Weak private sector job creation is not a myth

“One of the enduring narratives of recent months has been that the private sector is not generating the jobs to offset cuts in the public sector. Fortunately it is not true.”

So argued David Smith, the Sunday Times’ economics editor, on his blog. Is he right?

Smith says that since December 2009 public sector employment has fallen by 365,000 while jobs in the private sector have risen by 630,000.

Here’s the relevant table from the latest Office for National Statistics employment bulletin, released this week:

So Smith is about right. Public sector employment was 6,352,000 in December 2009 and 5,942,000 in December 2011, a shrinkage of 410,000 jobs. Meanwhile, private sector employment was 22,490,000 in December 2009 and 23,173,000 in December 2011, an expansion of 683,000 jobs. That makes it look as if private sector growth is indeed compensating for the losses of public sector jobs.

But there’s another way of interpreting this table. What happens if you start counting from the beginning of 2011, rather than December 2009 (which is a more appropriate time frame given that the economy has taken a marked turn for the worse over the past year)? This shows public sector job losses of 238,000 and public sector job creation of just 114,000. Not such an encouraging picture of job creation (notwithstanding that over the most recent quarter 45,000 jobs were created in the private sector while 37,000 jobs were lost in the public sector). And remember that there are still, of course, hundreds of thousands more public sector jobs to be cut over this Parliament.

Incidentally, if you start counting from the moment the Coalition took power in May 2010, you see that the public sector shrank by 350,000 jobs and the private sector created just 320,000 jobs.

Sadly for a great many unemployed and under employed Britons, the stuttering private jobs creation machine is not a myth. It’s all too real.

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• ineluctable2u

  No. This weighting of salary according to the cost of living specific to each area affects the north of England and Wales too. What is not taken into account with this kind of clumsy move is that while food may cost less north of Watford, heating bills are higher in the chillier north. Not sure this policy is anything but discriminatory in real terms….