NEARLY three-fifths of the growth in jobs under Labour during a decade in power was directly or indirectly created by the state, new research shows.
Across the country as a whole, it says 57% of new jobs created during the period 1997-2007 were state or “para-state” — dependent on government spending .
In the West Midlands these jobs accounted for all of the rise in employment, with no new private sector jobs generated overall. More than 80% of new jobs for women nationally depended on the state.
The research, which was carried out at Manchester University’s Centre for Research on Socio-Cultural Change, concludes that Britain’s business model before the financial crisis in 2007 was “undisclosed and unsustainable”
“We more or less knew that finance had made a negligible contribution to employment,” said Professor Karel Williams, one of the report’s authors. “We were intellectually curious about the gap between the official figures on public sector employment and what we call the para-state.”
The researchers define para-state employment as activities such as rubbish collecting or nursery education which depend for revenue on government funding, together with parts of private healthcare and other sectors partly dependent on government support.
It includes consultants employed by central government and local authorities who are officially in the private sector but whose work would disappear if the public spending taps were turned off.
In all, the researchers calculate that of the 2.24m jobs created in Britain under new Labour until 2007, fewer than 1m were true private sector jobs, while 1.27m were in this wider public sector. In the West Midlands there was a net fall of nearly 37,000 in private sector jobs, offset by a 105,000 rise in state and para-state work. In the northeast, 79% of new jobs were state-dependent, compared with 41% in London and the southeast.
Peter Williams, a former Rover worker, now works for Birmingham city council. “I count myself very lucky to have a job with the council, but now there is the chance of jobs going here as well, so there isn’t security anywhere,” he said.
“Birmingham’s industrial heritage works against it now, because people from outside the city think of it as a grimy industrial centre and I don’t think they consider bringing the new industries here which our children need.”
Jerry Blackett, chief executive of Birmingham Chamber of Commerce, said: “The situation is worrying. We are a net exporter of graduates. We have great universities in Birmingham, but we don’t hang on to the graduates we produce. There is still a perception that the city is all about the motor industry and metal bashing.”
A study by the Centre for Cities think tank last month revealed that between 1998 and 2007 almost 30,000 private sector jobs were lost in Birmingham while more than 40,000 jobs were created in the public sector. The report, commissioned for Birmingham city council, showed that a third of the city’s workforce is employed in public administration, education and health.
Dermot Finch, chief executive of the Centre for Cities, warned that the imbalance could cause problems after the election. “Birmingham cannot rely on future public sector jobs growth to support its recovery,” he said.
Nationally, of the 1.1m new jobs taken by women in the years leading up to the crisis, 81% were dependent on public spending with a particular increase in part-time work.
Williams said the research showed that politicians had to be intelligent in their approach to public spending: “Longer term we need a debate about a new kind of national business model. The public sector cannot sustainably fill in for an anaemic private sector.”
glad to see someone brought up Hayek in the comments section.