The Commons Treasury select committee should investigate who are ‘the winners and losers’ in the jobs market, Unite, the country’s largest union, said in the wake of today’s (Wednesday 17 September) unemployment figures.
Unite said that the rosy picture painted by ministers masked the true nature of unemployment in the UK, such as the growing number of people ‘forced’ into so-called self-employment to get off benefits.
“We would urge the Treasury select committee to hold hearings to investigate who are the winners and losers in this so-called recovery as it is neither as clear cut, nor as rosy as the government likes to portray.
“There are serious questions to be asked whether we are on the road to recovery, bearing in mind there are 4.5 million self-employed, the widespread and insidious use of zero hours’ contracts, and with hundreds of thousands of young people losing hope of a future with a decent job.
“We should not forget that, in this week alone, nearly 12,000 jobs are under threat at Phones 4U and Birmingham City Council.
“A key area for MPs to investigate should be the long term trends and changes to the UK labour market and who is benefitting or not, and whether these changes are desirable for the future economic health of the nation’s workforce.
“Unite would be willing to give evidence to such an investigation by MPs.
“Unite believes that Britain’s workers need a pay rise to generate economic activity, make workers and their families more secure and to lift thousands out of reliance on benefits.”
Commenting on last month’s employment figures, Unite said that the British economy was in a ‘Jekyll and Hyde’ situation.
Source – Welfare News Service, 17 Sept 2014
It is very hard to work out what is going on in the UK labour market because the quality of the statistics is basically junk – garbage in, garbage out describes the lack of quality of the data well. I really am not exaggerating.
Bad Labour Market Data Part 1 is that every other major country, including the euro area as a whole, is able to produce timely estimates, but not the UK.
Currently unemployment rates for February 2014 are available for Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Israel, Italy, Japan, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United States. Data for April 2014 were released by the United States on Friday.
The UK stands out as the only country out of 31 that has no data available for February, March or April 2014.
Pathetic. The national statistic that pretends to be for January is actually an average of December of 2013 and January and February of 2014. The reason for this is simply because the sample sizes are too small to generate accurate monthly estimates.
The Office for National Statistics does in fact publish a single-month estimate of the unemployment rate but that jumps around all over the place.
Let me illustrate the problem. The ONS makes the supporting micro data on individuals available for researchers like me to examine. They take out identifiers so we can’t work out who anyone is. The latest micro data we have is for the three-month period October to December 2013.
In total over these three months 77,657 people between ages 16-98 were interviewed. Of these, 39,761 were employed 6,995 were self-employed and 3,347 were unemployed. The overall unemployment rate, once the data have been weighted and seasonally adjusted is 7.2 per cent, but the relatively small sample size means this estimate is measured with lots of error.
For the technically minded, the 95 per cent confidence interval for the monthly national change is ± 0.3 per cent, which means that any monthly difference smaller than that is not statistically significantly different from zero.
The unemployment rates that were calculated, for example, for East Anglia (5.7 per cent), East Midlands (6.4 per cent), Scotland (7.1 per cent), Wales (7.1 per cent), Northern Ireland (7.4 per cent) as reported by the ONS for October-December were based on ridiculously small samples of 114, 246, 281, 153 and 142 unemployed people respectively. Given the very small sizes the result is that the regional unemployment rates are measured with even more error than the national rate and bounce around like a rubber ball from month to month.
The reason why the ONS struggles to report unemployment rates by month becomes obvious rather quickly.
So the single-month estimate for December of 7.2 per cent that it reports is only based on a sample of 1,198 unemployed people, of whom 632 were male and 452 were under the age of 25.
The number of unemployed people in each of the five regions identified above in December is East Anglia (34), East Midlands (91), Scotland (105), Wales (51), Northern Ireland (55), hence why no single-month disaggregated estimates can be produced.
Bad Labour Market Data Part 2. The government has claimed recently that based on earnings growth of the national statistic called Average Weekly Earnings (AWE) for the whole economy of 1.9 per cent in February 2014 and the fact that the Consumer Price Index has been steadily falling, this means that real wages are set to rise.
If only that was true. But sadly it seems most unlikely given the fact that the Monthly Wages and Salaries Survey (MWSS) on which the estimate is derived has two major sample exclusions whose wages are likely to be growing much more slowly than that, if at all.
First, the ONS has no earnings data, as in none, on the 4.5 million self-employed workers, including large numbers who have set up in business recently. The only earnings data we have available from HMRC are over two years old.
What we do know is that the typical self-employed person earns less than the typical employee and some have zero earnings or even losses; there is every prospect earnings growth of the self-employed will be low.
Second, it also turns out that the MWSS doesn’t sample workers employed in firms with fewer than 20 employees that are the least likely to have strong earnings growth given the difficulty small firms have had in raising capital. The ONS simply makes an adjustment based on the Annual Survey of Hours and Earnings (ASHE), which was last available in April 2013 and which itself excludes the lowest earners below the National Insurance threshold.
The ONS computes an average over the previous three years that it imposes on the AWE monthly data. So the ONS just guesses that what happened in the past applies now. But maybe it doesn’t.
The ONS admitted to me that “ideally, we would sample businesses with fewer than 20 employees in the MWSS. However, we do have to pay close attention to minimising the burden on respondents, and we believe that using the adjustment factor from the ASHE strikes an appropriate balance between this and accuracy of the estimates.”
Really? So making it up as you go along is OK? It turns out that this amounts to approximately 20 per cent of all employees, or another 5.2 million workers whose wages we know zippo about.
So the national wage measure excludes 10 million out of the UK’s 30 million workers and my working assumption, for the sake of argument, is that their average pay rise over the past year is zero (it’s a maybe not-so-wild guess that the ONS can’t disprove)!
There is supporting contradictory evidence of strong earnings growth from the latest UK Job Market Report from Adzuna.co.uk, showing that average advertised salaries have slipped £1,800 in the past year down to £31,818 in March 2014, 0.6 per cent lower than in February, and 5.3 per cent lower than in March 2013.
A survey carried out by the Federation of Small Businesses at the end of 2013 reported that “after several years of wage restraint, it is encouraging that the vast majority of small firms are beginning to raise wages again”. They found that 29 per cent of firm owners said that over the next year they would raise wages for all staff, 35 per cent for some staff, 8 per cent for those on the minimum wage. 22 per cent said they would freeze wages, 2 per cent said they would lower them and the rest didn’t answer.
So the AWE is an upward-biased estimate of wage growth. Garbage in, garbage out. The UK’s labour market data are not fit for purpose.
Source – Independent, 08 May 2014
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:
- 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.
- 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.
- 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:
- Those on ‘Zero Hours’ contracts earn less than half the average wage (£236 vs. £482 per week) of those on proper contracts.
- 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.
- Those on ‘Zero Hours’ contracts work 10 hours a week less, on average, than those who are not (21hrs – 31hrs).
- 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.
- ‘Zero Hours’ contracts are hitting young people the hardest, with 37% of those on such contracts aged between 16-24.
- ‘Zero Hours’ contracts are more likely to be held by those without a degree, and with a GCSE as their highest level of education.
- 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.
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