Unemployment, austerity and the job crisis

The latest Labour Market statistics show that the coalition government’s strategy, in particular its austerity measures and public sector cuts, are worsening the economic situation. The government’s hope that the private sector would be able to create more than enough jobs to replace those lost in the public sector has proven to be groundless.

Not only is the unemployment rate the worst for 17 years – 2.57 million – but there are signs that structural, rather than episodic unemployment is likely to blight the lives of young people and the women who are being thrown out of their public sector jobs, for many years to come.

You don’t have to be a genius to work out that the move to make people work beyond 65 will have a knock-on effect on young people who would have filled the vacancies down the job chain created by each retiring worker. Youth unemployment (16-24) now stands at 991,000 or 21.3% of the workforce. Not only do young people who have gone on to higher education find that they cannot get a job for which they are qualified, but now more than one in five of them are struggling to find any job.

Vacancy levels languish at 462,000 compared with the 2.57 million unemployed (5.56 people after each vacancy). Yet the situation is worse than these bare figures indicate because more than a million people have taken part-time work in the absence of being able to find a full-time job. Even the number of part-time jobs has fallen, to 7.78 million, down 175,000 from the three months to May 2011.

In addition there are 9,354,000 people (of working age, 16-64) economically inactive . Of these:

• 2,279,000 are students
• 2,321,000 “looking after family/home”
• 2,156,000 long-term sick
• 1,571,000 retired

Of this total 2,288,000 say they want a job, although do not qualify as unemployed because they have either not been looking for work in the last four weeks and/or they were unable to start work within 2 weeks. The majority of these people are women – 1,332,000.

The cuts in public sector jobs, many of them socially useful, such as in the NHS, and service providers like local government, simply lessen the pool of jobs which are available to young people.

Instead of job destruction it is job creation which is necessary to tackle this structural unemployment. Instead of handing over more money to the financial institutions (“quantitative easing”) socially useful production could create work and jobs. Ton take just one example, the debt which the government is imposing of local authorities for the new Housing Finance system (“self-financing”) is £28 billion. Swindon’s share of this is £145 million. The government could easily write off this debt, little more than a third of the £75 million for “quantitative easing”. This would provide local authorities with many millions more which they could spend on maintaining and improving their Council housing and building new homes. Of course, such work would require more workers. This would be both more productive and more socially useful than handing over more money to the financial institutions.