No one quite expected it, and even now ministers struggle to explain it. But the British jobs miracle has become the single biggest fact of economic life – proving that sometimes, things go badly right as well as badly wrong. Cameron has now overseen more job creation than his last six predecessors did at this stage (above). The excellent Michael Saunders from CitiGroup has produced an excellent report about it (pdf) and some of his charts are below.
1Jobs growth is beating every single forecast (see chart of total jobs, above), even the optimistic forecasts that George Osborne was publishing when he was talking about abolishing the deficit in five years. He has since given himself ten years, but look at these jobs. Even the March 2014 forecast from the OBR looks laughably out of date.
2. And look at the flip side, unemployment. Bank of England Governor Mark Carney used to say he’d raise rates when unemployment dipped below 7%. At the time, the BoE forecast unemployment following the dotted pink trajectory at the top, above. In fact, it took just a few months for unemployment to reach the position the BoE had planned for 2016. The BoE has made several other new forecasts but even its May forecast looks a bit pessimistic.
3. Is this all due to part-time jobs? Nope. The above graph shows full time and the self-employed doing best. I met a welfare-to-work provider a couple of weeks ago who told me his company was able to move people off benefits and into self-employment, by allowing them to set up a company around their skill set. To be sure, a lot of people would like more hours. But full-time jobs have risen more than any other type.
4. And yes, a lot of this is to do with real low wages. The cheaper folk are to hire, the more companies will hire (see correlation, above). A function of worryingly low productivity. But as Allister Heath says, if you had to choose between a jobless recovery and a low-productivity recovery with lots of jobs, you’d go for the latter every time.
5. We could soon be heading for the highest proportion of people in work since 1971. And that would be not a bad basis on which to fight the next election.