
traditionally associated with higher levels of short-term private
sector employment. We would need to see this pattern repeated over
the next two quarters at least to see if this represents a real
trend.
The figures given in Table 4: Public
and Private Sector Employment shows that from September 2010 (i.e.
the figures immediately before the Telegraph letter), public sector
employment stood at 6,262,000 and the total employed in the private
sector stood at 22,858,000. At December 2011, this had changed to
5,942,000 employed in the public sector, a reduction of around
320,000. Private sector employment had increased over the same
period to 22,947,000, a net increase of 89,000. Clearly, since
October 2010, the uptake in private sector employment has failed to
keep up with the loss of public sector jobs.
The total labour force has also
increased by around 400,000 over this period. The participation rate
of the overall workforce has fallen by around 0.2%.
In table EMP0, over the 12 months to
the January 2012, the ONS notes a rise in the temporary workforce of
around 110,000. This may also account for the rise in private sector
employment seen above. The latest figures state that nearly 40% of
those now working in temporary jobs are doing so because they cannot
find permanent work. Over the same period, part-time working has
increased by some 178,000 employees, with around 18% of these wanting
but unable to find a full-time job. Nearly 350,000 more
employees are working shorter hours than they would prefer than a
year ago. This represents real under-employment, and has serious
implications for the economic wellbeing of households. It also
represents a real, irreplaceable loss of output for the economy.
It is also worth considering that
swapping a public sector job for a private sector one may not be a
like-for-like exchange. The public sector has a much higher
proportion of female workers than most parts of the private sector.
This is probably partly due to the nature of work carried out by the
public sector in the UK, but public sector organisations can often
offer much more flexible working arrangements and better benefits,
particularly compared to the lower levels of the private sector.
Many decide on careers in Health, Social Care and Education as a
positive choice; the classic vocational motivation. Even where
public sector employees earn less, these benefits to the employee may
not be reflected in the hourly pay rate.
As noted above, there has been a
substantial increase in both temporary and part-time working, not all
of it voluntary. Exchanging a full-time teaching assistant post at
£6.50 an hour for a part-time store assistant job at £6.08 an hour
can hardly be considered a move into the “lucrative” private
sector. Trade Unions representing public sector workers stick to the
line that public sector workers are “underpaid”, to the point
where even those in the higher-rate tax band have been know to
proclaim themselves “low paid”. The latest ONS figures show that
average Public Sector pay (excluding the banks) is higher than
Private Sector pay, and has remained constant in recent months while
Private Sector pay has fallen. Economics professors may still earn
less than their City counterparts, but that is unlikely to elicit
much sympathy from those on the Work Programme. Using this logic,
the austerity measures are “liberating” armies of workers from
the yoke of public sector drudgery for the bountiful pastures of
shelf-stacking at Poundland.
The private sector has yet to increase
the numbers of employed to make up for the full loss of public sector
jobs announced so far, plus the overall increase in the workforce.
This has resulted in an increase in the percentage of the workforce
economically inactive. Even if the private sector can create
sufficient opportunities, these jobs may not be of the same overall
pay and conditions available in the public sector and represent a
real fall in welfare. If the trade unions choose their battleground
from the starting point that public sector workers are always worse
off, they will be entering a quagmire.
Unemployment is being used to
discipline both public and private sector employees. Workers
are being forced to take whatever employment is available, even if
that means accepting a degree of “flexible working” that they do
not want. Employers would not be able to demand this level of
unwilling flexibility if there were sufficient jobs available in the
economy. This represents a loss of potential output and real
hardship. So, the real question remains: why are there not enough
jobs?
Notes - Full ONS tables and datasets
are available from:
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