Britain has two main sets of unemployment data: the monthly totals, based on a count of unemployed people registered for benefit; and the Department of Employment's quarterly Labour Force Survey. But how accurate or useful are they today?
When Britain was fully employed, the unemployment index played a dual role. It measured how effective governments were in maintaining full employment; and it gave a wider measure of social and economic well-being.
As full employment collapsed, politicians took a greater interest in the way unemployment was calculated. From the 1970s criticisms were made of the accuracy of thedata, particularly of how they overestimated the number of people anxious and willing to work. Too little attention was devoted to the social impact of rising unemployment.
Recent changes in the job market are undermining the belief that having a job automatically spells economic and social prosperity. But there is no point in examiningDepartment of Employment pub- lications to find out how far such changes have broken the link between employment and economic well-being: the department does not consider it part of its remit to report on the nature of jobs - just the number of them.
Yet if more people are moving into jobs paying such low wages that they qualify for Family Credit, there is a taxpayers' interest here. Similarly, if the new flexible labour market is providing jobs without pensions, the impact on the social security budget at some stage will be considerable.
An employment audit would challenge the narrow remit which the Government sets for itself in labour market objectives. Among the questions we need regular answers to, if we are to present a moving picture of what is happening in the real economy, are: how many people remain unemployed for very long periods of time? Do these people stay unemployed until they retire? What kind of work do claimants go into? Is the number of low-paid jobs increasing? How many low paid workers move up in the pay scales, or back into unemployment, and over what timescale? What is happening to the number of households whose heads earn less than their income support entitlement? What difference does training make? Is the employment full-time or part-time? What is the pay? Do workers earn enough to become members of the national insurance scheme? Does the firm provide access to a company pension scheme, a private scheme, or other fringe benefits?
The last question illustrates the importance of the answers to government and taxpayers alike. Workers not covered by national insurance may become dependent on means-tested benefits, paid for out of general taxation. Without a second pension, retiring workers are likely to make new demands on the welfare budget.
We need a regular employment audit to log all these labour market trends. Only in this way will it be possible to tell whether the Government's current optimism is justified, or if a more sombre scenario is developing.
My hope is that the Government will soon announce it is joining forces with the academic community to see how best to initiate and to regularly publish employment audits. Only then will we be able to put the monthly unemployment count into its proper perspective.
The writer is MP for Birkenhead and chair of the Commons social security select committee.Reuse content