THE CLAIM: EURO CRISIS CAUSED JOB LOSSES
“WHAT we are seeing are the consequences of the crisis in the Eurozone,” said minister of state for employment Chris Grayling, commenting on the news that unemployment hit a 15-year high between July and September.
Labour’s shadow chancellor Ed Balls disagreed. “It’s not true,” he said. “Our recovery was choked off well before this latest crisis.”
So who is right?
Confidence has certainly taken a battering at the hands of the crisis.
Nationwide’s consumer confidence index plummeted this month, which the building society blamed on the sovereign debt problems.
Businesses are also suffering – the Institute for Chartered Accountants in England and Wales (ICAEW) reported that business confidence in the fourth quarter slumped, leaving private sector job creation struggling and “unlikely to be strong enough to offset rising public sector job losses”.
However, the latest job figures cover the three months to September, rather than the more recent months in which the Eurozone crisis has intensified.
The government initially hoped private sector hiring would offset public sector job losses as the economic recovery got underway.
The latest figures broken down by sector show private employment did outstrip public unemployment in the year to June, by 24,000 jobs. However, during the second quarter alone, public sector employment fell by 111,000 whilst only 41,000 private sector jobs were created – indicating jobs growth was faltering months before the crisis hit its recent heights.
Nonetheless, Grayling is not wholly wrong – the Eurozone was in trouble in the summer, with Greece negotiating a second bailout in July.
Economist Scott Corfe from the Centre for Economics and Business Research, who compiled the ICAEW business confidence monitor believes the Eurozone crisis did start impacting jobs before September.
“The euro worries started impacting towards the end of July, leading to a big fall in confidence in August,” he told City A.M.
“That dented hiring expectations.”
THE VERDICT | IT DID – BUT IT ISN’T THE ONLY FACTOR
Although the economy was weakening before the crisis really registered on the private sector’s hiring intentions, Europe’s woes did indeed impact on September’s job figures.
There is a fair degree of truth in the claims of both Ed Balls and Chris Grayling.
However, it seems they may be guilty of putting forward arguments that are a little too one-dimensional, missing the multiple factors impacting negatively on employment.