So, back in March we were transitioning towards a low-trust society via the phenomenon of the bogus hairdresser. I identified a maximum at the chilly limit of 1.16 million people who might be kept off the official unemployment number via Work Programme wipe-your-own-arse classes, zero wage placements, or bogus hairdressing. I didn’t believe it was that many for reasons I set down in the post.
Anyway, here’s Markit chief economist Chris Williamson comparing a variety of survey-based metrics of employment. They note that the total employment growth according to the ONS since 2010 is 1.16 to 1.2m jobs. Other survey-based estimates put it far lower, between 174k and 308k. If this is the case, the fabled “productivity gap” is at least halved.
Reading into the piece, Williamson notes the existence of 300-odd thousand additional self-employees – the bogus hairdressers – and also a sudden increase in the number of companies registered for VAT and PAYE, an extra 86.7k overall with 31k turning up between 2011 and 2012 thanks to a database cleanup at HM Revenue. He estimates, on the basis that an average British firm employs 11.4 workers, that this on its own would account for 989k jobs.
We’ve got two effects here that point in the same direction, and I said as much in the March post – one is the bogus hairdresser one, a survival response that creates fake employment to stop abuse from IDS. The other is genuine employment being forced out of the black economy and being counted, whether responding to Work Programme badgering or to VAT audits.
The upshot, anyway, is that the unemployment numbers have a cushion of something well north of a million. Williamson doesn’t, as far as I understand, try to model the contribution of zero-wage Work Programme placements or of people who signed off to reset the clock, so it’s quite possibly more.
The macro implication is that the whole second dig at recession was even worse, but that the recovery could be better. The real surprise is that anyone who lived through the 80s or 90s could be at all surprised that they just rigged the dole numbers again.