Unemployment figures reveal some grim truths

The unemployment figures, as they are popularly known (or Labour Market Statistics as they are officially known), reveal some insights into the state of the 'UK recovery'.

No jobs recovery in sight

Unemployment has bumped around 2.5 million now for four years. At 2.514 million, UK unemployment is at an almost identical level to two years ago - and 2,000 higher than in the first quarter of 2010, just before the 2010 election which brought the Coalition to power.

The small drop of 4,000 unemployed means at this rate it would take over 16 years for the Bank of England's target of 7% unemployment to be reached.

Furthermore, a new record was reached for the number of people working part-time who want full-time work - with 1.433 million looking for more hours. Overall, unemployment on the wider US-style U6 measure stands at over 6.8 million people (with only half a million vacancies in the economy).

Welfare policy is failing

The controversial Work Programme - the coalition's flagship privatised back to work schemes - are failing badly. Despite the tens of millions of pounds channelled to private providers such as A4e, long-term unemployment continues to grow - now reaching its highest level for over 17 years: 909, 250.

Likewise the £1 billion Youth Contract scheme seems to be having little effect (other than lining the pockets of unscrupulous employers), as youth unemployment is today 45,000 higher than when the Coalition came to power - and rose 15,000 in the last 3 months. Youth unemployment now stands at 978,000.

Worse still, the government figures include 164,000 people as 'employed' on government supported training and employment programmes - many of which are the failing workfare schemes. The numbers on the schemes rose 17,000 in the last 3 months.

Living standards continue to fall

As pointed out last month (Is the UK economy on the up?), the current recovery is particularly precarious as the recovery seems to be supported by a falling savings ratio and escalating personal debt. And the ONS stats today again highlight the enduring squeeze on wages, with regular pay rising just 1.1% in the last year.

This comes in the same week that we learned inflation is at 3.1%, rail fares will rise by 4.1% in January 2014, and that food price inflation currently stands at 4.4%.

Any sustained recovery needs to be accompanied by a sustained recovery in household incomes, but that seems as far away as ever.

Barclays and the sack race

Yesterday, Barclays announced it had made profits of £246 million in 2012, or just over £700,000 per day (or £8.14 every second of every hour of every day of every week of the year).

This was however down on 2011's looting when the bank made profits of £5.9 billion.However, when adjusted to remove fines over Libor rigging, PPI mis-selling and other scandals that have ravaged the bank, then its 2012 profits (on an adjusted basis) were £7.05 billion (or £224 per second).

The bank also announced a bonus pool of £1.85 billion (down 11% from 2011). The fall in profits and in bonuses though still large, excessive and exploitative are not enough.

So despite announcing these untold riches to be shared between shareholders and directors and other high fliers, the bank also announced that 3,700 staff will be made redundant - split roughly evenly between the retail business and the investment bank.

When I met with Jean-Luc Melenchon, the French Left Party leader, at the end of last year, he told me that one of his one his policy proposals was that no company should be able to make redundancies as long as it was profitable. After all, why should a company making profits be allowed to sack the workforce that produced those profits - simply to try to make higher profits for shareholders?

In the case of Barclays, their 2012 bonus pool of £1.85bn  would be enough to give each sacked worker £500,000 - more than enough to cover their wages. Barclays unadjusted profit of £246m would pay for 3,700 staff on average salaries of £66,000.

Now you might argue that such rules would be inflexible, especially in the case of a company that is trying to restructure - in the case of Barclays to restructure away from investment banking, and closing its tax avoidance unit, under considerable public scrutiny.

However, while voluntary redundancies could still be requested, what Melenchon's proposals would mean is that even when restructuring a company should offer alternative posts with re-training if necessary.

In fact Melenchon's proposals could be part of a modern full employment strategy, and would be a good way of preventing rising unemployment - something the OBR predicts we will see this year.

Unemployment and Osborne: the crisis deepens

On 14 September the horror of this government’s austerity policies was brought into sharper relief with the publication of unemployment statistics showing unemployment has breached 2.5 million again.

But that figure hides more worrying underlying trends: in addition to the 2.5 million unemployed are nearly 1.3 million working part-time who want full-time jobs (up 15% in the past year) and over half a million working temporary contracts who want a permanent job. In effect therefore 4.4 million people are looking for work (aside from anyone in work looking to change job). Youth unemployment is the highest on record, while women’s unemployment is at its highest since 1988.

To compound this misery further the number of vacancies sank to just 453,000 – meaning there are about 10 people chasing every job. In the areas of highest unemployment (the north-east and London) that figure is likely to be considerably higher.

Despite Osborne’s rhetoric about the white knight of the private sector coming to the rescue, Tory cuts and austerity are damaging private sector jobs too. On 15 September retail sales data for August showed a further contraction. With unemployment rising, wages falling in real terms and benefits and tax credits being cut, how could the service sector expand?

The unemployment rise was entirely due to the government’s cuts programme as data showed the public sector had shed 110,000 jobs in the last three months alone. Ironically despite rising unemployment, the government is shedding jobcentre staff and even embarking on another round of jobcentre closures – including in Camberwell, south London.

The attack on welfare is not just on the staff who administer it though, but on people trying to claim and maintain a claim for jobseeker’s allowance (JSA). On 15 September, the National Audit Office showed that the take-up rate for JSA is just 53% - meaning there are over a million people entitled who are not claiming. Many will be too proud or ashamed to claim, given the stigma successive governments have heaped on welfare, or they might have been pushed out of the system by the increased conditionality applied.

Osborne and the Tory-led government are in turmoil. Increasing unemployment means rising welfare bills and falling tax revenues, exacerbating the deficit crisis they pledge to be resolving. Their solution will be to cut more, and the downward spiral will accelerate – sucking in thousands of wasted lives as collateral damage in Osborne’s failing economic experiment.

A version of this article will appear in the October issue of Labour Briefing

One Million Climate Jobs

Earlier this week I went to the launch of the new and expanded 'One Million Climate Jobs' pamphlet, which sets out a strategy to solved both the economic and environmental crises.

In 50 pages it sets out a comprehensive argument for funding one million climate jobs now. It argues that the jobs and investment can be funded by the reduced unemployment and extra tax revenue from getting one million people back into work, and from addressing the tax gap. The investment required is just £18 billion - a fraction of the £1.3 trillion that bailed out the banking system. As Jonathan Neale, the pamphlet's editor, said at the launch,

"if the planet was a bank they would save it"

It argues that the dangers of abrupt climate change require us to act now to reduce our polluting ways. It is estimated that the one million climate jobs, costing just £18 billion could cut UK emissions by 80% in just 20 years, but the pamphlet is realistic: "of course cuts in the UK on their own will make little difference to global climate change. But if we campaign for a million new jobs, and win them, people all over the world will see what we have done".

The jobs themselves cover our electricity and energy production; refitting homes, public buildings and businesses, and building new homes to strict environmental regulations; building new transport infrastructure; as well as other industries. As Philip Pearson from the TUC pointed out, we have lost over one million manufacturing jobs in the last decade. This is the industrial strategy we need.

The pamphlet concludes with a chapter on what you can do. As John McDonnell MP, speaking at the launch, said:

"we need greens and trade unionists campaigning alongside each other, and to become one another"

The pamphlet is produced by the Campaign against climate change trade union group and is sponsored by the CWU, PCS, TSSA and UCU trade unions. Free download here or order from Bookmarks (£2.50)