The official monthly ONS figures on the state of the labour market covering the period March –May 2013, published this week show another small reduction in overall unemployment, (but a rise in youth joblessness, now up to 973 000 -21.3% of economically active 16-24 year olds). Regardless of what this month’s figures may show, it’s been events during previous days that have continued to make the headlines, but also provide examples of the negative ways in which the labour market continues to develop.
To begin with, the vastly increased estimates about the amount of zero hours contracts (see previous post) means that the number recorded in ‘employment’ doesn’t always equate with those actually working. Secondly, House of Commons Library figures published by several newspapers show that UK real wage levels (after inflation) have dropped 5.5% since the Coalition has been in office –only workers in Greece, Portugal and Holland suffering worse (www.independent.co.uk/news/uk/politics/fall-in-wages-puts-britain-in-europes-bottom-four-8755957.html). In otherwords though the ONS figures show another increase in the number in employment, there continues to be a decline in returns to labour as a whole.
This week also saw Labour’s Chris Bryant trying to backtrack over his accusations about Tesco and Next and their ‘unscrupulous’ employment of foreign labour at lower rates than offered to UK workers (www.telegraph.co.uk/finance/newsbysector/epic/tsco/10235442/Labour-accuses-Tesco-and-Next-of-hiring-foreign-staff-on-the-cheap.html). Bryant may have got his facts wrong about these particular companies and the inarticulate nature of his comments may have been reminiscent of Gordon Brown’s ‘British jobs for British workers’ gaff; but Bryant was trying to make the point that in a ‘flexible’ labour market with a large and increasingly diverse supply of surplus labour on which to draw, employers are able to deliberately force down wages, rather than workers ‘undercutting’ each other.
Finally, Chancellor George Osborne has widened the remit of the Bank of England’s new boss Mark Carney. With Carney’s predecessor Mervyn King only responsible for ensuring that inflation was kept at 2%, a 7% threshold has been set for the level of unemployment. As the Guardian’s Larry Elliott explains (www.theguardian.com/business/economics-blog/2013/aug/11/monetary-policy-bank-of-england-interest-rate) this represents a return to the idea of the Keynesian ‘trade off’ between unemployment and inflation. But it’s also a new political acceptance about what right-wing economists have previously termed the ‘market’ or the ‘natural’ rate of unemployment.
Compared to the Keynesian post war years in which unemployment averaged between 2 to 3% and where a figure of 500 000 would sound alarm bells for government action, in the current context, the new 7% norm is equivalent to a figure of at least 2 million. With this number ‘normally’ unemployed and with another 1.2 million part-time workers wanting to work full-time, but TUC estimates showing 3 million or more ‘underemployed’; the size of capital’s ‘reserve army’, as Marx termed it, continues to be way above the official count. Policies for ‘ fixing’ the labour market must be central to any alternative ‘plan B’ for the economy.