The job market in Haringey and Islington may not be dynamic enough to encourage economic growth, new figures suggest.
By Andrew Dowdeswell, Data Reporter
The job market in Haringey and Islington may not be dynamic enough to encourage economic growth, new figures suggest.
The steady rate of job creation and destruction, known as “creative destruction”, is necessary for long-term economic growth because it encourages new ideas and activities, the Office for National Statistics said.
The Institute for Public Policy Research said a healthy economy is “driven by businesses that are constantly changing, evolving and adapting to market conditions”.
But ONS figures show the UK jobs market is stagnant, with fewer roles created and destroyed and job creation and destruction rates falling in 87% of areas between 2004-07 and 2016-19.
It comes as Chancellor Rachel Reeves announced a National Wealth Fund, a £7.3 billion state investment in businesses in manufacturing, green and other high-growth industries to boost the economy.
Ms Reeves is looking to secure roughly triple this in private investment to help finance the fund, and a financial return is targeted to power future state spending.
Pranesh Narayanan, research fellow at the IPPR, said Labour “seems to be taking the right steps in driving risky investments” to aid a stagnating jobs market with its National Wealth Fund.
However, in Haringey and Islington, the job market was a little more complex, as while the destruction rate followed the national trend, falling from 20.5% in 2004-07 to 18.6% in 2016-19, the creation rate rose from 18.9% to 19.5% across the same period.
A growing economy requires both creation and destruction rates to increase, indicating higher job churn and fuelling greater “creative destruction”.
Mr Narayanan said: “Over time, most of the country has fallen into economic stasis, driven by established businesses reducing their rate of job creation and destruction.
“This suggests an increasing nervousness to risk-taking among established businesses and highlights the need for a new approach to economic policy.”
The figures also show 4.4 million jobs were created across the UK in 2022, while 4 million were destroyed.
The net growth in jobs follows 2021, in which the coronavirus pandemic was a major factor in the net loss of 200,000 jobs – the first time more jobs were destroyed than created since 2010, when 1.2 million were lost following the 2008 financial crash.
In Haringey and Islington, 70,425 jobs were created in 2022, whereas 55,940 jobs were destroyed, meaning there was net job growth of 14,485.
In 2021, 285 more jobs were created than lost, while there was a fall of 15,560 in 2010.
