Category Archives: Employment

There’s nothing wrong with People’s Quantitative Easing

It’s fashionable among the economic scribes to deride Corbyn’s advocacy of what he calls People’s Quantitative Easing (PQE) as though it were somehow illiterate.   In fact it is an entirely sensible policy.   Conventional QE operates via the central bank buying bonds in the financial markets, thus transferring newly-created money to banks, hedge funds and other investors.    The effect is therefore to boost the prices of bonds, shares and other assets, making the rich richer.   The theory then is that this wealth effect should stimulate the economy as the investors who have been enriched by selling assets at high prices to the Bank of England spend some of their profits on the high streets or employing servants or investing in new businesses.   It is clearly a very indirect and extremely inefficient way of  stimulating an economy.   Both Tory and Labour governments have spent £375 bn in using this device with very little to show for it since we still have the slowest recovery for over a century.

A better alternative – though not the best – would be ‘helicopter money’.   Or slightly more realistically, send cheques of £20 a week to every man, woman and child as a sort of reverse poll tax.   Technically, if £375 bn were spent this way, these cheques could continue to be sent out every week for nearly 6 years since £375bn is roughly £6,000 per head when equally divided among the 64 million people of Britain.   That would indeed be a far, far quicker way of stimulating economic activity.   Since neither dropping money from helicopters or sending cheques every week to every household in Britain is very practical, a third alternative is to bypass the banks and, after full and detailed consultation with the CBI ansd TUC, invest directly in key industrial or manufacturing projects.

Iain Duncan Smith demands that same proportion of disabled people work as able-bodied

As part of the government’s plan to extract £12bn from social security benefits, IDS has announced his latest target is “the disability employment gap”.   According to analysis of official ONS figures, this represents the difference between the number of disabled people who are in employment (48%) and the figure for the general population (73%).   The implication is that IDS expects the same proportion of disabled people to work as those who are able-bodied!   Just what does he believe disability means?   There is a long and aggravated Tory history behind this latest announcement, beginning with Thatcher’s attempt to conceal the true unemployment figures by switching applicants en masse to the category of disability and making them subject to incapacity benefit rather than unemployment benefit.

This legerdemain was prompted by unemployment spiking at 3.1 million in 1986.   It led to 1.6 million claimants being badged as incapacitated rather than jobless.   As soon as the unemployment crisis passed, the Tory government changed course and did all it could to cut back the numbers who could be classified as disabled.   The Blair continued the action, but did not get far.   The really big cutbacks only took off with the Cameron government which took on the big French IT firm, Atos, to carry out ‘work capability assessments’ on a systematic and relentless basis to force disabled persons back to work by declaring they were fit to work and therefore if they failed to get work they would be liable to loss of benefit for anything between 4 weeks and 3 years.   This infamous system generated massive complaints, but the government carried on regardless.

The objections were mainly that the examinations by Atos were often perfunctory and the questions asked largely irrelevant, and leaks from DWP staff indicated that the government had set targets for the removal of claimants from the benefit lists.  DWP of course denied this, but that can be taken with a pinch of salt from a department so desperate to conceal the truth as to now being found out using invented stories from fictional claimants, not just once but at least twice, to pretend that benefit sanctions were actually positive and beneficial!   In fact the Information Commissioner has now overruled attempts by DWP to withhold statistics of the number of claimants of incapacity benefit and employment and support allowance who died after being declared fit for work and then had their benefits stopped.   DWP then said it had always intended to publish these figures!   It seems impossible for a government department to stoop any lower than these constant lies, subterfuges and chicaneries, and since they are all politically driven IDS, if he had any integrity, ought to resign.  But of course he won’t.

Three-quarters of jobs created in UK went to workers from EU

UK unemployment, which is still as high as 1,850,000, is now starting to rise again.   Combined with the jobs standstill, the lack of momentum in pay makes this the most worrying set of labour market figures for a long time.   What is equally disturbing is that almost all the increase in employment since the 2008-9 crash has been accounted for by workers from the EU.   Employment among EU citizens born outside the the UK has now risen above 2 million for the first time.   The latest figures point to falling demand for jobs, fewer hours being worked, and little or no evidence of a rise in pay.

The number of non-UK nationals working in Britain over the past year is recorded as having increased by 257,000 to 3.1 million, whilst over the same period the number of working UK nationals rose by only 84,000.   But demand for labour fell during the spring, with the number employed 63,000 lower in the 3 months ending in June than in the first quarter of the year.   In that first quarter employment among UK nationals fell by 146,000 while over the same period employment among workers from overseas rose by 91,000.   It also emerged that since 1997 the proportion of employment accounted for by non-UK nationals increased from 3.7% to 10.3%.

The turnaround in the labour market was expected to generate pressure for higher pay.   That hasn’t happened.   Regular gross pay for employees as a whole remained unchanged at £463 a week in June.   However pay at the top continues to rise sharply.   The High Pay Centre has just released figures which show that the salary ratio between FTSE-100 chief executives and an average worker jumped from 160:1 in 2010 to no less than 183:1 last year.   At the extreme Sir Martin Sorrell, chief executive of the advertising group WPP, took home £42.9 million (£825,000 per week), which works out at 810 times as much as the average WPP employee.

All of this is of course without reference to the quality of the jobs.   We are seeing in both the UK and the eurozone the steady growth of ‘the precariat’.   More than half the eurozone’s young workers are in temporary jobs, churning from one short-lived contract to the next.   The share of the eurozone’s 15-24 year old workers who are temps is the highest on record, a deeply disturbing 52%.   It’s clear that the 2-tier labour market won’t go away without more incisive action.   But for now the priority must be to tackle the ‘black legacy’ of long-term unemployment where  Osborne repeatedly boasts success, yet is now already worsening from a total little short of 2 million.

Cameron-Osborne’s vendetta against the young could prove their downfall

Osborne really has got it in for young people – unless of course they are poised to inherit their grandparents’ £1 million home or will benefit from a higher inheritance tax threshold.   It will be young people who cop it from changes to universal credit that will deduct benefits faster as they earn more.   That will cost 3 million families an average of £1,000 a year according to the IFS.   Altogether some 13 million families, over half the population, will lose an average of £5 a week as a result of extending the freeze in working-age benefits, tax credits and local housing allowance, until 2020.

Then there’s unemployment.   The largest increase between 2008-13 was among 18-24 year olds, with 210,000 more out of work.   The latest figures show nearly half a million 16-24 year olds jobless, an unemployment rate of 13.7%, more than double the national average of 5.5%.   Even if they can find a job, Osborne’s over-hyped ‘national living wage’ won’t apply to those below 25 years of age.    The rate for 18-20 year olds will be a miserly £5.30 an hour, whilst for 16-17 year olds it will be slave rates of £3.87 an hour and and even £3.30 an hour for apprentices.

University fees are ending up putting poorer students into permanent debt.    When fees tripled to £9,000 a year, the maintenance loan was means-tested to target students from poorer families.   More than half a million students in England received the £3,387 maintenance grant last year, costing £1.6bn.   Now this grant is being turned by Osborne’s latest budget into another loan, of up to £8,200 a year.   So student debt will now rise to £51,000 after 3 years.   Unsurprisingly a report by the Joseph Rowntree Foundation has recently found that the largest increases in poverty in the last decade has been among younger adults of working age.

As for housing, anyone aged 18-21 will no longer be automatically able to claim housing benefit under the new rules.   The exclusion of young renters from any State support comes as young earners are increasingly locked out of home ownership as a result of soaring prices.   The average age of a first-time buyer has rocketed from 29 to 38 over the last decade.   Nor is further education a way out.   Further education colleges face some of the biggest cuts in the comprehensive spending review due in the autumn.   Indeed the further education sector, which provides the bulk of the UK’s post-secondary training, faces possible collapse and the loss of the invaluable source of technicians and mechanics.

What have young people done to deserve these successive kicks in the teeth?   In today’s volatile political climate this Tory campaign against the young will surely boomerang against its perpetrators.

 

The ugly face of Tory callousness exposed

With the world’s biggest refugee crisis since 1945, it is perhaps predictable that the Tories’ reflex response is to sensationalise the issue, lie about the facts, and pull up the drawbridge.   May kicks it off with the falsehood that the vast majority of migrants to Europe are Africans motivated by economic self-interest, when in fact 62% reaching Europe by boat this year were escaping persecution from Syria, Eritrea and Afghanistan.   Foreign secretary Hammond portrayed them as marauders risking the collapse of European civilisation, when in fact the number of migrants who have arrived so far this year is precisely 0.027% of Europe’s total population.   Cameron himself described them as a swarm intent of getting welfare benefits, when in fact the number of migrants reaching Calais of those arriving in Europe this year is just 1% and each asylum seeker in Britain gets a measly £36.95 a week to live on, only just over £5 a day, and is not allowed to work to supplement this sum.

Nor has Britain taken anything like its fair share of refugees under the vindictive and callous standards of the Tories.   Last year 25,870 people sought asylum in the UK, but only 10,050 were accepted.   Germany took 97,275, France 68,500, Sweden 39,905 and Italy 35,180.   Calculated as a proportion to population size, Britain comes even lower.   Calculated on 2015 rates, Britain has been even meaner in its reception of asylum seekers than impoverished Greece!   Against the hysteria the government has generated, you would scarcely believe it that the number of refugees in the UK has actually fallen by over 75,000 in the last 4 years.

Then there is the deeply unsavoury Tory involvement in trafficked workers debt-bonded and forced to work in slavery conditions that has just come to light.   Noble Foods, the UK’s largest egg company, used labour provided by DJ Houghton, a gangmaster operation run by Darrell Houghton and Jacqueline Judge at Maidstone, Kent, and its chairman has been a major Tory party donor and lent Cameron a helicopter for the election.   The Lithuanian workers were held in overcrowded accommodation riddled with bedbugs and fleas, denied sleep and toilet breaks, and had their pay repeatedly withheld while Lithuanian supervisors acted as the Houghtons’ enforcers intimidating the workers with fighting dogs and threatening them with instant eviction if they complained.   So much for Cameron’s promise earlier this month to tackle modern slavery in Britain.

Now that the election is safely out of the way, other Tory acts of harshness and vindictiveness have started to trickle out.   They have shelved their manifesto commitment to cap care costs for the elderly in order to save £100m (out of a deficit still stuck at £90bn), on top of cutting by a quarter of a million the number of elderly and disabled persons receiving social care at all.   They have concealed till now that 1 in 6 of all job seekers are hit by benefit sanctions even though the independent social security advisory committee, chaired by the ex-permanent secretary of DWP, have made the case that there is no certain evidence that sanctions actually work in forcing people back into work, but they do cause hunger and impoverishment.

 

Osborne’s £12bn cuts mainly from those in work will backfire badly

Contrary to incessant Tory propaganda about a pervasive culture of welfare dependency, the evidence actually shows jobless benefits claims are now at a 35 year low, but will be put at risk if Osborne pursues his £12bn welfare cuts at the expense mainly of people in work.   Of the three out-of-work benefits – unemployment benefit and income support mainly for single parents and disabled persons – the proportion of the working age population receiving one of these benefits (according to the Resolution Foundation) peaked in 1993 at 17%.   It now stands at 10%, its lowest level since 1980.   The number of children living in workless families has also dropped from 20% in 1996 to 12.5% now.   There are now fewer than 100,000 workless couples with children (excluding where adults are disabled).   Moreover the UK employment rate for single mothers has risen from under 40% in the early 1990s to 62% now, and has continued to rise through this latest recession.

These statistics point to two important conclusions.   One is that the Tory-promoted stereotype about a welfare class opting for a life of State-funded leisure is utterly wrong.   The other is that the gains that have been achieved by providing significant financial support for working households are in danger of being eradicated if Osborne gets his way by victimising those on in-work benefits.   Because the government regards pension benefits as out of bounds, the welfare cuts will be mainly concentrated on tax credits and disability benefits.   But this will have perverse results.   Reducing the value of tax credits may well make it no longer economically worthwhile for people on the lowest paid margins to work.   Equally, if Osborne curbs Britain’s system of maternity pay and rights which has kept so many young mothers connected to the labour market, the economic incentive to stay connected will simply drain away.

The real answer of course is raising the wages of the depressed bottom third of the working population.  It has been estimated that the saving to the State in tax credits and in-work benefits would actually outweigh the cost of the higher wages.   What is really needed now is a significant rise in the minimum wage, currently £6.50 an hour, to a Living Wage standard of (say) £8 an hour which is then annually increased either in accordance with the national average wag or with inflation, whichever is the higher.

Osborne will certainly not do this.   But what he will do, just as his deficit-cutting machine will choke off growth, his welfare cuts machine will whittle away most of the employment gains of the last 20 years.

Tory Trade Union bill is an attack on a fundamental human right

Under the Tories’ proposed new law, strike ballots would need a 50% turnout for industrial action to be legal.   But in the case of ‘essential’ public services – health, education, transport and fire services – 40% of those voting have to have voted in favour.   In other words, 80% which is the combination of the general turnout proposal and the new 40% yes vote must have voted in favour.   That would make almost all strikes illegal, particularly in large and dispersed workforces where postal ballots rarely achieve this.   This is a blatant attack on the rightful role of trade unions in being able to protect their members against exploitation at work – several recent polls have consistently found that more than 70% of the public believe unions are ‘essential to protect workers’ interests’.
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With everyone spouting aspiration, what’s in it for the 20 million in poverty?

According to the official Office of National Statistics’ latest report 19.3 million persons in the UK had an income below 60% of the national median at some point during 2010-13.   That is nearly a third of the entire population, and a higher proportion than for the EU as a whole.   The UK figures are even higher for pensioners (40%) and single-parent households (60%).   These statistics are awful for the sixth largest economy in the world, but there is a deeper hypocrisy behind them.    At the general election the Tory manifesto and Cameron’s speeches resonated with calls for aspiration for everyone.   So what are the aspirational chances for the 20 million people at the bottom of the pile when Osborne’s first act in the new government is to target them?    It has equally to be admitted that among Labour’s leadership contestants the air has been thick with expostulations of aspiration for all.   How is that compatible with continued support for austerity which hits the poorest hardest?   
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Aspiration is not only a goal for the Right, and they have no intention of making it a reality anyway

The Tory manifesto was artfully targeted at making everyone a weeny bit richer, and some a lot richer.   It offered to raise the income tax threshold to £12,500 (though the rich get more from that than the poor), to lower tax on those on the minimum wage, to raise the higher rate income tax threshold to nearly £50,000 (benefiting largely the top 10%), and raising the threshold for the inheritance tax from £650,000 to £1 million (benefiting only the richest 6% of families).   The Tories showered these goodies around like confetti, freely admitting that these handouts plus the £8bn for the NHS and £6bn for housing association right-to-buy discounts amounted to over £20bn, wholly unfunded, but Labour kept doggedly to austerity and no unfunded handouts in order to prove its fiscal reliability.   So who won?   It’s a no-brainer.

Aspiration is unquestionably important, but for the Tories it’s a code for something else – the system’s fine, you’ve just got to try harder to pull yourself up and get ahead.   For the Blairite Right now seeking to regain the Labour leadership, it means as Lord Mandelson so deftly put it: ‘New Labour is intensely relaxed about people becoming filthy rich’.   For the Left it means recognising that everyone must be given a real chance to get on, but if that is to be taken seriously, it requires fundamental changes to the structure of opportunity in our society.
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