Friday, December 05, 2008

Fantasy Economy

As we plunge ever faster towards a recession - I hear that thousands of City jobs will go from banks and institutions in the weeks before Christmas. This leads me to wonder about the "Three million 'new' jobs" that supposedly reflect this Government's much-trumpeted success in revitalising the economy.

This week, the Financial Times published an analysis comparing the growth of jobs funded by taxpayers with those funded privately. In a stinging editorial it remarks:

"Two out of three jobs created between 1998 and 2006 have been in sectors dominated by public services: health, education, social work and public administration. Some of these workers - agency nurses, supply teachers and public policy consultants - may legally have private employers, but they depend on the state."

The paper adds:

"Whatever the merits of public sector workers, they are not an investment. They provide services that must be paid for, and in the coming recession it is hard to see how."

What the FT has done is to use figures from the Office for National Statistics' Annual Business Inquiry to calculate job growth across the main industrial sectors of the economy. All too predictably, the growth of public sector jobs has been concentrated in Labour constituencies and grandiose and generous spending projects North of the border. Note from the diagram that Thanet and other South-eastern deprivation hotspots, has not figured even modestly in contrast with equally deprived North of London.

In the period, 1978-2008, the UK has created a net 4.8m extra jobs but no fewer than 3.3m of them have been in these same sectors dominated by the public sector. So actually, that ratio of 2 in 3 new jobs being in the public sector is not just a New Labour phenomenon. It's representative of our entire post-1970s history.

This is a worrying fact because it suggests that even at the height of Margaret Thatcher's power, the UK's job growth actually depended more on the public sector than the private and the Labour Government simply carried on the work of the past, in building the public sector in line with its good socialist principles!

The conclusion from the FT and economists elsewhere, is: "That looking forward into the gloom of our high debt, high tax, spending restrained future, there are going to be an awful lot of people without jobs. We truly have been living a fantasy."

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