UK unemployment continues to fall, it’s now at 4.4%, down from 4.9 % a year ago. Yet much more significant is the greater increase in the size of the workforce. For example, the most recent monthly ONS data shows a fall in unemployment of just under 160,000 over the year, but a 340 000 increase in those working.  The increased availability of part-time work with irregular hours continues to attract some of those previously ‘economically inactive’ – not in work, but not looking for it, the ONS figures show a 90 000 fall of people in this category, but the data also shows a 126, 000 increases in non-UK nationals from the EU working in the UK (bringing the total to 2.37 million). So, while unemployment may be the lowest since 1975, the UK labour market isn’t ‘tightening’ – a recent survey shows employers received an average of 24 applicants for unskilled vacancies and 19 for medium skilled. 

Karl Marx used the term ‘reserve army’ to describe the pool of semi-employed or unemployed workers who were the consequence of ‘overproduction’ and the rising organic composition of capital (the replacement of labour by machines).  Even if the concept might be a useful one, the nature of this modern reserve is now rather different. Rather than being part of Marx’s impoverished ‘lumpen’ workforce for example, research shows that migrant workers are likely to be overqualified (compared with UK nationals, a greater proportion have degrees) for the jobs they are recruited.

With new jobs as likely to be low-skilled as highly skilled (around 5 million people in total, reporting they are ‘over qualified’ for the jobs they currently hold) then the existence of large reserve army will severely limit increases in wages – as inflation rises, ‘real wages’ are now starting to fall again and predicted to fall further. Wages are also being dragged down by changes in employment status. The ONS data shows nearly 900,000 people on zero-hours contracts, despite a growing campaign against them, with 15% of people now declaring themselves ‘self-employed’ a category synonymous with low-pay.  

 

Alarm bells continue to ring about the implications of (a hard) Brexit for UK skill levels, future growth and prosperity.  By the end of 2016 there were 2.2 million working EU migrants -7% of the labour force.  Most recently there’s been specific concern about the effect of Brexit on an already understaffed NHS. EU immigrants make up about 5% of NHS staff (10% of registered doctors and 4% of registered nurses).

Migrants from the original 14 EU member states are more likely to be in better-paid employment, requiring higher skill levels – such as the business and finance sectors. By comparison, despite significant representation in professional and managerial categories, later Eastern European migrants provide a regular supply of semi and unskilled labour. In the ‘hotels, restaurants, and accommodation’ sector they make up I in 8 of the workforce and in construction over 7%.  According to one survey, (CIPD, Facing the future 2017) 40% of EU migrants could be considered ‘over-educated’ for the work they do, compared to 15% of UK nationals (evidence shows that, overall, EU migrants tend to be more highly qualified than UK workers).

Labour leader Jeremy Corbyn has given Brexit a socialist tweak, telling the BBC (23/07) that the “wholesale importation” of workers from Eastern and Central Europe has been used to undermine pay and working conditions particularly in industries like construction. CIPD report that one in seven employers consider EU nationals have lower expectations about pay and conditions, but they also regarded them as more productive.

It isn’t clear however, whether wages would rise if EU migration was curtailed. According to the CIPD study, a quarter of employers reported difficulties in recruiting UK born candidates for semi-skilled and unskilled posts.  To ease shortages, employers could recruit from ‘underutilised’ groups like young people. Unemployment rates for young people are still double that generally – 1 in 8  of all 19-24 years olds are still NEET, but many UK employers have been reluctant to offer proper apprenticeships.

With new ‘flexible’ working arrangements in the 24/7 service sector, employers will also continue to recruit from groups  not wanting to work on ‘standard’ contracts because of family and caring responsibilities (over 4 million part-time women workers, don’t want or can’t do full-time employment for example) and almost a million full time students currently work part time. It’s clear that this pool of labour is not yet exhausted.

Employers could also automate. While it is difficult to replace workers with machines in many low skilled ‘non-routine’ jobs like serving in restaurants or in-home care, many other jobs could be, however the CIPD survey found little concrete evidence of any plans to do this.  Uncertainty about the post Brexit economic climate may be a factor, but the UK’s historically low rate of capital investment (compared with other countries) is probably more significant.  In other words, for key sections of UK business a low-skilled, low-pay business model is the most preferred and a hard Brexit would result in a labour shortage, as much as a skills problem. Without a migrant ‘reserve army’ many employers may not be prepared to keep businesses running at all.

With growing concerns about the dramatic increase of insecure employment and the abuses of the ‘gig economy’, this week’s TUC conference was a welcome intervention.  According to the TUC, 1 in 10 workers are now affected by casualization and job insecurity, which invariably combine with low pay.   Increasing numbers are also ‘self-employed’ often against their wishes. The TUC  estimates that there are 1.7 million low paid self-employed.

Protecting this increasingly diverse and fragmented group of workers is a herculean task. The Tory government has commission the RSA’s Matthew Taylor to report on the current employment practices – this is expected very shortly, but as the conference understood, it’s only by electing a (more left wing) Labour government that employment laws could be changed and trade union rights restored. Labour’s plans for infrastructure spending and greater investment would, its argued,  lead to increased productivity through better jobs.  

Many of those attending the conference also had some excellent ideas about how new technology can be used to develop new ways for organising self-employed and agency workers, but short-term, front line, more immediate initiatives need to be combined with a greater awareness of the implications of major shifts in production and distribution. These developments, if more apparent in economies like the UK and the US are also universal developments, requiring new types of understanding and new strategies.

Mass trade unionism (UK membership reached its 13 million plus peak in the late 1970s) was associated with labour intensive/production line manufacturing, where it was often in the interests of employers to reach collective agreements and to standardise pay and working conditions. These types of arrangements – now referred to as ‘Fordism’, also predominated in other sectors of society. As a result, workers were provided with permanent and regular jobs, developing more collective occupational identities.  

As the twenty first century unfolds, developments in technology have resulted in the extensive automation of manufacturing and a much smaller ‘core’ workfare producing a greater output. Yet growing productivity and efficiency in manufacturing has not resulted in the expansion of highly skilled professional service sector employment, at least not to the extent that business theory had suggested –on the contrary, significant areas of this employment has been broken down into ‘para-professional’ work.

It’s no accident that as the size of the ‘core’ workforce has contracted, then so has the strength of the trade union movement – some estimate this will fall from the current 6 million to 3 million within a generation. Huge numbers of people who have become ‘surplus to production’ now depend on rather different types of work, providing ‘services’ for those more fully employed – like staffing bars, hotels, and restaurants, cleaning  houses, delivering  take away meals and dropping off on-line shopping products. Because of continued outsourcing and sub-contracting, many are no longer ‘employees’ in the traditional sense, sometimes not knowing who they are really working for, even who they are working with.

Yet, the TUC argues that ‘work is still the most important route out of poverty and to a better standard of living’ even though for many people, its own statistics show this is no longer the case. Now, rather than state benefits being associated with periods of unemployment, a new ‘working poor’ depends on state benefits to supplement full-time work. Despite the support for a universal basic, or ‘citizens’ income  increasing, this continues to by-pass the TUC (and the Labour Party).

Accepting the argument, that for many, work will no longer pay, will also enable a fuller discussion about the advantages of automating many jobs and reducing hours (as well as stress). It might be true that while some types of work can never be completely automated, as technology continues to race ahead, there are few jobs where automation cannot be extended. But while labour is so cheap and so plentiful however and paid work seen as the only route to salvation, this debate is less likely to happen.

 

Download the TUC’s  The gig is up

Almost 1 in 4 of trade union members are employed in education. According to the ONS 1.47 million of a total union membership of 6.2 million are now drawn from this sector. With almost half (47.7%) of all employees belonging to a trade union, the education has probably become the most organised. (In manufacturing, union density is now below 1 in 5 and in construction, only 1 in 8)

The ONS provides interesting –but in many cases, slightly alarming data, about the current state of the UK trade union movement, which is now less than half the size of its 13 million 1979 peak. The level of membership  decreased by 275 000 between 2015/16 alone, the largest overall fall since records begun.

In addition:

• Just 32.5% of workers are trade union members (13.4% in the private sector ,  52.7% of public)
• 4 out of 10 trade union members are over 50, but only 1 in 20 are between 18-24
• 4 out of 10 members can be classified as ‘professional’ workers. 43% have degrees
• Trade union density amongst female employees is now greater than it is for males
• Over a third of ‘middle earners’ (£500 – £999 a week) and 1 in 6 of employees earning over £1000 a week are in unions. Only I in 8 of those earning less than £250 a week are TU members

Trade union can’t and won’t ignore these changes, but at the same time they will recognise these are as much the result of longer-term structural trends across labour markets as they are the consequences of draconian anti- trade union legislation or government policies and develop new strategies accordingly.

That education workers now play a key role in the labour movement, provides both further impetus for greater organisational unity  (despite the NUT/ATL merger at least 10 different unions operate in the sector, often in competition with each other),   but also for creating more effective ways of working with student and parental bodies.

 

 

 

 

 

Latest figures from the ONS, show the employment rate (the proportion of people aged from 16 to 64 who were in work) at 74.6%, the joint highest since records began in 1971. The unemployment rate has also fallen to 4.7%, down from 5.1% for a year earlier. It has not been lower since June to August 1975. Yet in 1975, it was a very different economy with a very different labour market. The UK was the 5th or 6th biggest manufacturer in terms of total output (it’s now 9^th) with 1 in 5 still working in the sector (it’s now less than 10%). Harold Wilson was prime minister and a referendum on EU membership recorded two-thirds support.

Then, some 17 million people (approaching  40% of the workforce) belonged to trade unions compared to around 6 million today. As Andrew Glynn and Bob Sutcliffe described in their influential Workers, Capitalism and the Profits Squeeze – organised labour had been able to use its power to steadily increase its returns at the expense of profits. Capital could only resolve this by attempting to increase prices but could not fully win back what it had lost in wage negotiations because of increased international competition. Nevertheless in 1975, inflation reached a post-war peak of more than 25%

Today the situation could not be more different.  After approaching 65% of national income in the mid-1970s, the proportion of national income returns to labour is down to 55%. Alongside the fall in the wage share, there has been a general rise in the inequality of earnings. The most highly paid have taken an ever larger share.  The average full time person in work would be paid more than £7,000 more than they actually are if wages had kept up with economic growth and if the best paid had not increased their wages at the expense of everyone else.

Even if economic growth may have climbed to 2% per annum, this has been the result of an increase in size of the labour force not increases in productivity, with firms increasingly dependent on constant supplies of foreign labour. As a result per capita (per worker) income has barely increased at all. Meanwhile, the profit share (operating surpluses as a percentage of national income) rose from 24 % in 1980 to 28% in 2011.

The declining fortunes for workers is not simply a reflection of repressive trade union legislation. It’s also the result of significant structural changes within the labour market -the continued decline of traditional manual employment, where trade unions were always strongest, but also the ‘hollowing out’ of many ‘middle’ occupations. These have been replaced by huge increases in low-paid work at the bottom end of the service sector, the growth of casualised labour (‘zero-hours’ employment is approaching 1 million) and of bogus ‘self-employment’ –all areas where it is extremely difficult, though not impossible,  for trade unions to organise.

Whereas in the 1970s Labour politicians and many trade union bosses tried to sell ‘incomes policies’ as a way of controlling wage increases/inflation, today’s ‘precarious’ the labour market imposes its own discipline and as a result, as well calling for the repeal of anti-trade union laws, campaigners have demanded new types of state policies, for example, an increased minimum or ‘living’ wage and an end to ‘zero hours’. Demands for a Universal Basic or a ‘Citizens’ income to gain ground, which though accepted by Greens, continues to be largely ignored by Labour and union  leaders.

 

The UK is not an industrial economy in the traditional sense, despite what some politicians try and persuade us -remember George Osborne’s ‘march of the makers’. Like other countries, the proportion of the GDP devoted to manufacturing has dwindled as consumers become richer and spend a larger proportion of their income on services.  Though it is also true that the process of ‘deindustrialisation’ has been more acute and taken place more quickly than elsewhere. 50 years ago, around 8 million people were employed in manufacturing and the sector absorbed about a third of school leavers. Even as recently as 1982 the sector continued to employ 22% of the workforce. Today 2.6 million earn a living working in manufacturing – barely 8% of all workers, while the sector contributes 10% of national output –down from 14% in 1997.

The decline of manufacturing has been blamed on specific events, or even specific people – for example, during Mrs Thatcher’s first term of office, almost 1 in 4 jobs in the sector disappeared, while more recently, ‘deindustrialisation’ has been linked to the increased ‘outsourcing’ to countries with lower labour costs –  President Trump has pledged to both reintroduce protectionism and to punish American companies that relocate abroad. Unlike in other countries, UK manufacturing has also been hindered by the lack of any real national Industrial Strategy, or anything resembling a National Investment Bank.

Despite all this and despite representing a declining share of GDP, the UK continues to be the world’s 11th largest manufacturing nation – and ONS figures show UK industry has continued to increase on average by about 1.5% a year since 1948 with the sector still accounting for 44% of all exports. Productivity growth in the manufacturing sector has also been stronger than in most other sectors (3.4% compared to a 0.2% increase for the economy generally). Advanced production techniques, mean that three cars roll off the UK’s production lines every minute and output in 2014 was 25% than in 1990, yet employment has fallen from 502,000 in 1971 to the current total of 142,000.

The main reason for both the increase in productivity and the decline of employment in manufacturing has been the introduction of new technology. According to 2015 survey by the Manufacturer on-line journal, little under half of respondents said that they are in the process of implementing a major project, and 21% said that they last did so in 2014. This means that just under two-thirds of UK manufacturing businesses committed to major automation projects in the past two years. Investment in information and communications technology (ICT) continues an upward trend; 61% said they are spending more that year than last.

Even so, the speed at which automation will be introduced should not be overstated – investment in robotics by British manufacturing companies for example, continues to trail that elsewhere. Governments have continued to complain about a shortage of skills, but the number of apprenticeship vacancies posted by the manufacturing sector in 2015/16, was under 30 000 – the majority of these being at a relatively low (skill) level.