Casino economy no use to the jobless

ONS figures for Aug-Oct 2011

  • Unemployment is 2.64 million (8.3%) up 128 000, the highest since 1994  •
  • Youth unemployment (including 300 000 students looking for part-time work) is 1,027,000, up 54,000 on the quarter at 22% (14% of the youth population)
  • Youth unemployment (for those not in full-time education) is 17% – up 21 000 (3%) on the quarter and 10 % of the youth population
  •  600 000 16-24 year olds not in full-time education remain ‘economically inactive’

As the joblessness figure continues to rise, neither of the ‘alternatives’ coming out of the European summit last week, would appear to offer much Christmas cheer. Firstly, there is the Markel/Sarkozy invitation to sign up to a new ‘fiscal pact’ ensuring years of austerity and mass unemployment across Europe. Secondly there is Cameron’s ‘casino economy’ – where we forget any idea of ‘rebalancing’ (manufacturing output and levels of confidence have fallen again despite a ‘march of the makers’) and rely on the City and financial services industry to protect the ‘national interest’.

City leaders rushed to support Cameron last weekend – trumpeting the importance of the financial sector for growth, jobs and future economic welfare. Unfortunately, the figures do not support their arguments. Financial Services makes up 10% of GNP, still a smaller contribution than Britain’s clapped out manufacturing industries, but employs just over a million people; compared with over 2 million in manufacturing.

Over a quarter of those employed are in the City or in its Canary Wharf overspill. Even though the sector is considered to be a ‘high skills’ and ‘high earner’ less than 40% of the workforce could be considered to be in senior managers /officials or ‘professional ‘ – over a third work in ‘secretarial, administrative and sales’.

While ‘average’ salaries in London – where two thirds of the workforce are male and 50% under 35 – are about £85000, the pay of top individuals is well known. London can be contrasted with those employed in financial services in the North-East, where average pay is in the region of £27000 and where half of the workforce is over 35 and two thirds female. (FSSC AACS LMI report, Jun 2010)

The UK financial services industry, has been hit by the economic downturn of 2008 – to which it was an important contributor. As a result there has been a 5% decline in employee numbers. Industry pundits predict a pick up, but with the UK and Europe sliding into recession, this cannot be assumed. At least being out of the Euro strait-jacket however, allows a real ‘alternative’ government to promote prosperity through public spending, public investment, to plan for ‘green’ jobs and to redistribute income. Somewhat Ironically Cameron, as Larry Elliot, the Guardian’s economics editor commented (12/12/11) has made the right decision; but has done so for the wrong reasons.

Coalition policies have also meant that, rather than providing the foundation for future economic prosperity, employment in the public sector continues to fall – 375 000 jobs disappearing since the election.

Martin Allen

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