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Here’s another. Just how much of the rise in employment under Labour has been accounted for by public-sector jobs? One proxy for state jobs is employment in public administration, health and education, which has gone up by 927,000 since May 1997, out of a total rise in employment of 1.97m. Roughly half the new jobs, in other words, have been in the public sector.
Is public-sector employment at a record? On this measure, certainly; there are 2m more people employed than in the late 1970s, when records began. The Office for National Statistics uses a slightly different measure, which suggests that, even leaving out nationalised industries (which used to employ more than 2m but now account for fewer than 400,000), government employment was slightly higher in the early 1990s, before falling sharply under the Tories.
Even so, the trends are unmistakable. Figures on Friday showed that public-sector employment, on the ONS’s definition, fell by 815,000 between 1991 and 1998, but rose by 583,000 between then and the first quarter of last year. It is still rising strongly in spite of the chancellor’s promised civil-service cutbacks. The NHS now has 1.4m people on the payroll, 5% of the employed workforce, a near-doubling over 30 years.
I raise all this now because we will hear a lot from Gordon Brown on Wednesday about the need for Britain to be a highly competitive, enterprise-friendly, skills-rich, well-educated, science-and-technology-based economy. The list of ambitions the chancellor sets out will be as long as your arm, as he details how Britain can and will respond to the challenge from China and India.
But does this emperor have any clothes? The EEF, the Engineering Employers’ Federation, has been counting down the clock to the point where 1m manufacturing jobs will have been lost since Labour took office. It should come with the release of figures on Wednesday morning, just as Brown will be doing his voice exercises in preparation for his midday budget speech.
It is a long time, admittedly, since Britain’s prosperity was measured in terms of the number of manufacturing employees, which has fallen by 60% since the peak of the early 1970s. But what has happened to what many people still regard as the truly productive sector of the economy has echoes elsewhere.
Take, for example, Britain’s overseas trade, revealed last week to have been in deficit by £5.2 billion for goods, or £3.7 billion for goods and services, in January.
Last year the trade deficit in goods was a whopping £57.9 billion, nearly five times the £12.3 billion figure Brown inherited in 1997. The deficit in goods and services was £39.7 billion. That broader definition of the trade gap was actually in surplus, by £1 billion, in 1997.
There are several explanations for this deterioration, one of which would relate to the strong growth in consumer spending in Britain in recent years, particularly in comparison with sluggish domestic demand in Europe. But that takes us only part of the way, and it is hard to argue that Britain has become more competitive when faced with a yawning trade gap that the official statisticians say is becoming ever larger.
Britain’s productivity (output per worker) is 11% below the Group of Seven average and significantly behind America and France. The gap is even greater in output per hour.
It has narrowed in relation to Germany, but that largely reflects that country’s poor performance. Even the Treasury, when it last reviewed the evidence in December, conceded that “a significant gap” remained between Britain and its best-performing advanced competitors.
In skills, one of the keys to Britain’s long-term ability to compete, we start at a disadvantage. A recent study sponsored by the Department for Education and Skills found that the UK had a lower proportion of the workforce with level 2 skills (A-level or vocational equivalent) and above than America, France, Germany and Singapore, the four other countries studied. The Treasury and Department of Trade and Industry note a lower proportion of the workforce with intermediate skills, and a higher proportion with low skills, than other countries.
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