[R-G] [BillTottenWeblog] Snow Jobs

[Bill Totten]

The employment figures attached to large projects tend to be codswallop.

by George Monbiot

Published in the Guardian (April 01 2008)


There is no nonsense so gross that it cannot be justified by the
creation of jobs. The Ministry of Defence has just announced that it's
spending GBP 13 billion of our money - via a fantastically complicated
private finance scheme - on a fleet of refuelling planes. Do we need
them? Only if we intend to attack another defenceless country. But it's
worthwhile, because the new contract will "create up to 600 jobs at
AirTanker Ltd, and will safeguard up to 3,000 jobs directly at British
sites, with thousands more sustained indirectly". {1}

John Hutton claims that new nuclear power stations will generate not
only the energy 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 GBP 3.6 million on one new roundabout, at Haltwhistle. A
staggering waste of public money? No, "it will both attract new jobs to
the town and secure existing employment". {3}

It is true that investment creates employment. But jobs are used to
justify anything and everything. If recession strikes, the political
value of any scheme which boosts them will rise. Projects which in more
prosperous times might have been rejected by planners or ministers will
suddenly find favour. Anyone who stands in their way - however daft the
schemes may be - will be walloped as an anti-social Luddite.

But the big question is asked very rarely in the press: how reliable are
these promises? Whenever a new defence contract or superstore or road or
airport is announced, the papers and broadcasters repeat the employment
figures without questioning them. They rarely return to the story to
discover whether the claims were true.

The Guardian's research service was able to find only two stories which
challenged individual claims about job creation. One, from 2003, covered
a National Audit Office investigation into the government's grants to
companies in deprived areas {4}. The grants cost the taxpayer GBP 1.4
billion and were meant to have created or protected 300,000 jobs. But
the auditors found that only 45% of these jobs were additional: the rest
would have been saved or created if the grants hadn't existed. Of these,
eleven per cent displaced other jobs in the same region, even when the
multiplier effect (jobs creating further jobs) was taken into account
{5}. The schemes had worked, but not as well as the government had claimed.

The other story, in February this year, reported an odd but quite common
phenomenom: a private equity boss attacking his own industry. Jon
Moulton, the founder of Alchemy Partners, berated his own trade body for
using "very dodgy statistics" {6}. The British Venture Capital
Association had claimed that jobs at private equity firms have risen by
eight per cent a year over the past five years, while in publicly-listed
companies jobs have grown by only 0.4% a year {7}.

Speaking at the industry's SuperReturn 2008 conference, Moulton pointed
out that the association's figures excluded the private equity firms
that had gone out of business. "If you use an adjusted figure, the
number should be more like 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
nuclear speech, John Hutton praised the efforts of Dougie Rooney, the
energy officer for the trade union Unite, for his "unique contribution
to nuclear's renaissance in the UK". But they can't get their story
straight. Rooney has claimed that the nuclear programme will generate
10,000 new jobs: one tenth of 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 that there is "strong evidence that new
out-of-centre superstores have a negative net impact on retail
employment up to fifteen kilometers away". {9} The 93 stores 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 is
hardly surprising. The New Economics Foundation has calculated that
every GBP 50,000 spent in small local shops creates one job. You must
spend GBP 250,000 in superstores for the same result {10}.

But the press - especially the local papers - reports Eldorado every
time a new store opens. In the past few days the Telegraph and Argus
claimed that Marks and Spencer will create 2,500 new jobs in Bradford
{11}; the Halifax Evening Courier announced that the local B&Q will
hatch an extra sixty jobs by moving to bigger premises {12}; the BBC
published a story headlined "Morrisons site creates 1,000 jobs" {13}.
Seldom is there a word about the employment these schemes will destroy.

To produce a definitive account of the gap between the claims made by
companies promoting new schemes and the jobs they really deliver would
take years. Instead, I asked a researcher, Nicola Cutcher, to conduct a
rough sampling exercise. She took the latest year for which job figures
are broken down by the size of employer are available - 2006 - and
selected the middle week of each quarter. She then went through all the
stories that mentioned the word "jobs" in a press database {14},
selecting those which reported new openings or closures by large
enterprises (over 250 staff) that were definitely taking place. She
ensured that each claim was counted only once. To produce a rough
average for the year, she multiplied the four weeks by thirteen.

The government reports that the number of jobs among large enterprises
rose by 189,000 between 2005 and 2006 {15}. Our rough sample suggests a
net gain of 1.4 million, or 7.4 times the official rate. If the same
exaggeration applied to the whole economy, there would be 218 million
workers in the United Kingdom {16}.

This exercise has severe limitations. Job figures tend to be quite
lumpy. Some of the posts take several years to create, so they won't
show up in the 2006 figures; though 2006, of course, harvested the jobs
announced in previous years. But the gains among large employers this
decade have fluctuated between 160,000 and 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
papers are generally good at reporting job cuts, they rely for the good
news on companies and government departments that have an interest in
talking up the benefits of their schemes. There is also plenty of
confusion, often cunningly sown in corporate press releases, about
whether the new jobs are being created directly or indirectly. When
claiming wider benefits for their schemes, employers use the most
generous possible multiplier effects. The indirect employment claimed by
one company is the direct employment created by another. As they all
declare responsibility for work created elsewhere, new jobs in this
wacky world are generated several times over.

We need some reliable research into the reporting of employment claims.
We need journalists to start asking questions about the figures they are
fed; perhaps to refuse to print them unless they have been independently
audited. And we all need to make a simple demand whenever a shiny new
scheme promises to solve the community's problems: prove it.

www.monbiot.com

References:

1. MoD, 27th March 2008. GBP 13 billion deal for new Tanker Aircraft
signed. Press release.
http://www.mod.uk/DefenceInternet/DefenceNews/EquipmentAndLogistics/13BillionDealForNewTankerAircraftSigned.htm

2. John Hutton, 26 March 2008. New Nuclear Build: How do we make progress?
http://www.berr.gov.uk/pressroom/Speeches/page45417.html

3. No author, 28th March 2008. GBP 3 million road scheme to aid jobs.
The Cumberland News.
http://www.cumberland-news.co.uk/news/viewarticle.aspx?id=820414

4. David Hencke, 17th June 2003. GBP 100 million jobs subsidy scheme is
poor value, say auditors. The Guardian.

5. National Audit Office, 17th June 2003. The Department for Trade and
Industry: Regional Grants in England.
http://www.nao.org.uk/publications/nao_reports/02-03/0203702.pdf

6. Siobhan Kennedy, 27th February 2008. High-profile buyout chief turns
on his peer group. The Times.

7. The British Venture Capital Association, 13th February 2008. The
Economic Impact of Private Equity in the UK 2007.
http://www.bvca.co.uk/pdf.php?id=842&filename=the_economic_impact_of_private_equity_in_the_uk_2007

8. No author, 26th March 2008. 'Thousands of jobs' in nuclear design
licences. The Herald.
http://www.theherald.co.uk/news/other/display.var.2145944.0.Thousands_of_jobs_in_nuclear_design_licences.php

9. Sam Porter, Paul Raistrick, January 1998. The Impact of Out-of-Centre
Food Superstores on Local Retail Employment. The National Retail
Planning Forum, c/o Corporate 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.
The Telegraph and Argus.
http://www.thetelegraphandargus.co.uk/news/newsindex/display.var.2149091.0.dday_looms_for_massive_jobs_project.php

12. Carmel Harrison, 28th March 2008. DIY superstore prepares to open.
Evening Courier.
http://www.halifaxcourier.co.uk/local-business/DIY-superstore-prepares-to-open.3924045.jp

13. No author, 19th March 2008. Morrisons site creates 1,000 jobs.
http://news.bbc.co.uk/1/hi/england/kent/7305548.stm

14. UK News.

15. http://stats.berr.gov.uk/ed/sme/smestats2005.xls

and

http://stats.berr.gov.uk/ed/sme/smestats2006.xls

16. The latest total figure is here:
http://www.statistics.gov.uk/pdfdir/lmsuk0307.pdf

17. All the tables are here: http://stats.berr.gov.uk/ed/sme/index.htm


Copyright (c) 2006 Monbiot.com

http://www.monbiot.com/archives/2008/04/01/snow-jobs/

TO POST A COMMENT, OR TO READ COMMENTS POSTED BY OTHERS, please click
on the word "comment" highlighted at the end of the version of this
essay posted at http://billtotten.blogspot.com/