Showing posts with label unemployment. Show all posts
Showing posts with label unemployment. Show all posts

21 October 2013

Deconstructing Austerity II. Jobs



Aside from fallacious claims about reducing the national debt, the Conservatives' second claim to economic success--the creation of millions of private sector jobs--is also requires exploration. The well-rehearsed argument goes that massive cuts to public spending are not problematic since the private sector will take up the slack and create jobs to replace those lost in the public sector. There are several sleights of hand say that require unpicking in this part of the austerity narrative.

First it is important to note that the statistics tell us something about the quantity of jobs but nothing about the quality of those jobs, an argument made cogently by the TUC. A job as a nurse or an administrator in a public-sector setting is likely to be a unionised job with a nationally negotiated rate of pay and decent terms and conditions. The sort of job being generated in the private sector is much more likely to be an unskilled, poor-quality job with low pay. These jobs will do nothing to help with the standard-of-living crisis and will also not contribute to rebuilding a flourishing economy even in conventional terms.

The political narrative behind these arguments about the substitution of private for public jobs is the inability of the public sector to create wealth: an important part of the Conservative attack on the public sector (and devastatingly critiqued in an earlier blog!). So it is important to realise that many of the 'new' private sector jobs are actually simply redefined public-sector jobs. My job is a good example. Two years ago I worked in the public sector but now I work in the private sector. Because universities were privatised and are no longer funded from taxation, my job is now one that creates value whereas previously I was a parasite on the taxpayer. The same also applies to those who work in privatised sections of the health service or in services that are increasingly being outsourced from public sector employers such as schools and hospitals. (The Guardian has carried out some preliminary work unpicking this tissue of statistical manipulation.)

Finally, we need to ask what is a job? The data are most often used by Tories in claiming credit for this economic miracle are aggregated data based on everything that counts as a job. Incredibly even people working on zero-hours contracts are included in these figures as are those who are on any type of work scheme. So you don't actually have to be working to be counted in the government's jobs figures. Any government spokesman who presents data on increases in jobs without relating these two full-time equivalent jobs is, if not a liar, at least being very economical with the truth.
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27 July 2012

Understanding A Job-Creating Recession

The strange paradox of the UK economy post-2008 is that figures for output and figures for employment do not match. While the numbers that measure the actual output of the economy look disastrous, and increasingly so, the story on jobs is that many more of them are being created. The level of employment in the economy as a whole is up by 159,000 jobs in the 12 months to May. Even allowing for the fact that many of these are part-time jobs, this is still an impressive performance for an economy in deep recession. While the unemployment figures illustrated in the graphic are less encouraging, and show a clear divergence between the claimant count and the actual rate of unemployment, this still doesn not look like an economy suffering the worst downturn on record.

Part of this is undoubtedly resulting from the sorts of social factors that economic statistics can never capture; employers protecting their staff, perhaps because they value their skills or perhaps because they know their children; people protecting each other, even though there is not really enough work for them to do. The rhetorical attacks on the unemployed and all those who seek social support in times of crisis has also undoubtedly led many of those who are functionally unemployed to assign themselves to a range of more acceptable social categories, of which self-employment is the most popular.

On the other hand we may be observing what economists like to call a break in the trend, a historic shift in the relationship between some of the fundamental economic variables. One aspect of the change is the shift in the focus of productivity away from financial services and towards real economic output. After all if the financial sector is famed for creating money from thin air, a relatively labour-light process, then we cannot be surprised if the value-to-weight ratio of the economy is lower since that sector has massively contracted.

As in the case of the ending of growth, this may be another sign that the economy is already in transition towards a more sustainable pattern. If one of the features we are expecting is the rehabilitation of manual labour then we would expect to see a shift in the balance of productive assets away from capital and towards labour. This trend will speed up rapidly as we approach the exhaustion of fossil fuels or their prices rise as we begin to take climate change seriously. Perhaps the job generation that we are seeing now is already an indication of the green economist's claim that a green economy will be an economy that creates jobs.

This paradox is, in reality, not much of a paradox at all, but rather another indication that the way we measure our economy is not rational. If we had always measured output that really generated well-being, rather than counting money and counting jobs, we would have been able to formulate policies to reinforce what we value. This shift away from accounting to true economics could be one of the best outputs from this period in our economic history, which, in its own way, is proving particularly productive.
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