The unemployment figures yesterday appear to be nothing out of the ordinary. By that I mean there was no dramatic increase, and Osborne could even claim some new jobs had been created.
But that would be to misrepresent what appears to really be going on. The long term claimant count is steadily rising now. Whilst it is true that the total number of unemployed is not rising as fast, that is misleading. There are, approximately, one million people who are unemployed but who do not claim related benefits, for all sorts of reasons. These people are much more likely to take part-time, temporary, and low paid employment then those who are in the long-term claimant count. That is because the reason they are unable to claim benefits is because they are already living, in most cases, in households where there is a source of income. Therefore any additional and quite possibly part time income is likely to be much more attractive to these people than to those who are looking for a main income stream. And it is these part-time, temporary, and flexible jobs that are being created whilst long-term committed, well paid employment is being lost.
As David Blanchflower pointed out in a telling analysis in the New Statesman yesterday, this is reflected in the fact that there are vast numbers of working hours being lost in the UK economy even though the number of jobs appears to be relatively static. We are seeing a dramatic shift from full-time to part-time work, from high productivity work to low productivity work, and from, as a consequence, well-paid employment to marginal, low paid activity. To put it another way, as the true claimant count shows, the prospects of getting a job that are sufficient to sustain someone and their family in a reasonable standard of living are becoming remote for many.
This blunt statement of fact, because fact it is, is of enormous significance. The entire welfare programme of this government is predicated on the possibility of a person securing full-time, sustainable employment that will keep them and their family off benefits. Those jobs are not available.
And the entire thesis upon which the austerity programme of this government has been built is that as the government gets rid of full-time, reasonably paid, secure employment the private sector will rushing to create equivalent jobs and more besides, which will deliver economic growth, long-term prosperity and a boom time for all, crushing unemployment on the way. But as Larry Elliott points out in the Guardian this morning, that is also utterly untrue. Those jobs are not being created. The rising benefit claimant's count is clear indication of that and also of the fact that it';s not just the state that's shedding these jobs, the private sector is too. The private sector is doing nothing to take up the slack in other words. It is feeling defeated by the economic environment in which we are living and it is now clear that there is no prospect of change. Worse than that, as this becomes apparent, the private sector is likely to shed more jobs because they now realise that there is no prospect of a change in economic outlook.
That now means that the two fundamental assumptions underpinning government policy have both failed.
There is no prospect of the private sector employment compensating for public sector retrenchment.
In addition there is no prospect of saving the cost of benefits by encouraging people back into work when there is none to be had.
In that case, George Osborne's plans, and those of this coalition government, will fail. This presents two possible scenarios. The first is that the government will have to change plan, and that of course is possible, although the electorate almost invariably loses confidence in a government does a significant U-turn. The second possibility is that the government will not change its plans and we will face the most almighty recession, and significant poverty.
Of the options, I prefer the first. Of the two I think the second much more likely. It's another reason why I'm worried.
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Plus if you factor in the non event of the recent meeting of Sarkozy and “Mutti” Merkel,the new wobbling of the French economy,and the doubts about growth in the German one-things look pretty bad. But,of course,their agreement did give the French and Germans a chance to tighten the ratchet to European federalism just one more notch. Urgency did not prevail,once again. Mutti is worried about her electors-but I`m not sure what Sarkozy worries about!
I am 73. We were a poor family. We lived in a council house. My daughter made it to university. She is 45 and has more letters after her name than I can remember. I was so proud. And now they want her to put beans on a supermarket shelf for her benefits. No daughter of mine spent those years at university to be treated like that. I didn’t give birth to anyone an bring them up so they could be no better than force labour. She doesn’t even have a parking ticket. part-time job? What good is that to anyone? She’s never even earned as much as the average wage in this country. I thought she woul be able to stay warm without being frightened of the elecetric bill. It has always been a struggle for her.
I thought she was doing the right thing going to university. She wasn’t. She is always overqualifed these past two years. I worry when I die, they’ll throw her on the streets. Where is she supposed to keep those precious degrees? In a sleeping bag?
I will never forgive this country. I remember the war. I remember my dad in his uniform. What did he fight for? It wasn’t for this. It wasn’t to give this nightmare to my beautiful baby, my clever little girl.
Heartbreaking, I worry for my (very young) daughter for the same reasons. She is bright, funny and articulate, I am sure she would do well. But is she just going to be trapped by class boundaries in ways that the postwar generation weren’t?
Simon
I know that concern…
Richard
Hey Helen…..don’t you know there’s a recession on and people are just going to have to accept any work they can get?
The government has drastically cut back public speniding and deliberately created the conditions for recession, but its not their fault OK? It has to be done!
How else are the government sipposed to make taxpayers clean up a mess that the banking and financial sectors caused? They have to satisfy the demands of their paymasters, you know. That’s what they were not voted in for! Who cares if they have no mandate whatsoever for what they’re doing?
Rueful humour aside, they know full well they are putting the interests of finance ahead of the needs of the country. All they have to do is point to the national debt figures to con people into believing what they are doing must be done.
That’s why I believe the unions and the labour party must get off their backsides to get rid of this pathetic shower.
Austerity is totally unnecessary and they know it!
Hi Richard
Does HMRC publish any data relating to this?
Can it show the 25th, 50th and 75th percentile Income for year (based on P14/60 data)? And against previous years?
Obviously this will miss out Capital gains etc. But would this be a reasonable measure?
Data is available at HMRC statistics – just search on line
I worry for the two reasons you stated Richard but I also worry because Osborne and Cameron have been telling us that manufacturing and exporting are going to help grow us out of recession, yet manufacturing contracted last month and now businesses are losing confidence.
What truly amazes me is that this government are relying on manufacturing (which Thatcher destroyed) yet at the same time they produced the Sheffield Foremasters debacle and now have given a contract away to Siemens instead of British Bombardier, does it make sense?
[…] Murphy  http://www.taxresearch.org.uk/Blog/2011/08/18/theres-nothing-the-tories-are-doing-that-can-work/ It must be rare in modern history for a Government’s economic policy to get such a comprehensive […]
ONS state that the number employed has risen by over one-quarter of a million in the past year because the increase in private sector employment has risen by more than the decrease in the number of public sector jobs. The switch to part-time jobs only accounts for a small part of this. In fact they say that in the last quarter there was an increase in full-time employees and a decrease in part-time employees and since the change of government the number of full-time employees has risen over 10 times as fast as part-time employees. However the number of self-employed working part-time has risen.
Has Larry Elliott actually read the numbers?
We are actually seeing a shift from utterly unproductive work in the public sector to productive work in manufacturing industry. This will lead to average wage growth below inflation since public sector employees are paid more than those in the private sector even ignoring the value of pension contributions.
http://www.newstatesman.com/blogs/david-blanchflower/2011/08/less-hours-means-work-jobs
Sure we’ve read the numbers
Have you thought about them?
Your assertions – such as people are shifting from the satte sector to manufacturing – suggest you are, very politely, out with the faires. Such things don’t happen, not in the real world. I very much doubt that’s the one you’re in
Danny Blanchflower seems to think that we’re stupid
The reason for the decrease in hours worked in the second quarter was that Cameron declared April 29th a Bank Holiday, not that he destroyed quarter of a million jobs.
No – that marks you as crassly stupid
You’re now on the troll list
Surely and sadly more relevant,are the number of foreign born workers filling new jobs in the UK?
http://www.egovmonitor.com/node/43372
It seems to point once again at successive governments lack of attention to the need of skills training for all those who do not go to university,and some who do sadly-as happens in Germany,and probably other countries. An investment beyond compare I`d say.