Figuring it out

The classic Thomist angels-on-a-pin-head is updated by the constant debate on UK unemployment numbers. Today (despite the Thatcher-fest) should inspire a new outbreak:

UK unemployment rose by 70,000 to 2.56 million between December and February, the Office for National Statistics (ONS) has said.

It meant the unemployment rate for the quarter was 7.9%.

The number of people claiming Jobseeker’s Allowance last month fell by 7,000 to 1.53 million.

Also, the ONS said average regular pay, excluding bonuses, rose 1%, the lowest since records began more than a decade ago.

The number of people in work fell by 2,000 in the latest quarter to February, to just under 30 million, the first time the figure has dipped since autumn 2011.

The ONS data also revealed that 900,000 people have been out of work for more than a year, an 8,000 increase on the three months to November, while the number of unemployed 16 to 24-year-olds rose by 20,000 to 979,000.

Despite the increase in unemployment, the total is 71,000 lower than a year ago. There has been a 62,000 fall in the number of people in part-time jobs, to just over eight million, with a 60,000 increase in full-time employment, to 21.6 million.

As day follows night, the ConDem understrappers have to see all that as “good news”:

Employment Minister Mark Hoban welcomed the fall in the number of people claiming Jobseeker’s Allowance (JA), and especially the drop among young people.

Only in a parallel universe is the ministry for unemployment named so perversely. Hoban seems to hail two glad tidings:

1. That the numbers failing to claim “JobSeeker’s Allowance” (it used to be unemployment benefit, and was seen as a right which was paid for by deductions from paid salaries while in work) are down. What that amounts to is many are being dissuaded from claiming their due benefits because of the “skiving” hysteria generated by government propaganda.

2. “… especially the drop among young people.” What drop? In the number of claimants, presumably — see (1) immediately above. The Office of National Statistics are reporting an increase! 18-24 year olds up 20,000 in the quarter, and up 1.5% over twelve months. This is the actuality:

youthunemployment

A coolie economy

Beyond these numbers lies a harsher truth. The British are being educated into a low-wage, low-productivity economy. Cheap labour is making investment and industrial improvement unnecessary. Last month the Financial Times‘s Brian Groom was getting closer to the real problem:

Output per hour worked fell 2.3 per cent in the final quarter of 2012 compared with a year earlier, fuelling concern about the UK’s poor productivity since the recession of 2008-09.

The figure was down 0.5 per cent compared with the previous quarter and was the sixth successive quarterly fall, according to data from the Office for National Statistics.

John Philpott, director of the Jobs Economist consultancy, said: “The figures for manufacturing productivity are very worrying. Output per hour in the manufacturing sector has now fallen for five successive quarters and in Q4 2012 was 5.2 per cent lower than a year earlier.”

He added: “Such a sharp and prolonged fall is in marked contrast to much of the period since the start of the recession in 2008, during which time manufacturing productivity has generally increased.”

Weak productivity has resulted in an overall rise in unit labour costs despite a squeeze on wages, although this has slowed since the past two quarters.

Other figures show that earnings are growing at just 0.8% over the year, while consumer prices are running at 2.8% (and predicted to rise further to 3.5% by the middle of 2013). Lest we forget, the great ConDem economic miracle (founded 2010) was going to be founded on:

  •  a shift from public- to private-sector employment (going nicely, thank you: public sector redundancies continue apace); and
  • Britain’s economy would power ahead on consumer spending.

At this point, let us bear in mind a painful fundamental:

Productivity is a key economic indicator used to measure the efficiency and competitiveness of an economy. It is a key factor determining the underlying ‘trend’ or ‘potential’ rate of growth of an economy over the medium-term.

BoE Labour productivity

Excuses! Excuses!

Ah, but it’s been the bad weather! Snow! Sun! Drought! Flood! €-crisis! Royal wedding! Locusts in Belgravia! Olympics! Jubilee! Earthquakes in Dorset! (Take your pick, as Gids Osborne does at each reiteration).

Except reality peeps through this dense fog of dissimulation, as Abigail Hughes and Jumana Saleheen ever-so-polititely explained in their study for the second quarter bulletin of 2012. This, without fanfares, gave us the quite shocking comparison of Labour productivity across countries (see right).

It doesn’t need any great expertise in graphicity to spot that, in the years of the Labour government, British productivity was consistently improving and outstripping the competitive economies. Since the crisis, all that has gone into reverse.

Meeow!

The usual explanation of why production and productivity are falling, while employment hasn’t yet plummeted, is “labour hoarding”. Employers, not necessarily out of loyalty to their employees, keep a larger work-force than they currently require. That has a logic: no business, in straits, is without a Micawber belief that Something will turn up; and reliable employees are not a commodity to be dispensed with lightly. Others place weight on a woolly notion of “intangible investment” (that amounts to improved R&D and ‘software’) — something with all the odour of a ‘thought experiment’, an economist’s version of Schrödinger’s cat.

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Filed under Britain, broken society, economy, Financial Times, George Osborne, Guardian, politics, poverty, Quotations

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