There is no nonsense so gross that it cannot be justified by the creation ofjobs. The Ministry of Defence has just announced that it’s spending £13bn ofour money - via a fantastically complicated private finance scheme - on a fleetof refuelling planes. Do we need them? Only if we intend to attack anotherdefenceless country. But it’s worthwhile, because the new contract will"create up to 600 jobs at AirTanker Ltd, and will safeguard up to 3,000jobs directly at British sites, with thousands more sustainedindirectly."(1)
John Hutton claims that new nuclear power stations will generate not only theenergy we need, but also 100,000 new jobs(2). When and how? Here or in France?Northumberland County Council has revealed that it is spending £3.6 million onone new roundabout, at Haltwhistle. A staggering waste of public money? No,"it will both attract new jobs to the town and secure existingemployment."(3)
It is true that investment creates employment. But jobs are used to justifyanything and everything. If recession strikes, the political value of any schemewhich boosts them will rise. Projects which in more prosperous times might havebeen rejected by planners or ministers will suddenly find favour. Anyone whostands in their way - however daft the schemes may be - will be walloped as ananti-social Luddite.
But the big question is asked very rarely in the press: how reliable are thesepromises? Whenever a new defence contract or superstore or road or airport isannounced, the papers and broadcasters repeat the employment figures withoutquestioning them. They rarely return to the story to discover whether the claimswere true.
The Guardian’s research service was able to find only two stories whichchallenged individual claims about job creation. One, from 2003, covered aNational Audit Office investigation into the government’s grants to companiesin deprived areas(4). The grants cost the taxpayer £1.4bn and were meant tohave created or protected 300,000 jobs. But the auditors found that only 45% ofthese jobs were additional: the rest would have been saved or created if thegrants hadn’t existed. Of these, 11% displaced other jobs in the same region,even when the multiplier effect (jobs creating further jobs) was taken intoaccount(5). The schemes had worked, but not as well as the government hadclaimed.
The other story, in February this year, reported an odd but quite commonphenomenom: a private equity boss attacking his own industry. Jon Moulton, thefounder of Alchemy Partners, berated his own trade body for using "verydodgy statistics"(6). The British Venture Capital Association had claimedthat jobs at private equity firms have risen by 8% a year over the past fiveyears, while in publicly-listed companies jobs have grown by only 0.4% ayear(7).
Speaking at the industry’s SuperReturn 2008 conference, Moulton pointed outthat the association’s figures excluded the private equity firms that had goneout of business. "If you use an adjusted figure, the number should be morelike zero. We’re putting these things out as fact and we shouldn’t."
Many of the published figures have to be wrong. At the beginning of his nuclearspeech, John Hutton praised the efforts of Dougie Rooney, the energy officer forthe trade union Unite, for his "unique contribution to nuclear’srenaissance in the UK". But they can’t get their story straight. Rooneyhas claimed that the nuclear programme will generate 10,000 new jobs: one tenthof Hutton’s figure(8).
Ten years ago, a research organisation called the National Retail Planning Forum- financed by Sainsbury, Tesco, Marks and Spencer, Boots and John Lewis -published a report on the superstores’ impact on employment. It found thatthere is "strong evidence that new out-of-centre superstores have anegative net impact on retail employment up to 15 km away."(9) The 93stores the forum studied were responsible for the net loss of 25,685 employees:every time a large supermarket opened, 276 people lost their jobs. This ishardly surprising. The New Economics Foundation has calculated that every £50,000spent in small local shops creates one job. You must spend £250,000 insuperstores for the same result(10).
But the press - especially the local papers - reports Eldorado every time a newstore opens. In the past few days the Telegraph and Argus claimed that Marks andSpencer will create 2,500 new jobs in Bradford(11); the Halifax Evening Courierannounced that the local B&Q will hatch an extra 60 jobs by moving to biggerpremises(12); the BBC published a story headlined "Morrisons site creates1,000 jobs"(13). Seldom is there a word about the employment these schemeswill destroy.
To produce a definitive account of the gap between the claims made by companiespromoting new schemes and the jobs they really deliver would take years.Instead, I asked a researcher, Nicola Cutcher, to conduct a rough samplingexercise. She took the latest year for which job figures are broken down by thesize of employer are available - 2006 - and selected the middle week of eachquarter. She then went through all the stories that mentioned the word"jobs" in a press database(14), selecting those which reported newopenings or closures by large enterprises (over 250 staff) that were definitelytaking place. She ensured that each claim was counted only once. To produce arough average for the year, she multiplied the four weeks by 13.
The government reports that the number of jobs among large enterprises rose by189,000 between 2005 and 2006(15). Our rough sample suggests a net gain of 1.4million, or 7.4 times the official rate. If the same exaggeration applied to thewhole economy, there would be 218 million workers in the United Kingdom(16).
This exercise has severe limitations. Job figures tend to be quite lumpy. Someof the posts take several years to create, so they won’t show up in the 2006figures; though 2006, of course, harvested the jobs announced in previous years.But the gains among large employers this decade have fluctuated between 160,000and 330,000(17): in no year has anything like 1.4 million net jobs been created.
Should we be surprised by such exaggerations? Of course not. Though the papersare generally good at reporting job cuts, they rely for the good news oncompanies and government departments that have an interest in talking up thebenefits of their schemes. There is also plenty of confusion, often cunninglysown in corporate press releases, about whether the new jobs are being createddirectly or indirectly. When claiming wider benefits for their schemes,employers use the most generous possible multiplier effects. The indirectemployment claimed by one company is the direct employment created by another.As they all declare responsibility for work created elsewhere, new jobs in thiswacky world are generated several times over.
We need some reliable research into the reporting of employment claims. We needjournalists to start asking questions about the figures they are fed; perhaps torefuse to print them unless they have been independently audited. And we allneed to make a simple demand whenever a shiny new scheme promises to solve thecommunity’s problems: prove it.
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References:
1. MoD, 27th March 2008. £13 billion deal for new Tanker Aircraft signed. Pressrelease.
2. John Hutton, 26 March 2008. NewNuclear Build: How do we make progress?
3. No author, 28th March 2008. £3m road scheme to aid jobs. TheCumberland News.
4. David Hencke, 17th June 2003. £100m jobs subsidy scheme is poor value, sayauditors. The Guardian.
5. National Audit Office, 17th June 2003. The Department for Trade and Industry:RegionalGrants in England.
6. Siobhan Kennedy, 27th February 2008. High-profile buyout chief turns on hispeer group. The Times.
7. The British Venture Capital Association, 13th February 2008. TheEconomic Impact of Private Equity in the UK 2007.
8. No author, 26th March 2008. ‘Thousands of jobs’ in nuclear designlicences: TheHerald.
9. Sam Porter, Paul Raistrick, January 1998. The Impact of Out-of-Centre FoodSuperstores on Local Retail Employment. The National Retail Planning Forum, c/oCorporate Analysis, Boots Company PLC, Nottingham.
10. Emma Hallett, New Economics Foundation, April 1998, pers comm.
11. Jo Winrow, 27th March 2008. D-day looms for massive jobs project. TheTelegraph and Argus.
12. Carmel Harrison, 28th March 2008. DIY superstore prepares to open. EveningCourier.
13. No author, 19th March 2008. Morrisonssite creates 1,000 jobs.
14. UK News.
15. 2005 and 2006
16. The latest total figure is here
17. All the tables are here
