Muddled figures on UK vacancies

Matthew Hancock, the Skills minister, has been doing the media rounds asserting that British firms have ‘a duty’ to take on British workers rather than immigrants. This is rather irresponsible of the minister, because employment law is a minefield and any employers unwise enough simply to reject non-UK nationals applying for jobs could find themselves in front of an employment tribunal rather quickly.

Be that as it may. What particularly interests me here is the figures adduced by Mr Hancock to support his case. According to the Daily Mail’s account, “foreigners now take 55 per cent of vacancies”. In the Telegraph, this figure appears as 35% though I think this must be a typo.

My point is that Mr Hancock and his civil servants can’t possibly know this figure – whatever it is – and I strongly suspect that they misunderstand the data they have been looking at.

Our only regular information on vacancies – currently running at about 530,000 – comes from the Vacancy Survey, a survey we are required to conduct by the EU. It samples  about 6000 employers each month and, rather unusually, only asks one question:

“On ‘specified date’ what was the number of job vacancies for which you were actively seeking recruits from outside your business or organisation?”

There is no information obtainable on how many of the vacancies recorded are subsequently filled by UK or non-UK nationals.

What I suspect Mr Hancock’s researchers have done is look at the number in employment in  the three-month period just gone, and seen how many of these individuals were UK or non-UK nationals – these data are obtainable from the Labour Force Survey, a household rather than a business survey. Then the 2013 figures are compared with the equivalent figures last year. They show that total UK employment has risen over the period, but employment of non-UK nationals has risen at a faster rate.

Thus if you express the increase in non-UK employees as a proportion of the total increase in employees you get a figure of around 55%.

However this is misleading on two counts – one, we are taking a net change in employment as  a proxy for vacancies, which it clearly isn’t. Two, there is total confusion of stocks and flows. A change in the ‘stocks’ of vacancies and ‘stocks’ of employees obscures what is going on in a dynamic labour market.

Each month, hundreds of thousand s of people change jobs, which are created and destroyed on a huge scale which the net change in employment figures cannot capture. There is no reason to suppose that non-UK nationals change jobs faster than anyone else, so I imagine that the proportion of non-UK nationals taking on ‘new’ jobs is not far out of line with their proportion in the workforce, roughly 9%. This would be the average experience of an employer taking on new employees.

If you are still with me, thanks. This is all pretty pettifogging but the underlying point is an important one. Far too often politicians and their usually quite callow researchers make big assertions  without very strong foundations.

I’m sure Mr Hancock’s heart is in the right place: we all want to see more UK nationals in work. But instead of hectoring employers about their supposed ‘lazy’ preference for employing foreigners, he and his colleagues might better focus their talents on improving school and college training for work, reforming the tax and benefit system, and drastically cutting employment regulation which discourages employers from taking on any workers, UK or non-UK.

Editorial and Research Fellow

Len Shackleton is an Editorial and Research Fellow at the IEA and Professor of Economics at the University of Buckingham. He was previously Dean of the Royal Docks Business School at the University of East London and prior to that was Dean of the Westminster Business School. He has also taught at Queen Mary, University of London and worked as an economist in the Civil Service. His research interests are primarily in the economics of labour markets. He has worked with many think tanks, most closely with the Institute of Economic Affairs, where he is an Economics Fellow. He edits the journal Economic Affairs, which is co-published by the IEA and the University of Buckingham.