ONS employment figures show a structural jobs crisis

The latest ONS statistics (Office of National Statistics) show unemployment falling to 2,490,000. Yet the headline figures don’t tell the full story. For a start there are 165,000 people who are shown as ’employed’ who are on various government training, or work experience schemes, rather than in genuine jobs. Indeed they include those who are being forced to work for their Job Seekers Allowance, so they are not even earning a wage. They are ‘working’ for nothing.

It is widely recognised now that not only are there not enough jobs available for those who need them but there is a growing phenomenon of under-employment. In the five years since Sep-Nov 2007 there has been a decline in full-time jobs of 341,000 and an increase in part-time jobs of 660,000. Some 1,388,000 are in a part-time job only because they have been unable to find a full-time one. There are also 654,000 workers in temporary jobs who are in them only because they could not find a permanent job. Then there are 2,329,000 people who do not qualify as unemployed (because they have either not been looking for work in the last 4 weeks or unable to start working within 2 weeks). These people have indicated they want to find a job. Since they are not on JSA they do have to be seen to be looking for work so there is no reason to disbelieve their indication that they want a job.

From this we have a figure of 6,681,000 who are either out of work or in work with insufficient hours, or non-permanent jobs. At the same time there are 1,210,000 people who have at least 2 jobs because one is insufficient for their needs.

There are also signs of a tendency towards people becoming self-employed because of the difficulties of getting employed work. Self-employed workforce jobs make up just over 14% of all jobs but of the new jobs created in the last two years around a third are self-employed (240,000 as compared with 451,000 employee jobs).

With 2,490,000 unemployed and 494,000 vacancies the ratio of unemployed to vacancies is around 5 to 1. However, when you take into account those in temporary and part-time work, as a stop-gap whilst they continue to look for permanent jobs, many more people are chasing those available jobs . Competition is therefore much fiercer than that ratio would suggest.

For young people, of course, it is a desperate situation with an unemployment rate of 18% for those aged 16-24 who are not in education. For those aged 16-17 it is even higher at 36.7%. One of the idiocies of current government policy is the raising of retirement age at exactly the time when young people are struggling to find work. According to the ONS there are 990,000 people over 65 now in work, an increase of 96,000 over the last 2 years. At the same time there has been a fall in the number of people of working age who are retired, by 152,000 over the the last 2 years. More and more people over the age of 60 are being driven to try to find work by poverty rather than a dislike of retirement.

These statistics surely show that unemployment and under-employment is not an episodic feature just associated with current economic conditions but a structural jobs crisis which cannot be tackled by reliance on an upturn in economic activity, of which, in any case there is as yet no sign. Even the OBR’s latest rose-tinted forecast shows well over 2 million unemployed by 2016, even with a recovery factored in.

It is now clear to all save the most die-hard supporters of the government that its ‘austerity’ programme has deepened the crisis by driving people out of work and depressing economic activity. Even if those made redundant have managed to get alternative work it has most likely been in lower paid jobs, often part-time, so they are not spending the money they used to. Whilst the government can point to 1,013,000 private sector jobs over the past two years, 196,000 of these were actually public sector jobs in education which were reclassified as private sector rather than public sector.

As we know one of the reasons for the decline in jobs was the movement of manufacturing to other parts of the globe where super-cheap labour could be found. There are only 2.5 million manufacturing jobs left now. Whilst there has been a small increase of 41,000 jobs in manufacturing over 2 years (still 600,000 less than in 2007), construction has seen a loss of 99,000 jobs (243,000 less than in 2007). Over 40% of those jobs created have been in traditional low paid areas, namely 203,000 in “accommodation and food services activities”, and 61,000 in “wholesale and retail trade, repair of motor vehicles and bicycles”.

If you compare the average weekly earnings you can see the scale of the difference. Average weekly earnings in Great Britain in November 2012 were £472 a week. For manufacturing it was £545 a week, for construction £524 a week, but for Wholesaling, Retailing, Hotels and Restaurants it was just £309 a week. The precarious nature of much work creates a situation in which many people, contrary to being “shirkers”, are in and out of temporary and part-time work. There are 1.6 million temporary jobs.

The butchery of public sector jobs is yet to be completed. According to the estimate of the Office of Budget Responsibility between the first quarter of 2011 and the first quarter of 2017 there will be 986,000 less public sector jobs. In the year before that there were in the region of 140,000 job cuts. When you take into account the 196,000 jobs for further education and sixth form colleges that were reclassified from the public to the private sector this still leaves an estimated cut of in the region of 930,000 job losses overall.

Given the structure of the British economy it should be clear that we cannot all sell each other coffee, or all work for supermarkets. Moreover the ‘flexible labour market’ means that the insecurity of employment has a drag effect on the economy as a whole. The spontaneous actions of the market cannot tackle the jobs crisis. A job creation programme is necessary or else we face semi-permanent mass unemployment and under-employment. Here are just a couple of examples of what could and should be done.

We face a deepening housing crisis, which the government has failed to face up to, essentially because of its ideological conviction that ‘the market’ will address it. The Housing Minister has admitted that there are less than half the homes being built that household formation suggests are required. There are 1.8 million households on the housing waiting list yet the government has abandoned any support for ‘social housing’ and will not, thus far, countenance support for the new Council house building which can address the historic shortage of ‘affordable homes’.

In fact Councils could significantly increase their maintenance and renewal of existing stock, and build new homes even without new subsidy. The new Housing Finance system which was brought in in April had the positive aspect of enabling all those Councils that suffered ‘negative subsidy’ to keep all their rent. However, the government loaded up Councils with debt (which was more manufactured than real) to the tune of £13.2 billion. There is a good case for writing off this debt which would give Councils hundreds of million of pounds extra to increase the work that they do on existing homes and build some new ones. Such a sum pales into insignificance when compared to the £375 billion that this government and the last handed over to the banks in the form of “quantitative easing”, to little effect save pushing up inflation. Such a measure, to give the example of Swindon Council, would give them around £10 million extra each year for work on their stock and building new homes. Even if, as an emergency measure, debt and interest payments were suspended for a few years, they would have the same sum available. Such work resulting from the extra money would be socially useful and would put building workers back to work, cutting the benefits bill and increasing tax income for the government. This is the real way to cut benefits – putting people back to work, but in real jobs.

Despite the verbiage from the government about corporations paying their taxes, they have in fact cut corporation tax, and done little to force them to pay what they should do. The HMRC, which has suffered deep cuts under the last government and this, does not have the resources to chase up the money which is owed. The government has failed to block the legal loopholes which enable corporations to pay little or nothing by way of accountancy tricks and financial engineering. Reversing the cuts and creating thousands of extra jobs in HMRC could increase government income significantly. Even the dubious HMRC estimate is of a ‘tax gap’ of £32 billion a year. That doesn’t include the tax avoidance by the big corporations like Google, Amazon, Starbucks etc. And even the HMRC admits that 35% of all companies asked to make a tax return each year fail to do so.

Martin Wicks

February 3rd 2013


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