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Dublin: 11 °C Wednesday 17 December, 2014

Column: Do the Government numbers add up? Let’s not worry our heads…

The Government says its Action Plan will create 100,000 jobs, writes Michael Taft. This doesn’t make sense – and here’s why.

Michael Taft

THE MINISTER FOR Jobs, Enterprise and Innovation Richard Bruton is setting a target of 100,000 net new jobs by 2016 on the eve of the Government’s launch of the Action Plan on Jobs.  Does this mean that the Action Plan will create 100,000 net new jobs by 2016?  No.  Does this mean that without the Action Plan the target of 100,000 net new jobs will be undermined?  If we are to believe Department of Finance projections, no. So what’s all this about the Action Plan and 100,000 net new jobs?  Good question.  Welcome to the smoke-and-mirrors world of job creation projections and targets.

In the last budget, the Government projected employment would grow by approximately 62,000 between 2011 AND 2015.  These numbers are well below the Government’s projections in the previous April, when 102,000 net new jobs were projected.

Jobs Action Plan

Minister Bruton’s new 100,000 projection takes us out to 2016.  The Department of Finance’s estimates only go up to 2015.  But let’s assume that employment growth goes to 2 percent in 2016 (it is currently estimated to be 1.6 percent in 2015, increasing by 0.4 percent in 2013 and 2014). This 2 percent was the projected rate for 2015 in last April’s projections.

So if we assume that employment will grow by 2 percent in 2016 what do we get?  An increase of 100,000 net new jobs.  Okay, you ask – what’s the problem?  The Minister claims 100,000 new jobs by 2016.  My own estimate is 100,000.  There is concord, you might say between the two estimates.

Except for this.  In the budget last year, the Government explained its employment projections:

It is to be stressed that these labour market forecasts take account only of policies which have already been announced; they should in no way be seen as Government targets. The Government will publish its first annual Action Plan for Jobs in the New Year which will contain a series of measures to be implemented during 2012 and will provide further support to the labour market.

In other words, if there we no further job initiatives, employment would grow by 100,000.  So here’s the question.

If in the last budget the Government projected a employment to grow by 100,000 up to 2016 prior to the announcement of the Action Plan for Jobs, and the Minister is projecting that with the Action Plan for Jobs employment will grow by 100,000 – how many extra jobs will be created by the Action Plan for Jobs?

A logical deduction is 0.  No new jobs.

Will this be the case?  I don’t think so.  I suspect the Action Plan for Jobs – if it comes with some resources and investment – will increase the job creation rate, if only marginally (not substantially because the Government hasn’t yet copped it that jobs will only grow when demand for jobs will grow – but their fiscal consolidation strategy is reducing demand in the economy).

‘The Government is manipulating job creation projections’

The point here is the way this Government, like the last Government, is manipulating job creation projections, assuming that people won’t read what they have published before and examine the numbers in some details.

No doubt, when the Action Plan for Jobs is launched there will be great fanfare and the 100,000 target will figure prominently.  This is the same fanfare that accompanied last year’s Jobs Initiative – except that only a few months later the Government revised downwards its own job creation targets.

However, on the Government’s own admission the number of jobs expected to be created by 2016 will be 100,000 without the Action Plan for Jobs.

You could say this is a venial sin, this massaging of numbers for PR impact.  But it’s of a piece and we were promised a different governance when Fine Gael and Labour took office.

For a more egregious sin, check out the Taoiseach’s statement that the Fiscal Treaty will not result in more austerity even though the most ardent proponents of the Treaty accept the downside of more deflationary adjustments.

But, hey, these are all just numbers on a page.

Let’s not be worrying our little heads over such minutiae.

Michael Taft is Research Officer with UNITE the Union; author of the political economy blog Notes on the Front; and a member of the TASC Economists Network.

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