Tag Archives: unemployment

Osborne says he won’t take us back to Square One – We never left…

Posted on by
2

Osborne says he won’t take us back to square one. We never left

George Osborne has been coming under increasing pressure to change course of his austerity strategy. Even the IMF – who originally backed austerity – have deserted him. Osborne is sticking to his guns however and last night, in a speech at the annual CBI dinner said:

“Now is not the time to lose our nerve. Let’s not listen to those who would take us back to square one. Let’s carry on doing what is right for Britain. Let’s see this through.”

So the message is that doing anything additional to help the economy would “take us back to square one”. But how does “square one” compare to now? Assuming square one would be the situation Osborne inherited in May 2010, have far have we come since then? Here’s a few quick stats and commentary.

1) The Deficit

2009/10: £159bn

2012/13: £121bn

So the deficit down by a quarter. This seems to be the thing Osborne is most proud of, but – putting aside the fact that the deficit on its own is neither good nor bad – this reduction has been achieved primarily by cutting capital expenditure in half. From right to left, almost all commentators believe capital spending is precisely the thing notto cut, so in trying to lower that headline deficit figure, he’s actually setting us up for problems further down the road. Square one with double the capital spending actually sounds quite attractive.

2) Unemployment*

3 months to March 2010: 2.51m

3 months to March 2013: 2.52m

Yes, you read that right. Unemployment is actually higher now than in the comparable quarter in 2010. We are still at square one!

3) Employment*

3 months to March 2010: Employment rate – 72%; Total Employed – 28.83m

3 moths to March 2013: Employment rate – 71.4%; Total Employed – 29.71m

The Coalition like to say it has created 1 million private sector jobs. The net additional jobs since March 2010 though has been just under 1 million, and the working age population has risen faster than that, so the employment rate has actually fallen. Square one would actually be an improvement here.

4) Real Incomes

Median hourly earnings 2010 (constant prices): £11.92

Median Hourly earnings 2012 (constant prices): £11.21

Real incomes then have fallen since 2010, so again, square one doesn’t look too bad.

5) Interest Rates 

10 year bond yield May 2010: c3.6%                                          

10 year bond yield May 2013: c1.9%

Interest rates are another success Osborne likes to trumpet, and they have come down since 2010 (although by May 2010, they were already coming down). Whether this is a good or a bad thing depends on whether you are a borrower or saver, but assuming they are a good thing, how much credit should Osborne take for them?According to Jonathan Portes, not much.

In conclusion then, if Osborne were to change course, taking us back to square one, what would that look like? The deficit would be higher, but so would capital spending. Unemployment would be slightly lower, and a greater proportion of people would be employed. They’d also be paid more for that work. Interest rates would be higher (although on a downward trend). So the overall economic picture has barely changed since May 2010. I haven’t even mentioned the almost complete absence of economic growth since then. It looks like we never left square one. Going back there would actually be a slight improvement, and if we could go back there, but deploy our resources smarter than Gordon Brown in 2009/10, a huge one.

* Labour market figures sourced from ONS here: http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/index.html

The Mysterious Disappearance of Jobs and Skills

Posted on by
7

The Mysterious Disappearance of Jobs and Skills

When Norman Tebbit made a notorious comment that jobs could be easily found merely by hopping onto a bike, he made an assumption that it would solve unemployment because that’s father what his did, apparently. He repeated such advice this February by saying if Eastern Europeans migrate for work, why can’t the Brits?

How starkly this contrasts with what we are hearing Tory back benchers cry in the wake recent success of UKIP! Are we seeing a sudden surge to the extreme political right and 1930s divisions in society as ordinary people blame one another for high rates of unemployment, increasing poverty and unaffordable housing?

Deborah Orr (Guardian) comments: People are told EU migrants steal jobs – in truth bosses want cheap labour . People are told that immigrants stole their jobs. In truth, it was employers who wanted a ready supply of workers unused to the living conditions that it took the second world war for the ordinary people of Britain to achieve. The goal of neoliberal globalisation is supposedly a redistribution of wealth around the planet. It also, as the EU itself is discovering, redistributes poverty.

History has led to migrations of the workforce. In Cornwall, tin and copper had been mined for 4,000 years. Closure of the majority of Cornish tin mines forced whole communities to migrate in the 19th Century, leaving behind empty villages, graveyards surrounding them (Gwennap) the evidence that communities were once busy with industry.

tin_minerabove150Cornish tin miners faced

increasing competition

from alluvial mines abroad

Families were forced to move – or else starve. The simple fact was that the mine owners closed the mines, not because there was no longer a need for copper or tin. It’s because there was more money to be made elsewhere. Cheaper labour makes those looking to line their own pockets to ignore the plight on those who have come to depend on them – because they had the power to do so.

tin_mine203

In the 20th century a few mines survived, but the shortage of work put pressure on the working people. A row of differential pay rates resulted in a strike which pitched miner against miner, family against family, and only ended with the onset of WW2 and the greater demand for tin. Cornwall has never really recovered from the decline of this millennia old industry, and poverty exists there today.

  • How and when did these mine owners come to own the land and mines?
  • Why did such a few people have power over the many?
  • Who benefited from metals extracted from mines?

Removal of workers’ autonomy, their rights to sell labour for a living wage leads not only to their downfall, but that of everyone. The very rich may have the power to determine who shall have work and who shall not, yet their own very existence requires the same basic needs, provided by those workers. The race to the bottom, the search for the cheapest, poorest labour is fundamentally flawed, only a fool will argue otherwise.

Mankind’s survival has always involved work or labour – growing food, making clothes, caring for the community. Much of this work did not involve payment. Because of a division of labour, we can trade our skills, each contributing and receiving. Having a tradeable skill empowers us. If we can no longer cook a meal without a ready meal or grow our own food, we become yet more dependent on the supermarkets and their global supplies and speculation.

If we can no longer make garments, we buy-in fashion produced cheaply and unethically, thousands of miles away. In Bangladesh, cheap clothes come at human cost as health and safety of workers has no importance resulting in a deadly fire where hundreds died.

Yet, even now, the ConDemNation Coalition government aim to return UK to Victorian conditions, and have already removed workers’ right to health safety in the UK workplaces, and abolished the agricultural workers wages board. (See 114 year workers’ rights scrapped by Coalition government) Then UKIP, clearly trading on fear of unemployment and poverty, do not speak for working people. They are no party, but a bundle of individuals with extreme, bizarre attitudes, for example, Geoffrey Bloom, who advocates that employers should not employ women of childbearing age.

Deskilling a population disempowers them, to say nothing of lack of self-respect, independence and the prospects of lives in poverty. Thatcherite policies of attacking trade unions, decimating British manufacturing, closure of coal mines, ship-building, car industries, clothing and so on, led to massive unemployment, and broken communities, just as in the Cornish tin mines. Even food is being imported unnecessarily, for cheapness, and recent the recent horse meat scandal exposed the dangers of lack on control and monitoring. Lack of investment in education and training will not create a skilled workforce.

The Labour Party are setting out plans for full employment

“For Labour, that goal of full employment has always been the foundation for getting our country back on its feet. It was for Atlee’s Labour. It was for New Labour. It will be once more for One Nation Labour. Today the goal of full employment is important for a very simple reason. The faster we return to full employment, the faster we can pay down our debt. And the faster we can put the “something for something” back in to social security.

The Tories’ problem isn’t just that they are failing, but that they lost a belief in full employment many years ago, and never rediscovered it. That means more money spent on unemployment, so there is less to go around for working people and less for care.

After three years of failure we’ve got to find new ways to break out of this viscous circle. Seventy years ago, we set out a new path to full employment. Just as the Beveridge Report is a still a good roadmap for today, so too is the 1944 White Paper on Full Employment. It teaches us to be radical reformers to bring down the costs of social security; building exports; supporting public investment; fanning consumer demand – and taking determined action on jobs. It is a long road, but tackling poor places would be a big first step to getting our country back to full employment.’

From the New Statesman

If the British electorate are concerned about unemployment, they also have a very clear sense of injustice. They see bankers’ bonuses, they see politicians benefit from lobbyists, seeking to line their own pockets rather than serving the people, as they were elected to do. This week Ed Miliband’s Labour Party has pledged to address the Tax Justice.

He’s specifically committed to:

■ Pursue a new global system where multinationals must publish their revenues, profits and other key corporate information useful to revenue authorities in each country in which they operate.

■ Force multinationals to publish such information in the UK even if international agreement cannot be found on the issue, as they do in Denmark.

■ Make it a legal requirement for multinationals operating in the UK to disclose details of any tax avoidance schemes they are using globally.

■ Seek reforms to “transfer pricing” rules to stop companies from shuffling money to other parts of their firm based in tax havens in return for spurious services.

■ Open up the ownership of companies sited in Britain’s tax havens to the UK revenue authorities, but also seek to allow developing countries access to such information.

Whether the popularity of UKIP is a blip, a protest, or anger, it certainly represents an alienated electorate. Those in work feel they are working for the benefit of the rich and powerful. Those without work have little hope of finding work which pays a living wage. Women are hit hard by childcare costs, and equality with men has taken a backward step. Cuts hitting the disabled will make it more difficult, if not impossible for them to work, and those who are old or ill live in fear. It is time to do things differently, let us hope for a socialist Labour government, with policies which will unite people once again.

References and Further reading

Immigration, economics and Ukip

Quote

Posted on by
4

With Ukip’s present success in the opinion polls, and with the local elections on Thursday, it is bad timing that their Immigration Policy, one of the policies most associated with them as a party, is currently undergoing a review and update (18.04.13). Unfortunately, there is an Observer report of Ukip in chaos over policy on eve of key poll, ’herding cats’ and proposals to buy off-the-shelf policies.

Michael Burke’s evidence-based assessment might be helpful with regard to one of their ‘principles’ on which the detailed policy will be based.  This involves future immigration being allowed where it can clearly be shown to benefit the British people as a whole and our economy.  As you can read below, Michael Burke’s evidence indicates that:

‘The cause of migration is growth, to which migration is a decisive contributor.  The consequence is stronger growth.’

So a bit of a conundrum for any party advocating both economic prosperity and draconian measures to restrict immigration….  Migration results in stronger growth.. 

Needless to say, Michael Burke’s conclusion is that:

‘the debate on immigration in Britain is not about the economic causes and consequences of immigration at all.  It is overwhelmingly a ‘debate’ that allows politicians and others to whip up xenophobia and racism, while posing as being concerned about the interests of workers or the poor.’… 

First posted on Friday, 29 March 2013 on Socialist Economic Bulletin

Economics and the debate on immigration

By Michael Burke

Political parties in Britain have once more begun to talk about immigration, especially in the wake of the Eastleigh by-election.  Unfortunately the debate is usually an all-informed one and typically just a cover to introduce racist notions about the impact of immigration.  Therefore it is useful to examine some of the more important economic aspects of immigration.

Immigration

There are a number of countries in the world which have a higher per capita GDP than Britain.  There are also a number of countries in the world who have a higher proportion of migrants as a proportion of the population.  Both those facts are worth stating simply because discussion in Britain often seems to be dominated by the implicit assumption that Britain is both uniquely attractive to migrants and that it alone experiences immigration.

The chart below shows the countries with higher levels of per capita incomes than Britain.  It also shows those countries proportion of the population which is migrant, that is not born in the host country.  The table below specifies the data shown in the chart.

Chart 1

13 03 29 Chart 1

Table 1

13 03 29 Table 1

There are 13 countries in the world with a higher per capita income than Britain.  Of these, 10 countries have a higher proportion of migrants.  Some of these, such as Australia, Switzerland and Luxembourg have very much higher levels of immigration and have a much higher level of incomes.

There are 3 countries which have higher incomes but lower levels of immigration.  However, of these 2 countries, Norway and Iceland have higher per capita GDP because they have a very large energy resource that comes pumping out of the ground (oil and geothermal energy).  The remaining country is Belgium, whose geographic position means it has an exceptionally high proportion of people who work in Belgium but commute there from other countries.

By contrast, among the 18 OECD countries with a lower per capita income than Britain 12 also have a lower proportion of the population as migrants.  The remaining 6 countries are small economies which generally have specific geographic or historical reasons for unusually high levels of immigration, or both.  (The exception in this group is France.)

Migration is part of growth

According to the IMF the total number of migrants in the world rose from 75 million people in 1965 to 195 million in 2005.  Official data shows that most of that is to high income countries, about 80 million and most of the remainder to middle income countries.

The growth in the world’s migrant population is far more rapid than the growth in the total population.  Over the same 40-year period to 2005, the world population doubled while the migrant population grew by 3 times.

However, this cross-border migration captures only a fraction of the world’s total migrant population.  From a strict economic perspective there is little difference between cross-border migration and internal migration.  This is especially the case when internal migration encompasses vast distances and differences of language or dialect.

According to China’s National Bureau of Statistics in 2008 there were 285 million internal migrants in China.  This is far larger than the world’s total number of cross-border migrants.  For the migrants themselves this frequently encompasses far greater geographical distances than is required, say, in intra-Western European migration.  This level of migration is certainly the greatest level of internal migration in human history.  It is also associated with the greatest rate of growth for any major economy in world history.

In India, the level of internal migration is over 300 million people according to UNESCO.  India’s medium-term growth rate is below that of China, but both countries have been growing at a rate considerably faster than the high income countries.  The rate of internal migration has been a necessary accompaniment to high growth rates.

Correlation does not prove causality.  But within the high-income countries higher levels of income are associated with higher levels of migration.  Within the middle income countries, higher growth rates are associated with higher levels of internal migration.

Economic development depends on two key factors, the proportion of national income devoted to investment and increasing participation in the division of labour.  Migration is a key part of the division of labour, allowing workers to migrate where production (and wages and jobs) are expanding.  It also allows production to increase on the basis of employing the most adaptable workers.

Opposition to immigration

The government has recently produced a video to show potential migrants from Romania and Bulgaria that Britain is not a great country to emigrate to.  There is a certain logic to this.  The only way to stop immigration over the medium-term is to reduce the growth rate of the economy to zero or below.  This is the basis for the government’s self-proclaimed success in reducing net migration in the most recent data; by curbing overseas students growth is directly reduced.  Of course prolonged economic stagnation would also lead to a more rapid swelling of the 5 million British people who now live overseas.

Immigration of all types provides a substantial net benefit to the British economy, which a Home Office report clearly demonstrates.  Growth attracts immigration but is also increased by it.  The proportion of workers leaving a country will increase when there is an economic downturn and the proportion of the workforce arriving from overseas will tend to decrease.  The reverse is also true: net immigration increases when the economy prospers.

There are a series of reactionary myths about immigration, which are perpetuated in the labour movement by outfits such as ‘Blue Labour’.  These tend to focus on the supposedly local or microeconomic effects of immigration, particularly that they drive down wages.  These arguments are a rehash of Labour notions which opposed the growth of women in the workforce and even supported restricting their wages relative to men.

Jonathan Portes has done very good work in countering the assertions that immigration drives down wages, even for the very lowest paid workers in Britain.  As the Home Office study shows, the average wages for migrant workers in Britain are also about 5% higher than British workers, because on average they are more highly qualified.  The relationship between unemployment and immigration is also equally clear; immigration increases while unemployment falls and vice versa.

Chart 2

13 03 29 Chart 2

In reality the debate on immigration in Britain is not about the economic causes and consequences of immigration at all.  It is overwhelmingly a ‘debate’ that allows politicians and others to whip up xenophobia and racism, while posing as being concerned about the interests of workers or the poor.  The cause of migration is growth, to which migration is a decisive contributor.  The consequence is stronger growth.  The contrary argument is being raised now as a reactionary diversion from the current economic crisis, and the policies which are responsible for it.

 

‘A Change gonna come’

Posted on by
6

Change Gonna Come by liam carr

Liam Carr, a regular contributor to Think Left, is one of the two Labour candidates for the Leadgate, Medomsley and Ebchester area .

One of the things I am hearing about while I am canvassing for the local elections is the bedroom tax.  Many of the houses in Leadgate, Ebchester, Hamsterley and The Dene are bungalows.  Most are like my Gran’s house at Watling, with 5 small rooms in total: Living room, kitchen, bathroom and 2 bedrooms.  There are very few 1 bedroom flats in the area because demand for this type of property has always been low.  I listened to one voter who had been recently made redundant.  She told me she was losing £16 a week due to the bedroom tax, and that this meant she was going to struggle to pay for bus fares.  Even people who are unaffected can see the gross unfairness of this tax.People who live in social housing are not scroungers or skivers, they are normal people.  The vast majority of people in receipt of benefits are in work, and even those that aren’t are not long term unemployed.  I spoke with another man who lived alone and was being hit by the bedroom tax.  He was, like many people, unemployed for short periods, signing on and off almost on a monthly basis when he could not find work or when fixed term contracts came to an end.We must not allow ourselves to be divided and categorised by this government into strivers and skivers.  Unless we are super rich, we are all just a couple of months away from not being able to afford the rent or mortgage.

It is claimed that the purpose of the bedroom tax is to save money and free up social housing but in reality people can’t downsize when there are no smaller properties.  All that will happen is that the people affected will have to move into a similar property that is owned by a private landlord.  Regardless of size these properties do not attract the bedroom tax.  The cost to the taxpayer goes up, and the shortage of housing is not addressed.

Many private landlords look after both their properties and their tenants, but walk round any former council estate and you will see that there are 3 types of houses.  Privately owned, council owned and private landlord owned.  There are some private rented properties that are badly maintained and cost a fortune to heat.  The council must use all the powers it has available to make sure that the decent homes standard is met.  When housing benefit is paid to unscrupulous landlords, both the tenant and the taxpayer are being ripped off.

We hear about ‘austerity’ on the news; there is talk of the ‘chancellor’s failed economic policy’, but these are abstract terms.  What they actually mean in real life is that people who have very little are being asked to live on even less and the disabled are being forced into poverty.  Older people are having to choose between heating and eating and relied-on services are being put at risk.  Permanent jobs are scarce.

We can expect more of the same from the Tories; they have tried to decimate Northern towns like Consett before.  They are doing it again, not by closing the pits and the steelworks but by a policy of disproportionate cuts, under-investment and wilful neglect.

Change cannot come soon enough.

 

Published on Oct 22, 2012

A Change Is Gonna Come is a 1964 single by R&B singer-songwriter Sam Cooke, written and first recorded in 1963 and released under the RCA Victor label shortly after his death in late 1964. Though only a modest hit for Cooke in comparison with his previous singles, the song came to exemplify the sixties Civil Rights Movement. The song has gained in popularity and critical acclaim in the decades since its release.