Tagged: austerity policies

Concerns Grow Over Poor Wage Growth As Self Employment Soars

A rise in employment and sharp drop in the number of people out of work has had little effect on the scandal of low wages, the latest figures show.

Figures released by the Office for National Statistics (ONS) on Wednesday show that the UK unemployment rate has fallen sharply by 132,000 between April and June to 6.4%, the lowest since 2008, with a total of 2.08 million unemployed people in the UK. The figure does not include the 8.68 million people who are regarded as being ‘economically inactive’, or unavailable/unable to work. The economic inactivity rate now stands at 21.9% and is unchanged compared with January to March 2014.

ONS figures also show that there were 30.6 million people in work between April and June 2014, 167,000 more than January to March 2014 and 820,000 more than a year ago.
However, the welcome rise in employment has been overshadowed by the lowest wage growth in thirteen years. Wages have risen by a meagre 0.6% over the last year – a real-terms fall when inflation and living costs are taken into account.

The lower than expected wage growth figures come at the same time as other figures show that the UK is now the self employment capital of western Europe. Figures from the think tank IPPR show that the number of self-employed people in the UK has grown by more than 1.5 million over the last thirteen years, growing at its fastest rate during the first quarters of 2013 and 2014. Self employed people now represent more than 15% of the workforce. Around two-fifths of all jobs created since 2010 have been in self-employment.

Unions have expressed concerns that self-employment can often be insecure and low-paid, and may not always include the employment rights other workers are accustomed to.

Unite general secretary Len McCluskey said: “The British economy is in a Jekyll and Hyde situation.

“While the fall in the jobless total of 132,000 is welcome, we have to ask what sort of jobs have those people entered? The situation is compounded by the fact that more and more people are being driven into so-called self-employment in a desperate bid to get off benefits and find work.

“Self-employment is not the economic panacea that ministers crow about; it forces workers into a state without rights and with wage insecurity, and we are increasingly encountering people forced into `self-employment’ by employers who want to swerve their responsibilities.

“At the same time, the wage siege continues. If you strip out bonuses, wage rises are struggling along the bottom at a record low of 0.6 per cent which is hobbling the recovery in the UK economy. If self-employment earnings figures were included it would look even worse as the Resolution Foundation has shown.

“With George Osborne borrowing way beyond what he promised the nation, his mindless austerity policies are costing this nation and its people dear. This is no longer about reducing the deficit; it is about the systematic lowering of the living standards of ordinary people.

“Millions of people feel insecure in their jobs. Hundreds of thousands of our young people are languishing on the dole or press-ganged into workfare.

“Inflation is still running at 1.9 per cent – more than three times the rate of earnings. The case is clear that Britain’s workers need a pay rise – and this can be well-afforded by the companies which are sitting on a cash mountain of reserves.

“This government’s claims of economic competency are laughable. A government serious about job creation would not be borrowing to keep people in benefits, but would be investing to create work and skilled, decent jobs, through a mass house-building programme, rebalancing the economy away from its increasing dependency on the low-wages service sector, and tackling the chronic housing need in this country.”

TUC General Secretary Frances O’Grady said:

“The combination of rising employment and falling pay growth suggests the economy is very good at creating low-paid jobs, but struggling to create the better-paid work we need for a fair and sustainable recovery.

“Self-employment has been responsible for almost half of the rise in employment over the last year. The fact that self-employed workers generally earn less than employees means our pay crisis is even deeper than previously thought, as their pay is not recorded in official figures.

“Falling unemployment is always welcome – particularly for young people who are finally starting to find work – but unless the quality of job creation increases Britain’s living standards crisis will continue and people will be locked out of the benefits of recovery.”

Unison general secretary Dave Prentis said: “Any fall in unemployment is welcome but the rise of the number self-employed is a worrying trend. They are likely to earn less than those in full time jobs as well as being less secure.

“Underemployment is now a bitter reality for millions of struggling families across the UK. And many have no option but to work part-time because they cannot find a full-time job.

“Too many people are stuck in minimum wage jobs, on zero hours contracts and part time work when they are desperate to go full time. Desperate because they need regular, secure employment to feed their families without having to resort to foodbanks, pay their bills without falling into the grip of pay day lenders and decent pay to rebuild consumer confidence and grow the economy.”

The Citizens Advice Bureau (CAB) has described today’s unemployment figures as a “double-edged sword”. The charity says that falling unemployment coupled with low wages and an increase in self employment ‘will lead to instability for working households’.

Citizens Advice Chief Executive, Gillian Guy, said:

With employment up but wages down, today’s economic figures are a mixed blessing for working families. The rising number of people in work is extremely welcome, but emerging trends in the economy bring a double-edged sword of more jobs but more instability and lower wages.

“The Government has undoubtedly made good progress on jobs and growth but increased self-employment, flexible-hour jobs and Zero Hour Contracts mean insecurity for many working people. Those people who work for themselves are just as likely to seek debt advice as any other working group. Self-employed people in debt helped by Citizens Advice are more likely to face bankruptcy than people in debt who are employed or out of work.

“On Zero Hour Contracts, we’ve had welcome announcements from the Coalition about banning exclusivity clauses but with this type of job a growing part of our economy, people with such a contract should also be guaranteed basic rights like maternity pay and annual leave.”

The Bank of England has responded to today’s news about poor wage growth by cutting its forecast in half. Bank of England governor Mark Carney said that he now expects salaries to rise by 1.25% this year. The figure represents the slowest pace in wage growth since 2001.

Responding to the announcement from the Bank of England, TUC General Secretary Frances O’Grady said:

It is hugely concerning to hear that the Bank has cut its forecast for wage growth in half. The economy’s getting bigger but not better with Britain’s pay squeeze now set to continue even longer.

“It’s not just wage stagnation that’s pushing down incomes, living standards are falling because so many of the new jobs being created are low-skilled, don’t have enough hours, or are in low paid self-employment.

“It deeply worrying that the Bank says ‘average household real incomes have yet to stage a meaningful recovery’. If people don’t have money in their pay packets to spend on goods and services it’s hard to see how we can return to sustainable growth. Consumer spending is holding up for now despite people’s real pay falling, but the danger here is people running down savings or increasing their debts.

“That’s why Britain needs a pay rise, because a recovery built on stronger household incomes will be a recovery built to last.”

Citizens Advice Chief Executive, Gillian Guy, said: “As the economy continues to grow, ministers must not lose sight of the more than two million people stuck in the shadow of growth, and out of work. The legacy of recession is wages which remain far lower than prices, and with the Bank of England halving its wage growth forecast, many families will find that meeting household bills is even harder.

“Ministers need to make sure good policies, like financial support for childcare, reflect the new realities in the labour market. People taking up the growing number of flexible-hour and low income jobs are likely to struggle to get decent childcare, whilst 41 per cent of Citizens Advice clients say that finding a childminder or babysitter is a barrier to them taking on work.”

Source – Welfare News Service,  13 Aug 2014

http://welfarenewsservice.com/concerns-grow-poor-wage-growth-self-employment-soars/

Need for food banks is caused by welfare cuts, research shows

> Research – perhaps by the same people who, after several years “research“, decided that on  the balance of probability the Pope was almost certainly a catholic – tells us what most people had already worked out for themselves : the rise in foodbanks and the welfare cuts are not unconnected.

The government’s welfare reforms, including benefit sanctions and the bedroom tax, are a central factor in the explosion in the numbers of impoverished people turning to charity food banks, an academic study has said.

The study, part of a three-year investigation into emergency food provision, was carried out by Hannah Lambie-Mumford, a Sheffield University researcher who co-authored a recently published government report into the extent of food aid in the UK.

That report concluded there was insufficient evidence to demonstrate a clear causal link between welfare reform and food bank demand in the UK. But Lambie-Mumford’s new study, to be published on Wednesday, says the rise in demand for charity food is a clear signal “of the inadequacy of both social security provision and the processes by which it is delivered“.

The report warns that as social security safety nets become weaker, there is a danger that charity food could become an integral part of the state welfare provision, or even an replacement for formerly state-funded emergency welfare schemes.

> And that is a really scary prospect – having to go cap-in-hand to charities in order to survive. How very Victorian.

Lambie-Mumford’s study was based on 25 in-depth interviews with a range of food bank staff and volunteers in 2012 and 2013 and found many food banks were adapting to demand by scaling up food collection and storage provision “to accommodate the future trajectory of need“.

Her paper will be presented to an all-party committee of MPs which meets on Wednesday to finalise the terms of an inquiry into hunger and food poverty. The inquiry will examine the rise of food banks, an issue that has become politically highly charged as ministers attempt to deflect criticism that austerity policies, including welfare cuts, have had the effect of compelling more people on low incomes to rely on food aid.

> Well, what kind of result  did they expect austerity policies to have ? The clue is in the name…

Lambie-Mumford said her research showed that food banks were expanding to meet rising demand caused in part by a squeeze on welfare entitlements which made already poor people even worse off. This was compounded by inadequate processing of social security claims, including payment delays and “arbitrary and unfair” sanctioning decisions that left claimants without any income at all.

There were other factors which had contributed to the rise of food banks, such as low wages and the rise in the cost of food. But it was important that MPs did not duck or underplay the importance of welfare reform. “The tricky thing is that welfare reform is the most political aspect of a political issue. But we should not shy away from it for this reason,” she said.

The welfare minister Lord Freud notoriously claimed last year that more people were going to food banks because the food was free, thereby triggering “almost infinite demand”. Last month Freud admitted people did not turn up “willingly” at food banks but said it was “very hard to know why” they did go.

> And its people of this calibre making welfare decisions ?

The Trussell trust, which oversees a network of more than 400 food banks in the UK, has insisted repeatedly that welfare reform is the biggest driver of demand for food parcels. Its third-quarter data, published in March, showed that it helped 614,000 people in the first nine months of this year. Its final-year figures, expected next week, are likely to show that demand has more than doubled in the past 12 months.

More than eight out of 10 food bank managers interviewed for the study acknowledged the impact of welfare changes and welfare processes as a factor in driving demand.

A DWP spokesperson said: “This report, which is based on just 25 interviews, fails to consider how welfare reforms are helping people off benefits and into jobs. The truth is that we now have record numbers of people in work, the highest employment rate for five years, and falling unemployment.”

> I should imagine its easy to spot a DWP spokesperson – they must have very long noses by now.

Source – Welfare News Service  08 April 2014

http://www.scoop.it/t/welfare-news-service/p/4019225517/2014/04/08/need-for-food-banks-is-caused-by-welfare-cuts-research-shows