A ‘jobs-led recovery’? Assessing the facts behind the Conservatives and Labour manifestos

WalletIn the run-up to the General Election, the two largest parties have attempted to paint different pictures of the economy, particularly what this means for people’s jobs, in order to justify their Manifesto commitments and – by extension – why they should lead the next Government, writes research fellow Chris Lawton.

The Conservative manifesto emphasises the strength of recovery in terms of the quantity of jobs created since the start of the Parliament in May 2010: “Thanks to the success of our long-term economic plan, Britain is creating more jobs than the 27 other countries of the European Union put together… Over the past five years, 1.9 million new jobs have been created; 1,000 jobs for every single day that we have been in government.”

In their manifesto, Labour counter this claim by emphasising the quality of jobs created: “Over five million people are in low-paid jobs, earning less than the living wage. There are 1.8 million zero-hours contracts. 1.3 million are working part-time because they cannot get a full-time job. Half of all those in poverty live in working households.” The Labour position has been more difficult, as the party has been at pains to avoid ‘talking down’ the extent of recovery, and has instead focussed more on whether that recovery is genuinely benefitting people across the UK. The party’s previous emphasis on the ‘cost of living crisis’ has had to be toned down, as inflation has been below 1 per cent since December, meaning that real pay growth is finally in positive territory.

Are these two competing narratives supported by the data? Every month, the Office for National Statistics (ONS) publish their ‘Labour Market Statistics’ first release. The last LMS prior to the General Election was published on the 17th of April. This includes Labour Force Survey data covering the period December 2014 to February 2015 alongside a time-series of comparable quarters.

Firstly, in terms of the numbers of individuals in work, the Conservative claim is broadly correct.   The latest estimate from the ONS is that there are 31.05 million individuals in employment in the UK, which is the highest on record and between 1.9 and 2.0 million higher than at the beginning of the Parliament (depending on which period in the data is chosen as a starting point).

However, there are two significant caveats to this. It is disingenuous to present this in terms of 1,000 additional jobs per day over the five years the Conservatives have been in Government. The data shows that the recovery has been highly uneven, with falling employment during several quarters in 2010, 2011 and 2012. Secondly and more importantly, the claim ignores population growth. Employment rate expresses the numbers employed as a proportion of the total working age population, and is used to measure both an economy’s utilisation of potential labour and the extent of participation in the workforce. The population did not stop growing when the UK went into recession, as around 50 per cent of population growth is determined by the balance of births and deaths (with net migration being more sensitive to relative economic conditions). Between 2008 and 2013, the total working age population grew between 0.2% and 0.9% each year, whilst the numbers employed contracted between 2008 and 2009, 2009 and 2010 and again between 2011 and 2012. This means that the rate of employment fell to its lowest point in late 2011 (70.1%) and recovered more slowly than the absolute level of employment, as for many quarters population growth outstripped the increase in the numbers employed. From 2013 the growth in employment strengthened, leading to steady increases in the rate of employment to the current record high of 73.4%.

But the data also shows that Labour are right to identify a range of concerns around the structure of this employment and individual’s experiences of it. There have been significant increases in part-time work, self-employment and temporary employment – and individuals who would rather be permanent, full-time employees make up increasing proportions of these groups. In 2008 to 2009, 2009 to 2010, and 2011 to 2012, the number of people working full-time fell (very significantly in 2009 to 2010, by almost 600,000) whilst part-time employment increased in each period. Although full-time employment has since recovered, the structure of the UK labour market has changed: pre-recession part-time work accounted for 25 per cent of total employment, in the latest data it is 27 per cent. This is equivalent to half a million more people working part-time since the start of the Parliament. Moreover, the proportion of individuals who are working part-time because they have been unable to find full-time work has increased from nine per cent to 16 per cent.

Self-employment has followed a similar trajectory, increasing in share of total employment and growing in 2008 to 2009, 2009 to 2010 and 2011 to 2012 when employee jobs contracted. Analysis by the ONS and the TUC, summarised in an earlier NTU Election Expert article, suggest that the largest number of new jobs since 2008 have been self-employed, with many people ‘trading-down’ on previously more highly-skilled employment – into low-pay, low-skill activities in order to avoid unemployment, which the TUC dub the ‘rise of the odd-jobbers’.

The most striking change has been in temporary employment, which has increased by significantly more than total employment (by 3.4% on the previous year compared to a growth of 1.8% for all employment in the UK). In the latest data, there are 1.69 million individuals in temporary employment, up from 1.54 million at the start of the Parliament. Moreover, the strongest growth has been in the number of individuals who would rather have a permanent job – now 16.4% of those in temporary employment compared to 13.9% at the start of the Parliament.

In their Manifesto commitments, both parties recognise the outcome of these developments in terms of low rates of productivity growth, but Labour continue to place more emphasis on low wages. Although rates of pay growth are now well above the rate of general price inflation, this is due more to inflation being at a record low level (due largely to falling international oil prices) than to any change in pay growth – which has remained below 2 per cent per annum for most of the Parliament. Both Parties commit to raising the Minimum Wage to £8 per hour (Labour by 2019 and the Conservatives by 2020), but Labour continue to express a far greater concern for the stubbornly low levels of pay growth. Conversely, the Conservatives have argued that there are benefits to both the individual worker and to employers in the increase in part-time, temporary and zero-hour contracts in terms of choice and flexibility.

Other common Manifesto commitments include extended childcare entitlements for working families with young children and increases in the number of Apprenticeships. In this second area of common priority, the data suggests challenges for whichever Party forms the next Government. The structure of employment by occupation (which describes the kind of jobs people do and the skill level required to do them) has changed since the start of the recession, with more people in higher skill jobs, more people in very low skilled jobs, and a fall in employment in several occupations in the intermediate-skill range – notably the Skilled Trades (electricians, plumbers, skilled manufacturing technicians, etc.) and Administrative and Secretarial roles. Of the intermediate-skilled occupations, only those associated with Health and Social Care have seen a significant increase. Given it is intermediate-skilled jobs that Apprentices are most likely to enter upon completing their training, this trend presents a significant challenge unless there is a greater recovery in the demand for these job roles – for example in the Manufacturing and Construction sectors, which could be influenced by significantly increased investment in infrastructure projects.

On balance therefore, the narratives presented by both parties have significant elements of truth. The total numbers employed have increased strongly, although this recovery has not been by any means evenly spread over the parliament, as the Conservative claim implies. Labour do have a strong foundation in the available evidence over their claims on the structure of employment, and what this means for pay growth and living standards. Further research could investigate the impact of these changes on individuals’ job satisfaction, health and more subjective measures of happiness or wellbeing.

For the detailed analysis underpinning this article, please contact the author or refer to the NBS Work and Employment Research Group pages. All data referred to is ONS Crown Copyright, and is available from www.ons.gov.uk

Chris Lawton
Research Fellow
Nottingham Business School

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