Britain - "job-rich depression"? But what jobs?

Jan/Mar 2013

The government claims that employment figures have been "positive" for over a year: there has been consistent "growth" in employment and unemployment has fallen over every quarter compared to 2011.

The latest "Labour Market Statistics" from the Office of National Statistics, released on 23 January, give the employment rate for those of working age (16-64) in September-November 2012 as 71.4%, which is up 0.1% on June-August 2012 - and up 1.1% on a year earlier. We are told that 90,000 jobs have been "created" over the quarter, so that 29.68 million people are in employment - 552,000 more than a year ago. Employment "remains at record level", says the Department of Work and Pensions.

In line with this jobs "growth", the official unemployment rate fell from 7.8%, to 7.7% of the workforce (2.49m) in November 2012, the lowest in 18 months. Figures show unemployment has fallen steadily since it peaked at 8.4% at the end of 2011. The ONS report adds that "the number of unemployed for more than 6 months fell by 46,000". Nevertheless, commenting on this date, the Financial Times points out: "One blemish in the jobs data was a rise of 1,000 to 957,000 in unemployed 16 to 24-year-olds, the first increase since July. That represents a rate of 20.5% in that age group." But never mind the youth...

Surprising figures, given the bleak situation out there if you are looking for a job? Indeed! And it is not just the unemployed and under-employed who are incredulous in front of these figures. Lots of media commentators are asking: how this can be, if, at the same time, the economy has been shrinking?

But there is no real mystery. The ConDem government has, all along, been making a big fuss over nothing - literally. The DWP press release of 23 January, just days before the "triple dip recession" was announced, boasted that "unemployment has fallen below 2.5 million [2.49m] and is now lower than in Spring 2010 [just before the ConDem coalition came into government]". Sure. In Spring 2010, unemployment was officially 2.51m. So, the overall "fall" is a whole 0.01% compared with 3 years ago!

In an attempt to divert attention, ministers like to point to everywhere else in the world, where things are (apparently) so much worse. The latest DWP press release compares Britain's 7.7% unemployment rate to the official US rate of 7.8%, that of France, which is 10.5%, Italy, which is 11.1%, and Spain, 26.6%. The Eurozone average is 11.8%.

As for the rate of employment, says minister, Mark Hoban: "the UK employment rate is growing at almost double the rate of the US, and faster than any other G7 country."

True or not - and we have to take his word for it - this does not change the fact that, while official figures show a regular increase in the employment rate over the past 15 months, it is still only 0.6% higher than what it was 2 years ago (70.6%) - which is, at best, a tiny growth. What is more, since these quarterly figures lag by 3 months, they cannot reflect the situation now, in the context of the shrinking economy - and when the present figures come out, in March, the chances are that they will not show any "growth" at all.

It was Chancellor George Osborne himself who, when presenting his Autumn budget in December, waxed so lyrical about the great employment achievements of his government, based on the 0.1% increase in employment (40,000 "new" jobs) in the 3 months May-July 2012, which included the period of the Queen's Silver Jubilee celebrations and the run-up to the Olympics! This was, according to him, employment "at a record high". Fortunately for Osborne, his "record-breaking" was never put to the test on the Olympic track - although he was confronted with the judgement of Olympic spectators who booed him when came to present some medals.

And of course, both Osborne and Hoban keep telling everyone who cares to listen, how everything is rosy on the jobs front. Not only is there a "record" number of workers now in employment - but the statements put out by the DWP claim that the private sector is now making up for the "fall" (a nice way of describing the most vicious public sector cuts in 50 years) in public sector employment.

Public service ablated

In fact this ConDem government has always asserted that the private sector would create more than enough jobs to compensate for the loss of jobs in the public sector. Never mind that the idea behind this - that the private sector, whose only aim is profit, can make up for a job aimed at serving public need - already makes a nonsense of it.

This is how George Osborne put it when he presented his Autumn statement: "Once again these figures show that the private sector is creating far more jobs than are being lost in the public sector. It's a credit to British businesses that they're proving wrong those cynics who claimed the private sector wouldn't be able to step up."

And the DWP press release added: "The private sector is consistently creating more jobs than are being lost in the public sector. In the three months to September, the number of people employed in the private sector rose by 65,000 while the number working in the public sector fell by 24,000."

Let us look closer, because things are not what they seem. First, there are some very obvious sleights of hand, which may or may not affect the overall private and public sector jobs counts when measured over several years, but could well show up as big changes in the quarterly ONS figures - which are always used by ministers.

Since 2009, RBS and Lloyds, the main banks taken under government control after the banking meltdown, have been legally classified as "public corporations". Thus today, the 185,500 workers employed by these institutions are considered to be public sector employees.

This meant that the decrease in public sector jobs was somewhat offset by the integration of the banking headcount - but even so, public sector employment fell by 554,000 between 2009 and 2012. Taking account of the banking jobs, the real figure for public sector job cuts goes up to 739,500!

Then we fast forward to 1 April 2012, when the government's preoccupation was now to show that the private sector was actually creating the jobs which Osborne claimed it would do. It so happened that, at that point, English further education colleges and sixth form colleges were reclassified as "private" - suddenly moving 196,000 public sector employees into the private sector in one fell swoop and boosting the private sector employment figure accordingly! Coincidence? Maybe, but maybe not!

In fact these reclassifications have worked in mysterious ways. For instance when local authority maintained schools got academy status they were transferred from local to central government - and local and central government registered losses and gains of employment respectively.

But the "big" picture, overall is shocking. Today, the public sector employs the lowest proportion of people - 19.4% of UK employment - since the current method of collecting statistics began in 1999 - that is, 13 years ago.

As for the one million private sector jobs "created" since 2010, which every ConDem minister has been boasting about on TV shows, what are they? Many, if not most of these jobs are part-time and temporary - therefore not jobs which provide a proper livelihood. And since many formerly public sector jobs are contracted to the private sector - usually via agencies supplying casual workers, how is the line between private and public drawn anyway? Moreover, how many of these jobs have been directly transferred from the public to the private sector, without any change, except a cut in wages and conditions?

One thing is certain: what has happened is a gross degradation of wages, terms and conditions, so as to turn the words "job creation" into a travesty. Workers employed on cleaning and other manual contracts, whether in today's public sector or the private sector, would probably describe their situation as "slave labour".

Playing with definitions and time periods

Lack of decent jobs is the reality of workers' experience, of course. However, the ONS report tells us that: "Between June to November 2012: the number of people in full-time employment increased by 113,000". Were these people employed in permanent or temporary jobs? That we do not know. But at the same time, "the number of people in part-time employment fell by 23,000". So what was going on?

The clue lies somewhere else. In fact the real trend is still downwards for full-time jobs, if the figures for a five-year period are considered. Comparing the same periods in 2007 and 2012, the number of people in full-time jobs fell by 341,000. And the number in part-time employment increased by 660,000. So yes, part-time jobs are still replacing full-time jobs. The (small) blip in full-time jobs in the 6 months cited corresponds to the period of the Olympics and most probably reflects the rush to complete construction projects - almost all these jobs are full time - plus the workers employed in all those jobs central to the running of the show. The interesting statistics will be those which show the employment picture after the Christmas season.

Of course the major problem with employment figures is that anyone who works more than one paid hour per week falls into the category of "employed". So having lots of people employed has absolutely nothing to with having lots of people managing to earn a living.

On the other hand, the 7.7% rate of unemployment ("down" by another 0.1%) refers only to those unemployed who are "actively seeking work". And in fact not all are eligible for unemployment benefit (Jobseeker's Allowance). Claimants make up only 1.56 million of the total 2.49m regarded as active jobseekers and therefore who qualify to be regarded as "unemployed" for the purposes of government statistics.

Since the developed countries all use the same methods which totally under-play the depth of their employment crises, it is probably at least possible to say which country is doing better than others by comparing unemployment rates. But even that is not too certain. Anyway, the real unemployment level in Britain is probably easier to gauge by counting the "economically inactive" of working age, once those in full-time education have been subtracted. Excluding students, the ONS gives a figure of 16.9% for economically inactive workers, around 8.5 million. But many students do occupy a job - in fact sometimes more than one - and therefore could be counted as both "economically inactive" and as "employed" at the same time -  and may even be double (or triple) counted in this category due to their multiple jobs!

If we then add the "officially" unemployed - 2.49m - this makes around 11 million unemployed: just under a quarter of the working age population, or 24.2%, one in four...

This is bad by any standards. And this is the figure which the government (that is, the ONS) actually admits. But what about the hidden unemployed, or the falsely employed - those who are working but are either unpaid or are just paid their benefits and/or travel expenses or are put on work schemes and work programmes?

A parliamentary answer from the ONS director general, Glen Watson, given in October last year, confirmed that even if people were claiming jobseeker's allowance, they could still be counted as employed: "Those participants [in government schemes] whose activity comprises any form of work, work experience, or work-related training, are classified as in employment. This is regardless of whether the individual is paid or not."

This was put to Employment Minister Mark Hoban, for explanation and to try to find out something of the scale of the problem. He started with his usual obfuscating boast: "The fact is that there are 700,000 extra people in work compared to 2010 and unemployment has been falling since last Spring. Any quirk in the way a small number of people on our schemes are counted makes little difference. These figures are independent of government and were collected in the same way under the previous administration, but I want them to be absolutely transparent which is why I've already raised this issue with the ONS last year."

So how many people does this "small number", a mere "quirk", referred to by the minister represent - taking into account that those involved must vary from month to month, because the schemes themselves may be only weeks or months long?

A well known investigative journalist, Shiv Malik, wrote on this very subject in the Guardian newspaper recently: "The results were eye-opening. It turns out that on top of the 166,000 in government training and work schemes counted as employed, there were another 57,000 who were also on such schemes but hidden away among general employees. This figure has almost doubled from the year before. This gives us a total of 214,000 people who are being counted as employed but are actually on government training and back-to-work schemes."

So the 214,000 who could be documented in this case, is a "small number" which is not worth considering, for Hoban. However the 90,000 who he claims found new jobs over the last quarter is "the highest level on record"!

And what do their 90,000 jobs comprise? We do not know. And we will not find out by looking at government statistics, and certainly not by listening to ConDem government spokespersons.

After all, it is the Department of Work and Pensions under Iain Duncan-Smith which itself instigated the many new "workfare" type schemes and cover-ups, including those which allow bosses to continue to enrol workers in fake "jobs" and "internships" which shouldn't be described as "employment" it the first place, as they don't pay a penny. And this, despite the public exposure, after the Silver Jubilee and Olympics, of companies (linked to top Tories) which had coerced unemployed workers into unpaid work on pain of losing benefits - and despite the subsequent government commitment to curtail this practice.

Being under-employed

But the statistical cover-up is not the worst of it. Because there are twin blights facing all workers today. The first is, of course, the absolute lack of jobs. One million documented "real" jobs have disappeared since the recession began, and probably just as many which nobody has recorded, precisely.

On top of it all, several other things have been exacerbated by the recession since 2007/8, creating the second blight - namely the cutting of jobs to part-time, the further casualisation and the forcing of employees to become self-employed so that the employer is no longer liable for National Insurance contributions nor benefits like pensions, sick pay, redundancy pay, etc. Avoidance of liability to pay NI contributions is another reason for employers to cut hours of work to a minimum.

In other words today there is a lack of"decent" jobs - what now comes under the heading of "under-employment". The number of hours and the wages paid per hour have been reduced so much that in order to survive, workers must find several different jobs to make up their hours and therefore make up a living wage.

The economic blogger, John Philpott, points to the fact that the "standard working week is no more", and how "a growing army of contract workers may be always 'in work' but not necessarily always 'at work'. Almost half-a-million people now usually work fewer than six hours a week."

The ONS Labour Market Report looks at the total number of hours worked in the economy, and reports that average weekly hours worked for September to November 2012 were 31.8h, (up 0.2h from June to August 2012 and up 0.1h from a year earlier - in other words more or less unchanged).

This is a very high average given the ever-increasing reality of under-employment. It seems to imply that some workers are doing very excessive hours. It also probably means that overtime working is increasing, helping to maintain the high total average hours, even as jobs increasingly fragment into part-time, casual work.

Philpott writes that over one tenth of the workforce - 3m workers at least - are "crying out" for more hours.

A whole and increasing section of workers are thus referred to as "the precariat": they are working for second or third parties via agencies, which act as labour suppliers - or, in fact as quasi- or real gangmasters.

Continues Philpott: "but many who have taken this course could reasonably be described as "self-unemployed" - picking up the odd bit of casual work while desperate to avoid being stigmatised as 'shirkers' in case this proves a barrier to getting a proper job."

In fact there is no way into the labour market today except through the door of short-term, precarious work, with or without a contract, long periods of probation and then there is still no guarantee of a permanent job at the end of it. One of the worst forms this takes is a new invention - the so-called Swedish Derogation Contract. This contract was derived out of its opposite - that is, a supposed attempt at European level to regulate the employment of agency temps and implement equal pay for equal work. But these good intentions backfired when a loophole was discovered (by the Swedish delegation to the European body which instigated the regulations) and then exploited by the employment agencies.

The "Swedish Derogation" allows agencies to by-pass equal pay rules, even though these rules only kick in after 12 weeks, anyway. Agencies sign workers up to a permanent contract which offers temporary placements, but also "pay between assignments". If an "assignment" cannot be found, the agency only need pay a minimum of 1 day per week, usually at the minimum wage (which conveniently keeps the worker off the unemployment register)! But even this minimal payment can be forfeited if a worker turns down an assignment which is offered. And these offers are nowadays usually made by e-mail or SMS - and can easily be missed. Since jobs are so hard to come by, many workers feel forced to agree to this super-exploitation.

So much for the ConDem's "job creation". The permanent full time job is under threat of being dumped into the dustbin of history. At least for the time being.

Fake self-employment?

The category of "self-employed" workers has, unsurprisingly, been increasing disproportionately to any other. The latest figures indicate yet another increase of 7,000 "self-employed", to reach 4.2 million.

The TUC's analysts reckon that this "surge" in self-employment is what has skewed the government's employment figures - making them look better than what they are. They say that 40% of all of the new jobs created have been through "self-employed" roles - even though only 14% of all British workers are self-employed. They also claim that "the small rise in overall employment levels since the start of the recession has been driven by a 9% increase in the number of self-employed workers (up 330,000)." They point out that "the number of employees has actually fallen by 1% (down 284,000)....This sharp rise in self-employment could be masking the true extent of unemployment."

In fact, according to this TUC report, the largest increases in self-employment have been in administrative and secretarial work, which saw a 52% rise. Sales and customer service activities saw a 32% increase, while personal service occupations, such as hairdressing, cleaning and care work went up 31%. They deduce that, "rather than running their own businesses, many people could be undertaking 'false self-employment', i.e. doing the same work as contracted employees but on poorer terms and with poorer conditions."

And why not? When employers can save 13.8% on National Insurance Contributions by forcing staff to be self-employed, as well as waiving certain employment rights such as sick and holiday pay? "More than one in three new jobs created since 2010 have been self-employed. It would be naïve to think that these are all budding entrepreneurs," explained TUC General Secretary, Francis O'Grady.

In October 2012, Tony Dolphin, senior economist and associate director for economic policy at the economic think-tank IPPR, exposed the fact that more than half the increase in employment over 2012 was accounted for by the self-employed, unpaid family members and people on government work schemes.

Not everyone agrees with the TUC's arguments on self-employment. Rather amusingly, because this is a bit like an opinion from another planet, "PeoplePerHour", which is an online "freelance marketplace" says the surge in self-employment has been driven by a baby-boom - and these new parents want to work from home for themselves... on the internet. "We have seen more than 150,000 new freelancers and micro business owners registering on the website in the past 12 months for a number of reasons. Some people are freelancing to earn a little extra money to supplement their incomes, but most of the people we speak to on the site are freelancing or starting small businesses because of the greater independence and financial freedom that working for themselves offers."

This is well and good. But there is a vast difference between supplementing an income and earning enough to make a living for you and your family via a small business on the internet. It may never have been easier to work for yourself, as they say, but how easy is it to earn the equivalent of a decent wage? The same report cites a survey of such small businesses. They were asked how they felt about running a business in the current difficult economic climate? More than a third said it was "challenging" and that the next six months would be "make or break".

The reality of self-employment is not doing a few hours "work" in front of a laptop of course. It is often hard graft on a construction site (many skilled tradesmen are "self-employed") pursuing one short spell of work after another and having to weather increasingly long spells of unemployment in between, often with no right to out-of-work benefits.

The humming economists

There is another aspect of the employment statistics which is puzzling economists. This is what the Economist weekly says about it: it has called this a "job-rich depression"; GDP has slumped, productivity is down, yet the job market is "humming" (do they really think so?)! It goes on: "Data released on January 23rd show that employment has topped previous peaks. The combination of economic slowdown and plentiful jobs means output per worker has fallen 12% further than at the same stage in previous recessions. That is equivalent to the loss of the entire manufacturing sector. Britain is now startlingly unproductive compared with other rich countries. What is going on?"

In fact "productivity" has dropped to its lowest point since 2005. Apparently the output per hour of private sector workers fell by almost 4% in the year to October 2012. For the economy as a whole it fell 2.4%.

Curiously, the Economist does not take into account the fact that the biggest job "creators" are sectors like retail where the value produced is low, whereas jobs which have been cut in manufacturing produced far more value. However, the Economist does offer several possible explanations - including that the ONS got its sums wrong and that the government over-eggs its employment figures - but doesn't think they can explain the discrepancy. Neither does it buy the argument that bosses are "hoarding jobs" - i.e. keeping workers in jobs despite the fact that they don't really need them due to falling demand for goods and services!

That said, there are so many subsidies available to the bosses - especially incentives to "employ" the unemployed - that, incredible as this may sound, there may be a certain amount of "job hoarding". Apprenticeships, which now abound, are a good example of this. Most are not real apprenticeships. Some only last a few weeks and are just a cover to place someone in a non-skilled job for a pittance. Such non-jobs would help account for part of the productivity decline - but certainly not all of it. So would some "internships" offered at no pay of very low pay, which do not necessarily involve real work.

The other means of achieving the same end (keeping workers in the job even while production has been cut) is simply to cut wages directly and indeed this has been done too, most notably in the public sector which has experienced 3 consecutive years of pay freeze. The ONS confirms that over the year ending in November 2012, basic pay for employees rose by an average 1.4% - just over half the 2.7% annual increase of the Consumer Prices Index in the same period. In other words wages carry on falling.

For the columnists of the Economist, however, this cannot account for the overall decline in productivity. So their preferred explanation is that there is a delay, in the measures to cut jobs, wages and conditions and implement the speed-up of a leaner workforce - but that these measures are going to come. In other words, if we think this is bad now - we ain't seen nothin' yet! This is probably true - and the signs are already there, for instance in the car industry which is cutting jobs radically.

Cutting welfare benefits

Of course, if workers cannot earn enough, they are obliged to try to top up their wages by claiming benefits (housing and tax credits) - that is, provided they qualify. The added hazard is that the qualifications are being modified continually in order to exclude more and more workers from claiming and cut the government's welfare bill.

Some ConDem strategist must have figured out that pretending that employment was on the rise would make the government's cuts in welfare benefits easier to justify. So now, after claiming for a whole year, that employment was growing and unemployment falling, the government is proceeding to implement its planned cuts in welfare, starting with a 3-year benefits freeze and tax credit cap!

All of this is deliberately timed and carefully stage-managed, from the announcement of the increase in private sector jobs (versus the fall in public sector ones), to the justification provided for labelling a section of the unemployed as "skivers" on benefits who sleep behind closed blinds while hard-working "families" pass by, going to work - as was pictured by George Osborne. The prime minister contented himself with merely sloganising that the Conservatives backed "workers not shirkers".

The ConDems even had a poster campaign ahead of the vote in the House of Commons over welfare reform, primarily probably to provoke the Labour opposition, but also to try to set the low-paid against the no-paid: "Today Labour are voting to increase benefits by more than workers' wages", it propagandised.

However since so many of these "hard-working" waged workers earn so little that they also qualify for benefits and are among those who are going to suffer for the welfare cuts, this is hardly going to fool them. And there are a lot of people who fall into this category - 60% of those who will lose out are in work, including 300,000 nurses, 150,000 teachers and even 40,000 soldiers!

Inequality rules, until we rule it out

The dire state of the working class today in Britain is a reality. No statistics registering employment growth, let alone politicians' rhetoric about record breaking growth in jobs can hide the facts.

There is no question that the rich, despite the recession have been getting richer. No question at all. But the gap between rich and poor has been the real record-breaker.

In the last 30 years the share of national income going to wages and salaries has been falling. And the way this has been split up has become increasingly uneven: the highest paid 10% received incomes which were 8 times higher than the lowest paid 10% in 1985. By 2008, they were 12 times higher. Today, the best off 10% get 40% of total British income. The poorest 10% get 1%. Income inequality has grown faster in Britain than anywhere else among the rich countries, and today Britain is said to be the fourth most unequal place in the world. Yet the cuts in welfare will mean that the poorest 20% of British households will have lost another 6% of their income by 2014.

Long-term unemployment has risen by 146% since 2010. The government, through its cuts in welfare, is not hitting the real scroungers - the greedy landlords and bosses who refuse to pay a living wage. No, it is hitting the most vulnerable - as is now quite usual. The question for the working class is how and when it will make a stand against this war on the poor. And declare its own war on the bosses and their policy-makers in government.