Revealed: the harsh truth behind jobs figures

Governments on both sides of the Atlantic have good news on jobs. Apparently. The real story is of people giving up the search for work and young people, in particular, facing a life on the dole.

Figures just out on the UK show unemployment falling by 82,000, and the number of people in full-time work increasing by 44,000 between May to July 2012 and August to October 2012.

In the US, Barack Obama and his administration are celebrating the drop in the unemployment rate from October’s 7.9% to 7.7% in November. At its peak, in October 2009, it was 10%.

Good news? Not for the majority of American or British or European workers.

Look a little closer and you find that the percentage of working-age Americans who are either employed or actively in search of a job was reported as 63.6% for November 2012, two points lower than the previous month and the worst the country has seen since 1978.

This more revealing measure has now been at or below 66.0% since the country entered a recession in late 2007 and it is getting worse. The number of Americans “not in the labour force” has grown by almost 8.5 million since the Obama administration began. Not much improvement there.

When jobs become scarce and benefits run out, millions of people just disappear off the radar to the evident delight of the government.

Alongside the loss of jobs the global recession is driving a worldwide assault on conditions of work - for those that still have it. Michigan yesterday became the 24th US State to pass ironically-named “right to work” legislation. This prevents unions for getting non-union workers to pay subs to benefit from pay awards.

An exhaustive study by economist Lonnie K. Stevans of Hofstra University shows that wages and personal income are lower in the states with so-called right-to-work laws than in those without, though employers’ incomes are higher. In short, the laws simply redistribute income from workers to owners.

  

The global contraction which has claimed millions of victims, wiping out the future for a generation of young people is set to get a whole lot worse.

The youth jobless rate has reached 58% in Greece, 55.8% in Spain, 39.1% in Portugal, 36.5% in Italy, 30.1% in Slovakia, and 25.5% in France as European governments push on with ever more punitive assaults under the guise of “austerity”. 

In the UK the current batch of statistics do nothing to hide the grim future as predicted by two studies. The Institute for Public Policy Research says that the outlook is especially bleak for young people and the long-term unemployed. The IPPR finds that hundreds of thousands are at risk of permanent “scarring” by having their “long-term outlook damaged by long periods of unemployment or by a difficult and patchy entry into the world of work.”

The IPPR analysis, based on the pattern of increase in 2011, shows that 86,000 more under-25s could become unemployed next year, taking the total to around 1.05m, while a further 32,000 people could become unemployed, reaching 926,000.

A separate study by The Jobs Economist consultancy warned that "sub-zero temperatures" would persist in the UK's jobs market as the number of people short of work hits 8 million.

The headline unemployment rate shows there are 2.56m unemployed people in Britain. But the consultancy report shows a further 3.05m are "under-employed" - desperate to find more work or longer hours but cannot - and a further 2.58m people are "economically inactive" but want a paid job.

The overall work shortage rate compared to the working age population is 23.8% - three times higher than the official unemployment rate.

This is no accidental by-product of attempts to rescue the global financial system, nor is it as many claim, the result of bad policy which could be replaced by an even more hefty dose of credit by pushing more money into the economy.

The wholesale elimination of productive capacity is a necessary consequence of the drive for profit. Like a monster, it is devouring its own in the shape of the unemployed and the under-employed. Surely it’s time to slay the capitalist dragon?

Gerry Gold

Economics editor

Populist Cameron trumps pathetic Labour

Interviewing the prime minister for the Sunday Telegraph, Matthew D’Ancona curiously concluded that David Cameron was a man with a mission – “to save capitalism from itself”.

Cameron is acutely aware that the system is in deep trouble and that vast numbers of people are increasingly angry about the widening gulf between them, the rich and the powerful.

A new poll has confirmed that economic fears are by far the greatest concerns. So Cameron is in a bidding war with Labour to fool a worried public that that action is being taken to curb the excesses of the system. With Ed Miliband’s party in practice a semi-detached part of the coalition government, Cameron’s task is made easier.

Cameron’s trumpeted curbs on executive pay, aimed at giving shareholders a direct say in determining salary packages and pay-offs, is aimed at soothing outrage over the earnings of company directors, as is his decision to maintain the top 50p rate of tax.

People are aware that the class divide is deeper than ever. The vast majority, are disgusted at the wealth of a tiny minority. Rising prices and bills combined with rapidly rising unemployment and wage freezes have cut deep into people’s standard of living.

Anger at top people’s wealth is of course totally justified. An independent survey finds that chief executives of 87 of the FTSE 100 firms helped themselves to a 33% rise in pay and perks in 2010-11, taking their average package to £5.1million. Other directors took pay rises of 49% over the year, walking away with £2.7million each.

Small wonder, then, that the Tent City occupation outside St Paul’s, which initially targeted the London Stock Exchange, has continued to strike a chord amongst large numbers of people, including City workers.

For a Conservative leader, Cameron has been harsher in his criticism than Labour of how economic growth and speculation on the markets has benefited a tiny minority. Edward Heath, the Tory prime minister before Margaret Thatcher, once famously talked of the “unacceptable face of capitalism”.

Cameron went one better in outright populist rhetoric directed at big business. He told BBC’s Andrew Marr show, that where “there was excessive growth of payment, unrelated to success, frankly ripping off the shareholder and the customer, [it] is crony capitalism and is wrong. It’s also, and this is the key point, payments for failure”.

It’s not the first time that Cameron and his strategy directors, who include Steve Hilton and Andrew Cooper, have invaded territory which Labour felt it could lay claim to. But that’s not difficult. Shadow Business secretary Chuka Umunna’s pathetic weekend call for a “responsible and better capitalism” hardly set the pulse racing.

The truth is that these political leaders hope to cash in on disquiet with the system simply to keep the show on the road, just as the spectre of uncontrolled financial markets and the greatest debt crisis in history is causing economic havoc.

The notion that the shareholders can somehow regulate the fortunes made out of the system is just as harebrained as the idea of that politicians can control or even influence the flows of capital through the world’s financial market.

Giving shareholders more power will do nothing to change the spots of the capitalist leopard. Institutional shareholders like insurance companies have already presided over the biggest transfer of wealth from the majority in society to the minority. And many of them benefit from the same high earnings as the CEOs they are supposed to regulate.

Along with business secretary Vince Cable and the Labour leaders, Cameron is simply cashing in on the oh-so-threadbare but still powerful myth that capitalism can be reformed or tamed by pretending that “fairness” can be spread around. Behind all the rhetoric lies the awareness that they are impotent as the system careers further and further out of control.

Corinna Lotz
A World to Win secretary

Your vote counts for very little

News today that Britain’s voting system is said to be “broken” comes as no surprise. What is left unsaid in a report by the Institute for Public Policy Research (IPPR), however, is that the political system itself is in a state of terminal decline.

The IPPR report Worst of Both Worlds explains in convincing detail why the current first-past-the-post (FPTP) voting system is increasingly undemocratic and why things can only get worse.

it found that just 1.8 per cent of the electorate - less than 450,000 voters - decided the outcome of the May election in 108 marginal constituencies. “The overwhelming majority of us live in safe seats where we are increasingly neglected by the political parties both during and between elections –and where we have little chance of influencing the result of general elections,” the report notes.

As we know, the election produced a hung parliament and Britain’s first peacetime coalition government since the 1930s. Drawing on academic research, and conducting its own analysis of voting election data, the IPPR report suggests that the 2010 election result was not a one-off aberration.

“Instead, we believe it reflects long-term changes in voting patterns across the UK – declining support for the two main parties and divergent support for them across the nations and regions of the UK – that significantly increase the likelihood of hung parliaments in the future. Unless FPTP is reformed the UK will be left in the ‘worst of both worlds’: a voting system that neither delivers fair representation nor single-party majority government.”

The report shows the dramatic shift away from Labour and the Tories over the last 60 years. In 1951, the parties polled 96.8% of the total electorate between them at that year’s general election. By last year, the figure had slumped to 65.1%. Yet the voting system continues to reward Labour and the Tories, who between them won 86% of the seats in the House of Commons last May .

The rise in support for third parties makes it more difficult for individual MPs to secure a majority of support (50% or more) among their local electorate, which, says the IPPR, raises serious questions about the legitimacy of MPs to represent their constituents. “It also makes it much harder for governments to win an overall majority nationally, which again undermines the representativeness of governments formed under FPTP.”

The IPPR, which was a strong supporter of New Labour governments, is concerned that “Britain will become increasingly divided electorally, and governments will be formed that lack widespread support across the country”.

The report will lend support to those campaigning for the alternative vote (AV) system in the referendum scheduled for the coming May. This has already led to some bizarre alliances with, for example, some trade unions joining with right-wing Tories in a bid to block a “Yes vote”. Most Labour MPs are against AV, which is not surprising because their party only needs a three-point lead in votes in order to secure an overall majority, whereas the Conservatives need about an 11 point lead.

But surely the point is that an unfair voting system reflects a broken political system, as reflected the decline in voter turn-out (especially among new generations). Increasingly, politics is part of a state structure where corporate and financial interests predominate. The last government bailed out the banks and the Coalition is cutting the deficit to appease the money markets.

Over the last 30 years of globalisation, Parliaments and governments have become bit players in a world dominated by ultra-powerful transnational interests. No amount of fiddling with the voting system will change that. A transition to new forms of democratic government around the concept of People’s Assemblies is what beckons in 2011.

Paul Feldman
Communications editor