Jeff Randall drags CIPD into his conspiracy rant

An extraordinary piece yesterday from Jeff Randall in which he attacks an alliance of doom-mongers for talking down the country and predicting economic collapse. The Armageddon Alliance, he says, has turned attacking the government into an industry:

Critics compete to paint an ever darker picture of Britain’s future: an economy without soul, a wasteland for cockroaches and tax-dodgers. The message is pure Dad’s Army: “We’re all doomed!”

What kind of person would take such delight in running Britain down and predicting catastrophe?

The sort of person who told us, only three years ago, that Britain was “falling apart” perhaps? Jeff, it seems, can do doom-mongering just as well as anyone but, of course, that piece was written when he didn’t like the government. Now his lot are in power, clearly only fools or knaves would do something so unpatriotic as point out some of the flaws in the government’s plan.

So outraged is he at anyone questioning whether things might be anything other than hunky-dory that he included the Chartered Institute of Personnel and Development in the Armageddon Alliance.

Yep, according to Jeff they are part of this vast left-wing conspiracy. Why? Well for predicting that public sector job losses would be huge and suggesting that the rise in self-employment might not be all that much of a good thing. Legitimate concerns, you might think, for an organisation whose members do much of the country’s hiring and firing. Not for Jeff though. This makes the CIPD a “peddler of gloom”.

The CIPD’s former chief economist John Philpott was quick to respond. You may remember that he has been ridiculed by a conservative ranter once before, only for his job-loss predictions to be quietly adopted by the Office for Budget Responsibility a year or so later. (See previous post.) Anyone who has met John will not be surprised that his response is cool and measured. His final paragraphs are particularly interesting.

Having looked in detail at the rise in self-employment between 2008 and 2011, my CIPD report concluded that this was accounted for by individuals with characteristics very unlike the bulk of self-employed people. The latter tend either to be skilled professional consultants or trades people of the ‘white van man’ variety, in both cases working long hours. The ‘new self-employed’ by contrast are often unskilled and work hardly any hours at all – hence the ‘odd jobber’ tag.

Although the recent jobs market data have taken many people, myself included, by surprise, on closer examination the picture they paint is one consistent with an economy that is seriously short of demand rather than, as the tenor of Mr Randall’s article suggests, on the up. ‘Part-time/odd job/pay squeezed’ Britain might well be preferable to the kind of ‘doleful Britain’ seen in earlier decades but it is just as much a sign of ongoing economic malaise. And those of us who wish to point this out rather than act as cheerleaders for a flawed fiscal policy don’t deserve to be called ‘pedlars of gloom’.

Jeff Randall claims that the record number of self-employed people is a sign of “Britain’s journey towards self-reliance.” If he’d bothered to read the CIPD report, or indeed, any of the other data on self employment, he’d know that it is more likely to be a sign of Britain’s journey towards being a poorer and weaker economy.

It is true that the overall employment data has held up pretty well but I wonder how long it can last. We have more public spending cuts to come, which means more job losses. There are only so many people who can set themselves up as freelancers. Many of those who have done so recently will struggle.

A lot of people discover the hard way that they are not very good at being self-employed. The trouble is, it often takes them a while to do so. They make enough money to keep going and think everything is fine until they realise they have to cough up some of that money in tax. They then have to work out how much; something their employers used to do for them. Even people who planned their move into self-employment find it tough – not so much in the first year but in the second and third.

Many of the newly self-employed will struggle over the coming years. Some will go back to employment but with employers cutting more jobs, they will find it difficult. Unless the private sector creates jobs to soak these people up, many of them will throw in the towel and sign on. You don’t have to be part of the ‘Armageddon Alliance’ to see that.

Update: For more on this and a round-up of reactions see Michael Carty.

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7 Responses to Jeff Randall drags CIPD into his conspiracy rant

  1. Pingback: Jeff Randall drags CIPD into his conspiracy rant - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. John D says:

    A recent Radio 4 programme analyzed just where real jobs are being created in the USA and – despite all the claims by politicians there – it is apparent that the real engine of job creation is not self-employment or small firms but medium sized (250 employees) and above. These are the types of businesses which government policies ought to be encouraging.
    A BBC World Service programme contained the startling prediction that by the middle of the current century, there will be no coral reefs in existence anywhere in the world due to the increasing acidification of the planets’ seas. In the past, sea levels have been as much as 20 metres higher than at present. If any doom-mongers want something to really get worked up about, perhaps they should start thinking about what climate change will mean in the not so distant future?

  3. As John D notes, volume job creation is overwhelmingly the result of expansion among medium and large firms, which is then amplified among smaller firms in the supply chain. A growth in elected self-employment or small firms, independent of larger firms, is only possible in the event of an export boom and a major shift of economic activity by small businesses away from domestic supply. There is no evidence this is happening.

    We should also bear in mind that different size firms do not deliver GDP proportionately. Excluding firms with zero employees (i.e. sole traders, partnerships and personal services companies), small businesses (i.e. 1-49 staff) account for 37% of employed private sector workers and 30% of turnover; medium-sized firms account for 14% of workers and 15% of turnover; and large businesses account for 49% of workers and 55% of turnover. In other words, a growth in small businesses at the expense of large ones (i.e. net employment remains roughly the same) would result in downward pressure on GDP because they are less productive as a sector. Even in Germany, while the famous Mittelstand accounts for 70% of employment, it produces only 50% of GDP. It’s real value is that is is heavily export-oriented.

    Randall quotes Mervyn King to the effect that the recent growth in employment “is not the product of a switch from full-time to part-time jobs because total hours worked have risen at the same rate as employment”, but he seem to be oblivious to the corresponding drop in productivity – i.e. there is more labour in the economy but little additional ouput. Despite a good quarter, it is unlikely that GDP growth for this year will be much above 1%

    The fall in productivity since 2008 may be down to labour hoarding or possibly firms choosing to invest in labour as an interim measure, rather than investing in new plant and machinery (see Paul Gregg on this), but in either case it does not presage a healthy future growth in full-time jobs. Though employment is back to its pre-2008 level, output remains 4% down. This implies that many larger firms have capacity to grow without adding many jobs, while low levels of capital investment imply that any eventual catch-up may trigger another wave of automation and offshoring.

  4. Pingback: What unites us? Finally, hatred … »

  5. John D says:

    I have been trying to track down the programme but I cannot find it using the search options at the BBC. There is an Economist article at which contains a broadly similar message. I will keep searching for the BBC Radio 4 programme but will not definitively say I will find it. The BBC is not what it once was…….

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