Tagged: Resolution Foundation

North East family incomes lags behind most of UK

Family  incomes are on the rise in most of the region, official figures show – but at a slower pace than in most of the country.

Household disposable income per head crept up by just 0.8 per cent in the North-East between 2012 and 2013, below the one per cent rise across the United Kingdom.

And the North-East was left in the slow lane by both Scotland (up two per cent) and the West Midlands (up 2.3 per cent) as the economy bounced back, as well as by Yorkshire (up 1.4 per cent).

But households in London and the South-East (both up 0.6 per cent) saw incomes grow more slowly – even though overall growth was far higher than in the North-East in both areas.

The statistics also reveal striking local variations in the changes in gross disposable household income (GDHI), the amount available for spending or saving after taxes and benefits.

Incomes grew sharply in Darlington (3.5 per cent) and South Teesside (2.6 per cent) and were also up in North Yorkshire (two per cent) and Hartlepool and Stockton-on-Tees (1.9 per cent).

But growth was more sluggish in County Durham (1.3 per cent) – and fell markedly in both Sunderland (3.1 per cent) and York (3.3 per cent).

 And disposable incomes in the North-East are as little as one-third of those in the plushest parts of London, where the figures surged ahead between 2012 and 2013.

In Westminster, the average GDHI was £42,221 in 2013 – almost three times the figure of £14,659 in County Durham and the highest of 173 local areas analysed.

And incomes in Kensington and Chelsea/Hammersmith and Fulham (£42,116), Camden and City of London (£37,324) and Wandsworth (£35,237) were not far behind.

Matt Whittaker, chief economist at the Resolution Foundation think-tank, said:

“Regional inequalities have fallen since the crash, but the gap between the South East and the UK is stark.”

Experts believe disposal income – the amount people have to spend after the bills have been paid – is the best measure of the economic confidence of families and individuals.

The rising figures in most areas were thought to reflect low interest rates and low inflation offsetting disappointing wage rises, perhaps helping to return David Cameron to No.10 earlier this month.
Source – Northern Echo, 28 May 2015

75% Of Low-Paid Workers Unable To Escape Poverty Pay Trap

Only one in four workers in the UK have successfully managed to escape low-paid employment in the last decade, a new report reveals.

The report – Escape Plan – written by the Resolution Foundation for the Social Mobility and Child Poverty Commission, found that only 25% of low-paid workers were able to permanently escape the low-pay poverty trap over the course of an entire decade.

The majority of workers were hit by an unenviable case of one-step forward and two-steps back, falling back into low-paid employment whenever they managed to escape.

12% were permanently stuck in dead-end low-paid jobs for each and every year over the last decade, forced to survive on low wages with limited opportunity for progression.

Workers who were able to escape the low-pay poverty trap saw their wages grow by an average of 7.5% in real terms over the decade, while those who were unable to escape low paid work saw their wages grow half as fast (3.6%).

The Resolution Foundation used official data to track workers over a decade to find out how far up the employment ladder they were able to progress. The independent think tank also investigated what factors may have played a part in pay progression.

Several factors were identified as being positively associated with escaping low paid employment, such as a higher level of education and a ‘positive outlook’. Businesses who assist with career development and offer greater opportunities for progression into higher-paid positions were are also a major factor, says the Resolution Foundation.

However, the report identifies a number of significant barriers to pay progression including disability, gender, part-time employment, being a single parent or an older worker.

The strong link between part-time employment and poor pay progression will be particularly disconcerting for the 6.8 million people currently working part-time in the UK – three-quarters of whom are women.

Part-time workers are offered fewer opportunities to progress within a company to higher-paid positions than full-time workers, say the Resolution Foundation. The hospitality industry such as restaurants and take-aways were found to have particularly poor escape rates.

Vidhya Alakeson, Deputy Chief Executive at the Resolution Foundation, said:

“Britain has a long-standing low pay problem, with over a fifth of the workforce in poorly paid jobs. But the limited opportunities for escaping low pay is just as big a concern as it has huge consequences for people’s life chances.

“While relatively few workers are permanently trapped in low pay, just one in four are able to completely escape. More permanent escape routes are needed for the huge number of workers who move onto higher wages but fail to stay at that level.

“Some groups clearly find it more of a challenge than others to rise up the pay ladder. Breaking down the barriers to promotion faced by disabled people, single parents, part-time and older workers is crucial to reducing the share of low pay across the workforce.

“We know that even in sectors dominated by low pay it is possible for staff, assisted by employers, to progress their career and earn more. But for this to happen we need more employers to take the issue seriously and have effective plans to promote pay progression.”

The Rt Hon Alan Milburn, Chair of the Social Mobility and Child Poverty Commission, added:

“The majority of Britain’s poorest paid workers never escape the low pay trap.  Too many simply cycle in and out of low paying jobs instead of being able to move up the pay ladder.

Any sort of work is better than no work but being in a job does not guarantee a route out of poverty.

> There speaks someone who has never had to do “any sort of work”…

“This research provides compelling evidence for employers and government to do more on pay progression.  It is a powerful argument for Britain to become a Living Wage country.”

Source –  Welfare Weekly,  11 Nov 2014

http://www.welfareweekly.com/75-workers-unable-escape-poverty-pay-decade/

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/

Cuts May Undermine Work Incentives In Universal Credit

This article was written by Patrick Wintour, political editor, for The Guardian on Tuesday 17th June 2014

 A cross-party review of universal credit is being launched amid new evidence that funding for the project has been cut so severely that its original aim to provide incentives for people to get into work could be undermined.

Technology flaws, implementation delays and Whitehall infighting has led to deep cynicism about the scheme, which is due to be fully implemented in 2017-18 covering as many as eight million households.

Many critics claim the scheme is dead, but although Labour has been fiercely critical of the way in which universal Credit has been implemented, the shadow work and pensions secretary, Rachel Reeves, has not yet said that she would scrap the reforms.

The expert review, to be chaired by the welfare expert Nicholas Timmins, is being launched by the Resolution Foundation thinktank and will focus on structural redesigns that may be required to restore work incentives.

The scheme is currently being implemented on a limited pilot basis in some jobcentres, and that progress is likely to be re-examined in a second report by the National Audit Office before the election.

In total, eight million households – half of them in work – will be eligible for UC, which has been designed as a single payment to replace six existing types of benefit or tax credit. Half of all families with dependent children will be eligible, so making it vital that UC’s structure works and that recent revisions do not undermine its effectiveness.

Initial work by the Resolution Foundation shows that by 2018 cuts to the basic and work allowances will mean UC is £685 a year less generous for a couple with one child, saving the government £1.8bn a year.

The structure of UC may be badly targeted to protect second earners, according to Resolution Foundation. At present, a second earner under UC can lose as much as 76% of their earnings once they make enough to pay income tax.

The review will also look to see whether the coalition was wise to omit council tax support from UC. There has been widespread concern that a household receiving UC will see its earnings eaten away by the means-testing of council tax support.

The review will look at how those in work may face loss of UC if they cannot show jobcentre staff that they are unable to earn more than £220 a week. If they are earning less than this they may be required to take a different job or work longer hours.

> And of course there are so many other jobs for people to take. Why stop at just two ?

It appears that claimants of UC could face the same sanctions regime as applied to claimants of jobseekers allowance if they cannot show they are seeking longer hours, but there is a much scepticism about how this would apply. Similarly, the self-employed under the UC regime will be subject to interviews to see that they are truly gainfully employed.

Finally, the review will examine the way tax cuts prioritised for after the election could be undermined by the impact on UC. The review team suggests families receiving UC will lose at least £65 out of every £100 tax giveaway, and £72 in every £100 where council tax is already withdrawn.

Gavin Kelly, the Resolution Foundation chief executive, said: “Universal credit is an incredibly ambitious and important reform but the recent focus on the slipping timetable together with the complexity of the underlying policy means that some of the underlying policy changes have not received the scrutiny they deserve.”

He said the beginning of the next parliament was likely to be the last opportunity to make changes to UC.

The review team includes Giles Wilkes, a former economic adviser to the business secretary, Vince Cable, as well as Mike Brewer, a former IFS economist who was one of the first advocates of the reform five years ago.

> All people who have probably never had to claim benefits for basic survival, and probably never will. How far would you trust them ?

Source –  Welfare News Service,  18 June 2014

http://welfarenewsservice.com/cuts-may-undermine-work-incentives-universal-credit/

Areas of North-East worse off than former East European communist countries

Parts of the North-East are poorer than many areas in former communist countries in Eastern Europe, new figures show.

People living in County Durham and Tees Valley have a lower income than places in Romania, Bulgaria and Poland, according to the Brussels statistics.

Large chunks of Greece also boast higher living standards than the North-East’s poorest sub-region – despite that country’s recent economic catastrophe.

And the figures also lay bare the extraordinary wealth of central London, where incomes are 4.5 times those in Tees Valley and County Durham.

Phil Wilson, the Sedgefield Labour MP, said the analysis was a stark reminder of just how far the region had to go to catch up, saying: “These are poor figures.

“There is a lot to do to raise the standard of living in the North-East. People face a cost of living crisis, which has only got worse over the last two or three years.

“However, we should remain part of the EU, because the North-East has benefited from a lot of inward investment, including from multinational companies like Nissan and Hitachi.”

The statistics, produced by Eurostat, an arm of the European Union, compare wealth across the EU using a measure known as “purchasing power standards” (PPS).

 It takes into account the effect of prices on the cost of living, rather than simply measuring gross domestic product (GDP), or output per person.

They show that, in 2011, Tees Valley and County Durham, GDP per head on the PPS measure was £14,700 – or just 71 per cent of the EU average.

That was significantly lower than Northumberland Tyne and Wear (83) and North Yorkshire (89) and the third lowest figure in the UK, after Cornwall and West Wales (both 64).

But it was also lower than the Yugozapaden sub-region of Bulgaria (78) and two areas in Poland – Mazowieckie (107) and Dolnośląskie (74).

Four sub-regions of Greece enjoy a higher income and Bucureşti-Ilfov (122) – which takes in the capital of Romania – is far, far wealthier.

Meanwhile, two other sub-regions of the UK – North Eastern Scotland (159) and Berkshire, Buckinghamshire and Oxfordshire (143) – are among the EU’s richest.

Separate figures, yesterday, also threw fresh doubt, on the Government’s claims that the region has enjoyed a jobs recovery, despite the flatlining economy, until recently.

Since the start of the recession five years ago, the number of self-employed people has leapt by 23,000 in the North-East and by 37,000 in Yorkshire.

Meanwhile, the number of traditional employee jobs has dropped by far more – by 91,000 in the North-East and by 64,000 in Yorkshire.

> I think that says all you need to know about the job situation in the North East.

Worryingly, the average weekly income of someone in self-employment is 20 per cent lower than in 2008, earning them 40 per cent less than a typical employee.

Source – Northern Echo  07 May 2014

More than two in five new jobs created since mid-2010 have been self-employed

Self-employment accounts for 44 per cent of the net rise in employment since mid- 2010, with pensioners, part-time workers and ‘odd-jobbers’ the fastest growing groups of Britain’s new self-employed workforce, the TUC says today,  ahead of the latest employment figures published later this week.

The TUC analysis shows that despite self-employment being a relatively small part of the UK jobs market – just one in seven workers are self-employed – it has accounted for 44 per cent of all employment growth since the last election.

Workers aged 50 plus account for half the increase in self-employment, with self-employed workers aged 65 and over the fastest growing group in the labour market (increasing by 29 per cent since the end of 2010).

Over 40 per cent of all the self-employed jobs created since mid-2010 are also part-time. The TUC is concerned that many people are only taking this kind of work because they are unable to find good quality employee jobs which provide the stable employment they really want.

The TUC’s analysis also shows that the number of people starting their own businesses has fallen in recent years, in spite of rising self-employment. The biggest growth areas of self-employment since mid-2010 have been people working for themselves (up 232,000), freelancing (up 69,000) or sub-contracting (up 67,000).

The number of self-employed people who either run a business, or are a partner or sole director in one (positions usually associated with entrepreneurship) has actually fallen by 52,000. These figures show that rising self-employment is part of a wider shift towards insecure employment, rather than as a result of a growing number of people starting up new companies as ministers like to claim, says the TUC.

Self-employment has been going up steadily since early 2008, even when unemployment was rising sharply, and has increased even more in recent years.

The TUC is concerned that the growth of self-employment is at the expense of more secure employee jobs. Many newly self-employed workers do the same work as employees but with less job security, poorer working conditions and often less take-home pay, says the TUC.

Other forms of self-employment – for example selling goods online or registering as self-employed to do the occasional ‘oddjob’ – tend not to pay enough to make a decent living, says the TUC. Recent figures from Citizens Advice suggested that self-employed workers are as likely to have debt problems as unemployed people.

Self-employed workers also have no right to paid sick, holiday, maternity or paternity leave, redundancy pay or protection against unfair dismissal – a particular problem for self-employed workers who are sub-contracted to another employer.

The government is also planning to exempt most self-employed workers from vital health and safety protections in the Deregulation Bill currently making its way through way through Parliament.

Self-employed workers are often poorly paid, says the TUC. Recent Resolution Foundation research found that earnings from self-employment fell by a fifth between 2006 and 2010, while official figures published by Parliament found that the average annual income from self-employment is less than £10,000 for women.

The TUC is concerned that insecure work including self-employment, agency work and zero-hours contracts are becoming a permanent feature of the labour market, even as the economy recovers. The growth of casualised work is likely to continue to hold back wages, and prevent people from having the kind of secure employment they need to pay their bills, save money and plan for the future, warns the TUC.

TUC General Secretary Frances O’Grady said: “Self-employment accounts for almost half of all the new jobs created under this government.

“But these newly self-employed workers are not the budding entrepreneurs ministers like to talk about. Only a tiny fraction run their own businesses, while the vast majority work for themselves or another employer – often with fewer rights, less pay and no job security.

“While some choose to be self-employed, many people are forced into it because there is no alternative work. The lack of a stable income and poor job security often associated with self-employment makes it hard for people to pay their bills, arrange childcare, plan holidays or even buy or rent a home.

“The economy is finally back in recovery yet people’s wages are still shrinking and many are unable to find stable employment. Until we see decent pay rises and better job security, working people will continue to feel that the recovery is passing them by.”

Source –  TUC,  14 April 2014

http://www.tuc.org.uk/economic-issues/economic-analysis/labour-market/labour-market-and-economic-reports/more-two-five-new

How the UK government hid 1 million jobless from unemployment figures

This is a few months old, but well worth reprising…

One of the purported achievements of the Coalition government’s disastrous economic policy of austerity, has been the unemployment figures.  Pundits say that at 7.8% (2.51m) they are nothing to shout about but not the disastrous rates seen in states such as Greece (26.9%) or Spain (26.3%). In reality, the unemployment rate is more than double this in many areas, while those in employment are facing ever worsening conditions to retain their non-jobs.

We have the Thatcher government to thank for the majority of the statistical trickery which currently renders the government released unemployment figures redundant.  Prior to 1979, the unemployment rate was anyone registered as unemployed, this was converted to a percentage of the total workforce and that was the published unemployment rate.  Then some changes came in:

  1. Redefining Unemployment:  originally defined as those ‘registered’ unemployed, changed to only count ‘claimants’ – this obviously reduced the number greatly as many unemployed people do not, for various reasons, claim benefits.
  2. Cutting Benefit Entitlements: By making changes to the benefit system (who is eligible and not) the government can magic away unemployment numbers by simply removing eligibility for benefits.  If the person cannot claim, they are not classed as unemployed.
  3. Training Schemes & Work Programmes: the conservative government of the 80’s began to double count those in training & work programmes.  First, they excluded them from the unemployed figures, then they added them to the total workforce figures – this means that simply by recruiting people into a work programme, the government has reduced the unemployment figures.  Prior to Thatcher, these schemes were not counted as employment.

The Thatcher government was able to show a drop in unemployment of 550,000 in July 1986, and 668,000 in 1989 by transferring those unemployed into work programmes.  They also kept an average 90,000 unemployed under 18 year olds off the books by making them ineligible to claim benefits.

Sadly, none of these changes have since been reversed, giving the UK public a much skewed view of unemployment and underemployment.  If we look at the research prepared by other bodies without such downright deceitful exemptions, we reveal a more realistic picture of the economic woe being meted out across the country.

A study put together by Sheffield University last year set out to establish the real level of unemployment in the UK, given that there has been little change in the published unemployment statistic, we can suppose they still hold relatively true.  The study found:

  • For Britain as a whole in April 2012, the new figures point to more than 3.4 million unemployed. This compares to just 1.5 million on the claimant count and 2.5 million according to the Labour Force Survey – the government’s two official measures of unemployment. The difference is attributable to extensive hidden unemployment.
  • An estimated 900,000 unemployed have been diverted onto incapacity benefits. These are men and women with health problems who claim incapacity benefits instead of unemployment benefits. They do not represent fraudulent claims.
  • Hidden unemployment is disproportionately concentrated in the weakest local economies, where claimant unemployment is already highest. The effect has been to mask the true scale of labour market disparities between the best and worst parts of the country.
  • In the worst affected districts, the real rate of unemployment is often around 15 per cent. Knowsley in Merseyside tops the list with a real rate of unemployment estimated at 16.8 per cent.
  • The older industrial areas of the Midlands, the North, Scotland and Wales mostly have the highest rates of unemployment. In large parts of the south of England the rate is still only 3-4 per cent.
  • Comparisons with similar data for earlier years shows that Britain was still a long way off full employment before the 2008/9 recession. Full employment is now still further away and the real rate of unemployment is higher than at any time since 1997.
  • The report casts serious doubt on the likely impact of the Coalition government’s reforms, notably the Work Programme and Universal Credit, which are founded on the assumption that unemployment can be brought down by encouraging the unemployed to find work. The evidence points to large and continuing shortfalls in job opportunities away from the most prosperous parts of southern England.

One of the more worrying points in the survey is the widening gap between ‘claimant count’ and unemployed , as ever increasing numbers of people fund themselves without a job or eligibility to claim social security.  For this expanding pool of people, exploitation beckons.

The government is pressurising people into ever more exploitative work programmes in order to reduce unemployment figures by threatening withdrawal of social security for non-compliance.  In 2011, the Conservative and Liberal Democrat coalition government announced a plan to increase uptake of Workfare (the term given to these schemes) by 100,000.  They also made changes to the programme they inherited from New Labour as follows:

1. A jobseeker who leaves a placement after 1 week loses their welfare payments for 6 weeks.  If they do this a second time, they lose them for 13 weeks.  The third time, three years.

2. Placements can be mandated for up to 30 hours a week for as long as 6 months.

3. The scheme has been opened up so corporations in the private sector can exploit this taxpayer funded, forced labour.

This means that someone who finds themselves unemployed must work up to thirty hours a week, for up to six months at a time, stacking shelves for Tesco or Poundland simply to receive as little as £53 per week, which they are already entitled to as part of the social contract of Britain.  Also, Tesco isn’t paying the £53; we are, through our taxes.

Although an interview is supposed to be guaranteed at the end of the term, it is not required that the workfare provider has a vacancy open.  An interview for a job that doesn’t exist is no interview at all.

Corporations get free labour, the government gets to massage the unemployment figures (Workfare victims are counted as employed) and the unemployed get shafted.

Anyone doubting this critique would do well to read the findings of the DWP’s own analysis of the performance of their work programmes.  These schemes cost the taxpayer £5bn, yet only 1 in 10 people found employment lasting up to 3 months.  The figures are even worse for the sick and disabled people forced into the work programmes – only 1 in 20 finding lasting employment.

The picture doesn’t get any rosier for those who have managed to find employment either.

Employers are less likely to provide real jobs than ever.  As the market favours the employer, there has been an unprecedented month on month fall in wages through the entire 36 months of the Coalition government, and wages were already falling before they arrived.

On top of hidden unemployment, the UK also has an ever growing problem with underemployment; the case of people unable to find jobs with sufficient hours/pay to meet their needs.

A recent paper by researchers at the University of Stirling revealed that underemployment rose from 6.2% in 2008 to 9.9% in 2012. The rate hit 30% among 16 to 24 year olds.

We have also seen the rise of ‘zero hour’ contracts. Almost unheard of a few years ago, more than a million UK workers are now under these contracts.  These contracts have no specified working hours – meaning that an employee is placed on permanent stand by until or unless the employer needs them.  While classed as employed, the person has no wage security as they cannot guarantee their pay from one week to the next.  They also receive no sick pay, leave or other basic terms and conditions.

The Resolution Foundation recently published a review of ‘Zero Hours’ contracts which found serious issues of the spike in their use:

  1. Those on ‘Zero Hours’ contracts earn less than half the average wage (£236 vs. £482 per week) of those on proper contracts.
  2. Workplaces using ‘Zero Hours’ contracts have a higher proportion of staff on low pay(within £1.25 of minimum wage) than those who do not.

These factors have allowed the UK Labour Market in recent years to combine a relatively high level of employment and an unprecedented squeeze on wages.

  1. Those on ‘Zero Hours’ contracts work 10 hours a week less, on average, than those who are not (21hrs – 31hrs).
  2. 18% of those on ‘Zero Hours’ contracts are seeking alternative employment or more hours versus 7% of those in ordinary contracts

These factors have contributed to the rise in underemployment in the UK since 2008.  An ONS survey last year revealed more than 1 million people had been added to the rank of the underemployed since the 2008 bailout of the banks.

  1. ‘Zero Hours’ contracts are hitting young people the hardest, with 37% of those on such contracts aged between 16-24.
  2. ‘Zero Hours’ contracts are more likely to be held by those without a degree, and with a GCSE as their highest level of education.
  3. Non UK Nationals are 15% more likely to be employed on such a contract than UK Nationals.

It is not difficult to see the advantages of ‘Zero Hours’ contracts to employers – they can achieve maximum flexibility of their workforce, effectively retaining them on a pay as you go basis.  It is also clear that in the short term, the government of the day also enjoy the advantage of hiding the true effects of their cut throat economic policies.  But the ordinary human being seeking to meet the rising cost of living is losing on all counts.

Between 2008 and 2012, inflation rose 17% according to the Consumer Price Index, while incomes increased just 7% – this translates to a real terms pay cut of 10% for working people.  But the Consumer Price Index measurement tracks the rising cost of an imaginary list of products and services that the poorest workers are unlikely to ever buy.  The UK Essentials Index however tracks inflation of the bare essentials that would the poorest would buy – and these have risen by an eye watering 33% during the same period.  This means that not only is the impact of unemployment hitting the country disproportionately, but underemployment and exploitative employment conditions are too – with the poorest being the worst affected.

There was a piece on the Guardian this morning talking about the triple boost to the UK economy of increased factory output, house prices and car sales, and trumpeting this as a sign of economic recovery.

But what is the point of this increased GDP if it is won at the expense of people wages and livelihoods?  Surely, if the inequality in the UK between rich and poor is growing, unemployment is rising, underemployment is rising and wages are falling – this is a recession.  It speaks volumes for the broken economic measures of growth at play here that a real world recession for the majority, is applauded as a recovery, when all that is recovered are the profits for transnational corporations and incomes of high earners, most of whom pay little or no contributions in tax.

Get Involved

Boycott Workfare – get involved in the campaign to outlaw workfare

UKUncut – get involved in demanding proper tax contributions from those corporations benefitting from these nightmare employment schemes.

DPAC – Disabled People Against Cuts do extraordinary work highlighting the state’s assault on disabled people.  Please support them

Source – BS News,  07 Aug 2013