This is from the Bank of England Inflation report issued this morning:
Unemployment has fallen to 6.4%, but look at the trend: most new jobs are in low and medium skilled employment.
Now wonder wages are falling.
Now wonder growth feels illusory, and is expected to fall.
This is a hollowed out economy where subsistence is the best that the government can offer, and with changes in the social security system it is doing its best not to do that.
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Being as most skilled jobs have been outsourced and mainly replaced by service sector “McJobs”, it is not surprising.
Now we need to know who is getting those ‘low skilled jobs’. If it is immigration or those over retirement age, then you definitely have an economy that is actively swapping capital for labour.
Which would be an explanation for the low productivity rates and low business investment we’re seeing. Not good.
The solution is still the same – make labour more expensive by forcing up the minimum wage and, preferably, by introducing a Job Guarantee outside the private sector (completely contrary to what Labour proposes), which would help improve the liquidity in the jobs market and stop the chase to the bottom.
Neil-I assume you are advocating the Warren Mosler Job Guarantee proposals that are falling on deaf ears unfortunately.
Some good news: Seattle has established a minimum wage of $15! So it can be done if people get together.
Again, don’t think this will get through but….
The thing is though that employers won’t pay lots of people £18K a year to simply serve coffee or clean chalets or stand at till or pick fruit – don’t you know we’re in a service economy now….so they’ll either not hire to start with…or let people go.
Plus of course what happens to the differentials? Do you think the TUs will wear a chap getting £18K a year ‘for pushing a brush’ if there is no uplift for their skilled members?
And I know I’ll sound like some sort of ‘righty-moron’ but these things have to be thought through. If you want to push up wages you need to chop the supply of labour and protect high cost UK from low cost everywhere else.
Looking at ‘bottom wages’ in isolation to every other cost of employment is pointlessly (if brilliantly admirably) utopian.
This issue has been thought through
It’s called, at a minimum, the living wage campaign
Haven’t you noticed?