meaningful results


'New jobs' - the elephant trap

The lead editorial piece in the Times on 15 October fell into a trap that some seem quite incapable of avoiding in saying “migrants fill about half of new jobs”.

Now perhaps those at the Times hadn’t noticed the furore caused by the Prime Minister writing in the Telegraph on 28 July that 75% of new jobs had gone to British workers since the election. And that writing here in the Independent on 21 August, Ben Chu resoundingly took the Prime Minister to task for “sounding off without doing his homework”, invoking a letter by Sir Andrew Dilnot – head of the UK Statistics Authority – to Jonathan Portes who had complained about the use of the term ‘new jobs’ and which Ben says “explains why Mr Cameron was incorrect”. As can be seen at the foot of the Telegraph here the original article has been 'corrected'. 

Employment in the economy is central to the presentation of the Long-term Economic Plan with a strapline of “n million more people in work: more people with the security of a pay packet to support themselves and their families”.

But that growth in the number of people in work would not be such a success if the rise in employment were just a reflection of increasing numbers of people from abroad getting jobs in the UK.  That is what was at issue here: who are the people who have been benefitting from the increase in employment? The Prime Minister tried to allay those fears by quoting figures from the Office of National Statistics that showed that the number of UK nationals in employment had risen by 1,110,000 between Jan-Mar 2010 and Jan-Mar 2014, or 76% of the total increase in employment over the period.

Sir Andrew Dilnot’s letter doesn’t say there is anything incorrect about these numbers, but that these increases in employment are not the same as people getting new jobs. That’s because he defines new jobs as newly created jobs, and because the ONS does not collect data on these he says "From the available official statistics, it is therefore not possible to estimate the number of new jobs". This is clearer from a previous letter he wrote to George Eaton at the New Statesman in 2012 about whether new jobs were in the public or private sector  - “The available official statistics relate to the estimated number of people in employment. This is not quite same as the number of jobs, since one person may have more than one job. And the estimated change in the numbers in employment is not the same as the number of jobs created, since it is effectively a net figure, equivalent to the difference between jobs created and jobs that are abolished.”

And more recently he wrote to Matthew Hancock chastising his claims about  jobs being created in cities - “ONS publishes a large volume of official statistics about different aspects of the labour market, including the number of people employed and the number of filled jobs in the economy. However, no official statistics are available showing the number of ‘new jobs’

Let’s follow this through with an example. Long-serving sales manager Mr Green in Birmingham retires, and following a review of business needs the board decides not to replace him and the sales manager job is abolished. Instead the marketing department in London is expanded and a web design job is created. Mr Blue from the IT helpdesk within the company gets the web-design job. The newly-vacant helpdesk job is advertised outside the company and Miss Violet – who has been looking to return to work - gets the job.

What are the ‘official’ results? Employment levels are unchanged. All new jobs have gone to men. No one out of work has got a new job. But has Miss Violet not got a new job? She has taken a career break to look after her young children but now they are at school she is returning to work. She will be very pleased to get back into employment. She will tell her friends she has got a new job. The Prime Minister and Matthew Hancock (and now it seems the Times) say she has got a new job. But Sir Andrew and the ONS (and Ben and Jonathan) say she has not got a new job because her job is not a newly-created one.

This suggests that the number of newly created jobs is perhaps not a sufficient indicator of changing employment because at the same time as jobs are created existing jobs will be being abolished (the sales manager post above) and new opportunities arise in existing jobs (the IT helpdesk post above). For the same reasons, who is getting newly created jobs is not a good indicator of success in competition for jobs or newly gaining employment as it ignores anyone getting an existing job that has become vacant.

Ben and Jonathan point to ‘serious academic research’ carried out at the LSE by Jonathan Wadsworth that gets around this by looking instead at what they call ‘new hires’ – people who have been in their job for less than three months regardless of whether the jobs are newly created or existing jobs. Looking at our scenario in that light, there are two new hires, half are men and half are women, as both Mr Blue and Miss Violet have been in their jobs for less than three months. But this does not tell us male employment is unchanged while female employment has increased and so the success of different groups in ‘getting work’. No distinction is made between Miss Violet gaining a job and Mr Blue merely swapping one for another. Nor is anything revealed about overall levels of employment. New hires are just a measure of churn in the labour market, and the number of new hires can be high and/or increasing even when the total number of jobs and/or employment levels are falling.

Even looking just at the number of new hires who are gaining jobs rather than moving between jobs is not any more instructive as people move in large numbers between employment, unemployment and inactivity. Sir Andrew points this out, and the actual numbers entering employment either from inactivity or from unemployment since 2010 add up to 16 million in total. On that basis the Prime Minister could say “We have moved 16 million people into work”. Of course he wouldn’t say so, because while it would be true to say 16 million people had entered employment by newly getting jobs (both newly created jobs and existing jobs) since the election, many of these will be repeat business as individuals change jobs with spells of unemployment or inactivity between them. And preponderance of any particular group in this number would merely say something about their relative propensity to move jobs more often, or to have breaks between jobs.

When talking about people having or getting jobs the Prime Minister seems to suggests it is the net changes in employment levels that matter to him. If a factory employing five hundred people closes down and the DWP bolsters the local Jobcentre Plus with five additional posts to help those who have lost their jobs find work, the result would be five new jobs on the ONS definition (and five new hires). But what would matter to the people there is that there were on balance four hundred and ninety five fewer jobs than before, and the same number fewer in work. It is the net change in the number of jobs and numbers employed that is meaningful about employment in the town for people who are there (rather than economists elsewhere).

That is why when the Prime Minister was talking about who was gaining from changes in the labour market that have led to more people being in work than ever before, net changes in employment levels were arguably a better measure of this than who was getting newly created jobs, or involved in general churn in the labour market.

In terms of growth in employment since the election there isn’t any real argument about what the figures show. Many more people are in employment now. As it happens, the increase in employment is comprised of more men than women. About 1 million more men are in employment and only about ¾ million women. Talking about this growth in employment it seems quite unexceptionable to observe that more new jobs have gone to men than women if what is intended is to communicate simply and in ordinary terms the point that the increase in the number of men working has been greater than the increase in the number of women working. There is no necessary implication that men are ‘taking jobs’ from women in making such an observation, although the reasons for any such differences are worth examination. The same in principle applies to the number of people in employment who are ‘British’ or ‘in cities’, ‘in the private sector’ or ‘in part-time work’.  

As to the distinction between numbers of jobs and people in employment made by Sir Andrew because some people have more than one job and some jobs are shared, there is no reason for this to get in the way of our talking about people getting jobs. When we do this we are really talking about whether people are in work in not. If Mr Blue is already working and gets a second job, not many people would say “He’s got a job now”. And if Miss Violet enters employment in a job-share, even fewer people would say “She hasn’t got a job yet”. So it does not seem that anyone can really be confused or misled by the use of ‘having a job’ to mean being in employment and ‘getting a job’ to mean entering employment.

The ONS does count the numbers that the Prime Minister used. They just don’t call them the numbers of new jobs. ONS also counts the numbers that Ben and the Jonathan used, but they don’t call these the numbers of new jobs either. So the serious academic research doesn’t in any way counter what the Prime Minister said. And it’s not an issue specific to migration – if we can’t use ‘new jobs’ to mean net growth in employment we similarly can’t say anything about how many new jobs are part-time or how many self-employed, or (as Matthew Hancock found out) where they are in the country if what we are examining is the changing number of people in employment through getting part-time work, or through self-employment, or where in the country they are doing so. As whatever we do we can’t use the phrase ‘new jobs’ to refer to them getting work unless the jobs are newly-created.

That seems a bit obtuse. There might be reasons for distinguishing newly-created jobs from existing jobs, but we can do this by using the term ‘newly-created jobs’. There does not seem any good reason to restrict the use of the phrase ‘getting a new job’ to meaning ‘getting a newly-created job’. If we were talking instead about levels or rates of home ownership, it would be like saying moving into a new home only meant moving into a newly-constructed one, and that neither movers nor first-time buyers of existing flats and houses were moving to a new home. And counting house purchases seems to be the equivalent of ‘new hires’ for jobs, telling us only about how much (or how often) some people move house. Neither tell us what we want to know about changes in home ownership, whether it is going up or down, or how it might vary across groups. 

Sir Andrew concluded his letter to Jonathan by saying “I hope this letter clarifies what can, and cannot, be said from the published official statistics. I have agreed with the National Statistician that ONS will consider what further analysis it might provide to shed more light on this area.” That is good to see, as although we could all take Wittengstein’s injunction to heart - ”whereof one cannot speak thereof one must be silent”, these are important matters that we do need to talk about, so rather than saying we cannot, we should try all the harder to find and agree a meaningful way to do so.

So, what should ‘new jobs’ mean, or in what other terms could we usefully examine the who, what and where of changing employment? 





prompts and links ...

Jonathan Portes

Writing in Financial World, Jonathan puzzles over the lack of productivity rebound from recession, and wonders whether ground has been lost permanently here.

Morgan Stanley

There are five key drivers of increases in UK self-employment. Overall these suggest the growth derives from weakness in the economy and is a sign of slack. Their report should download here.

Steven Toft (@FlipChartRick)

Increased self-employment doesn't appear to be necessarily a good thing, looked at internationally and macro-economically here

Benedict Dellot from the RSA

Growing self-employment results from opportunity not necessity,  and suggestions to the contrary are myths to be busted here

Adam Lent from the RSA

High self-employment rates aren't a sign of economic weakness, but stirring entrepreneurial spirit here


The growth of self-employment is part of a trend towards casualised work, likely to hold back wages, and prevent people from having the kind of secure employment they need to pay their bills, save money and plan for the future here 

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