Any other business

Can Cameron bring us full employment? And do we want it?

Plus: The lessons of a post-poll bender

16 May 2015

9:00 AM

16 May 2015

9:00 AM

‘Two million jobs have been created since 2010 — but there will not be a moment of rest until we have reached our goal,’ said David Cameron in a Telegraph article a fortnight before the election: ‘Two million more jobs; or full employment in Britain.’ It was a bold statement. Indeed you might think, given unemployment at 1.84 million in the winter quarter, that the target for new jobs was actually an error on the part of who-ever drafts the Prime Minister’s prose. Either way, it drew little attention amid the smoke of battle. But now the air has cleared it merits revisiting, because it connects all the key themes (except perhaps the Scottish one — so full of perils that, like the Scottish play, it is best not named) of the coming phase of national politics: aspiration, equality, spending cuts, immigration and EU membership.

What is full employment, and is it a feasible target? When George Osborne declared it to be so in April 2014, I called him ‘cheeky’ — even though his speech was followed by yet another sharp fall in jobless numbers. Full employment does not technically mean ‘everyone in work’; more like ‘everyone in full or part-time work who wants to be and is not resting between jobs’. Back in July 1955, it meant an unemployment rate of just 1 per cent, or 216,000 jobseekers.

In today’s more flexible labour market, it is reckoned to occur somewhere between 3 and 5 per cent unemployment (we’re currently at 5.6 per cent) and is easily confused with the ‘equilibrium jobless rate’ at which labour shortages begin to fuel inflationary wage claims. The Bank of England has put that at 5.1 per cent, which was the average unemployment rate from 2001 to 2007 — though economist Michael Saunders of Citi argues, ‘The labour market has changed so much over the past ten years that the equilibrium jobless rate may well be lower now than it was then.’

Enough theology — let’s assume the jobless rate goes on falling well below 5 per cent and into or beyond equilibrium territory. What are the implications? There were indeed two million jobs created since 2010 — and according to the Office for National Statistics, half of them were taken by immigrants. Suppose we really do create two million more. Even after netting off public sector job cuts to come with the next swing of Osborne’s axe, such a private-sector flourishing will boost total numbers in work to a peak high above the current record of 31 million: will that suck in immigrants at a similar rate to the past five years, and where will they live? Was Cameron’s gambit based on advice that the immigrants are coming anyway, so we’d better create jobs for them?


As for inflationary wage pressure in response to labour shortages, immigration is the obvious valve to keep it down. But rising wage rates are also a useful antidote to inequality — which remains a taint on Cameron and Osborne, or at least a taunt that makes them wince. Many Tory candidates told voters on the doorstep that they would be happy to see a significant rise in the statutory minimum wage. Wouldn’t it be better if the market pushed pay upwards anyway? Yes it would, so long as energy and import prices hold inflation down and — most importantly — productivity also improves. It has actually fallen by a fraction since 2007 (also ONS figures) and that in turn raises urgent issues to do with skills, technology and management.

Then again, a growing private-sector workforce means more taxpayers, and rising wage levels at the lower end of the scale mean less demand for in-work benefits — so full employment means that Osborne can balance his books quicker, with fewer painful welfare cuts. What can knock us off this beneficent trajectory? Events, dear boy, and Europe — whether by its own inevitable crisis, or one we manufacture all by ourselves.

My post-poll bender

As I slumped into an armchair on Sunday evening after what I can best describe as a three-day bender, a passage from Robert Burton’s The Anatomy of Melancholy, first published in 1621, swam to mind: ‘Now come tidings of weddings, maskings, mummeries, entertainments, jubilees, embassies, tilts and tournaments… now comical then tragical matters. Today we hear of new Lords and officers created, tomorrow of some great men deposed…’

The first reader who emails the name of the 1975 novel from which I borrowed that abbreviated quote will receive a signed copy of one of my books — but isn’t it exactly how public life arranges itself in Britain, the only nation on earth that sandwiches an epoch-making general election between the birth of a royal baby and a remembrance ceremony that stands sleepless political victors and vanquished shoulder to shoulder?

My own post-poll peregrination took me from a crawl of Mayfair’s oligarch bars (reader, I drank a ‘porn-star martini’ — Google the recipe — in a circle of hell called Novikov) to a wedding in the New Forest and reunions with friends old and young, north and south. Everywhere the mood was one of relief that the tiresome campaign was over, and the future unblighted by Milibandist dogma.

For the many twentysomethings I caught up with (though I can’t speak for the tall blonde ladies in Novikov, who would prosper under any regime but were too busy to talk to me), this week may be as tough as last for finding a graduate job, but in a broader sense there has never been a better moment to start a career or a business. For my own cohort turning 60, at least we shall live the first five years of our remaining span under a government that believes in enterprise as the path to national prosperity, and in the virtues of civil society. And we have choices: cash in the pension pot and go wild, devote ourselves to voluntary service, or go on working and earning for as long as we wish — because in a full-employment economy, our country needs us. Happy days, until the next crisis.

martin

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Show comments
  • Sean Grainger

    You’ve been moving stuff around again like supermarkets: this column was not list in Columnists.

  • kathee

    I remember lying in my room when I was in high school and writing in a journal to my future husband. I’d write all sorts of notes and questions and things I’d wonder or ask this man when I eventually met him. I would wonder where he was and what he was doing and if he was thinking about me too. It has alwasys been such a strong desire in my heart to find a wonderful man to marry, someone who would love me and cherish me and appreciate me for the person I am. I always thought I would get married right out of college, just like my parents, so when that plan didn’t work out, I started to get discouraged. A school mate snatched my future husband away from my arms just because she had spiritual powers, all hope was lost to me before i came across the help doctor (prayerstosaverelationship@gmail.com
    ) who i confided in, i told him my long story and he helped me regain back my lover with his prayers which is now my husband today. if you have any problem email the help doctor (prayerstosaverelationship@gmail.com
    ).

  • AndyB

    Have emailed what I believe to be the answer to your 1975 novel conundrum to martin@spectator.co.uk…. glad to hear you enjoyed the Conservatives victory in a not dissimilar manner to myself. Has to be done.

  • rtj1211

    The rich always prefer plenty of unemployment, it keeps wages down and their wealth up. Full employment means supply balances demand, which is an absolute disaster for Scrooges. It’s also terrible for unemployment offices, mental health practitioners, social workers etc etc who will have rather less to do (although there will still be need for quite a few of them).

    It’s never going to happen because there is always a lag between being made redundant (which will never be eliminated as some firms will always fail/need to restructure) and finding new positions. I don’t know what the natural limit is, but I would have thought that 0.5m would be a seriously challenging target to reach…..

  • I.Q. Hunter

    Anthony Powell? Hearing Secret Harmonies?

  • Yvon & Barry Stuart-Hargreaves

    So for the Tories Full employment is now one in 20 out of work.

  • Jaria1

    Unions would celebrate full employment

  • Pacificweather

    Let us first end subsidised employment. Employer subsidies are costing the British taxpayer more than the EU. These are the government figures for those working more than 30+ hours per week (effectively, those in full time employment on minimum wage).

    Housing Benefit & Working tax credits:-

    WTC
    £1960 basic plus £810 for working 30+ hours = £2770 per annum

    3.2 million in receipt of WTC working 30+ hours = £8.864 billion per annum

    These are just the figures for individuals and couples. The figure is larger if you include the payments for children.

    HB
    1.049 million working and in receipt of HB at £90.44 per week = £4.933 billion per annum

    Total £13.7 billion per annum

    Employment is supposed to generate tax not consume it.

  • John Smythers

    Interesting to look back at this, as a quote from the Deputy Director of Policy at https://www.ipse.co.uk/ , the Association of Independent Professionals and the Self Employed, commented recently regarding self employment in recent months: “The continued low inflation is generally good news for the self-employed.” However, IPSE’s quarterly Freelancer Confidence Index also shown throughout 2015 that a high percentage of freelancers are concerned about rising business costs. So, it’s all well and good to see employment and self employment is on the rise yet the overheads and costs of doing this is a barrier for new business start ups.

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