Sing when you’re winning …

… spin like hell when you’re not.

cities_in_flightThe Dillon-Wagoner Graviton Polarity Generator under Downing Street must be at full stretch:

The spindizzy field was up. It was invisible in itself, but it was no longer admitting the air of the Earth.

The myth…

Everything in the Tory garden is lovely. And is under strict instruction to remain so for the next fourteen months.

Anticipating All Fools’ Day, yesterday we had Gids Osborne anticipating “full employment”. We can expect to hear more, much more of such twaddle over the next year.

Dress it up and it looks like this:

Budget-employment

Note the little ConHome symbol in the bottom left corner. Consider what that graph would look like were it framed less narrowly.

However even ConHome are not wholly convinced:

it’s worth noting that “full employment” doesn’t actually mean having everyone who can work in work. In truth, it kinda means whatever you want it to mean. Some take “full employment” to mean an unemployment rate of around 5 per cent. Some prefer to see it as an employment rate of 80 per cent. Some think it’s got something to do with phases of the moon and ley lines.

51pnFR8xNcL._SY300_Should anyone think “full employment” means what it used to mean — the Beveridge’s 1944 notion of 3% natural churn — forget it. Even Osborne (and we’re still with ConHome here) doesn’t quite mean “full employment” when that is what he says :

So what is Osborne’s definition? He spelt it out pretty plainly in his speech. “To have more people working than any of the other countries in the G7 group,” he said, “That’s my ambition.” Which means, in effect, overtaking the employment rates of Germany (73.5 per cent), Canada (72.4 per cent), Japan (72.2 per cent). We’re currently languishing in fourth place, on 71 per cent.

The zero sum game

What we don’t know is more telling that what we are told in the hum of the Spindizzies: how many of these jobs are full-time? How many are zero-hours contracts?

Well, perhaps we have some sort of idea for that:

Chuka Umunna, the shadow business secretary, attacked the government after the figures released by the Office for National Statistics found that 582,935 workers were on the contracts in 2013.

The big increase in the figures, which is three times higher than the number given for the year the coalition was formed in 2010, follows a change in the way that the ONS assesses zero-hours contracts last summer. This meant that it increased its estimate for the number of workers on the contracts in 2012 from 200,000 to 250,000. The new methodology helped to produce the high figure for 2013.

Even that may not be the full accounting:

There is suggestion that the ONS might still be underestimating the figure. Britain’s largest trade union, Unite, has cited research by the Chartered Institute of Personnel and Development (CIPD) which has said that 1 million workers are on the contracts. Dilnot instructed the ONS to examine the CIPD work in its new assessment. The union said: “Unite believes that, in general, zero-hours contracts are unfair, creating insecurity and exploitation for many ordinary people struggling to get by.”

If getting real numbers for zero-hours is difficult, having the ConDem government to recognise realities is far more so. Yesterday’s Hansard:

The Minister of State, Department for Work and Pensions (Esther McVey): Thanks to the Government’s long-term economic plan, youth unemployment is falling. I am particularly pleased that long-term youth unemployment has fallen by 38,000 over the last year…
Alison McGovern (Wirral South) (Lab): Of the young people the Minister just mentioned who have a job, how many have gone on to work on zero-hours contracts?
Esther McVey: As the hon. Lady will know, the number of zero-hours contracts has remained fairly stable since 2000. They are called zero hours or casual hours, and they are used by Liverpool city council and Wirral council, which are Labour run. The worst council for using them is Doncaster.
We are having a full review of zero-hours contracts, and if they are exploitative we will bring about changes. Our report is due in July—something that Labour did not do for 13 years.

Pants on fire

article-2455471-18ACD5CC00000578-288_634x672-1On the contrary, Miss McVey (as left), the number of zero-hours contracts has increased disproportionately.

A report by Matthew Pennycook and others, for the Resolution Foundation, argued:

Establishing a precise estimate of the scale of zero-hours contract use is extremely difficult. Statistics relating to zero-hours contracts are not only likely to suffer from a significant degree of reporting error (many of those working under such contracts fail to accurately self-identify themselves as such) but there is also widespread ignorance among those on such contracts about their precise contractual situation.

There are two main sources of statistics on zero-hours contracts: the Office of National Statistics’ Labour Force Survey (LFS) and the Workplace Employment Relations Study (WERS). According to LFS estimates from the three-month period October to December 2012, 208,000 people reported that they were on a zero-hours contract (0.7 per cent of the workforce). This was up from just over 134,000 (0.5 per cent of the workforce) in 2006. Given the data limitations detailed above and strong evidence to suggest extensive use of zero-hours contracts in particular occupations and sectors (the National Minimum Dataset for Social Care, for example, estimates that 150,000 domiciliary care-workers alone are employed on zero-hours contracts7) it is clear that these headline figures are likely to be an extremely conservative estimate. Yet even on the basis of conservative estimates a clear upward trend, as shown in Figure 1 below, is apparent. 

So let’s have Figure 1:

Zero-hours growth

The Pennycook Report erred by deriving the available “official” statistics. As we saw above, the latest ONS figure is 2¾ times that again: 582,935.

Truth or Consequences

 Once known as Hot Springs, Truth or Consequences New Mexico is a small resort town with a year-round population of slightly more than 6,000.

Nearer home, the consequences of the banking Crash and the subsequent Slump it induced is:

Nearly half the jobs in parts of Britain pay less than the living wage, theTUC has said, as it steps up its campaign on Tuesday for workers to earn enough to cover the basic costs of living.

The TUC said a breakdown of official figures showed that on average around 20% of workers are earning less than the living wage – an informal and unenforceable benchmark – but that this rose to almost 50% in some parliamentary constituencies.

Designed to top up the legally-binding national minimum wage, the living wage is set at £8.80 an hour in London and £7.65 for the rest of the country. Ed Miliband, the Labour leader, says he wants to include the idea as part of Labour’s 2015 manifesto, while David Cameron says he supports a living wage in principle.

The TUC said that in total around 5 million people were being paid less than the living wage, with some of the areas with the greatest concentration of the low paid seen in parts of outer London.

What Osborne doesn’t say

There may have been good reasons, back in 2008-9, to spread the jobs around. Half-a-decade on, what we have is a low-wage, low-productivity economy.

The Financial Times‘s post-budget analysis was scathing:

… by far the biggest cloud hanging over the UK economy remains the productivity crisis.

While output per hour worked used to grow annually by about 2 per cent, it has not expanded at all since 2007. Without this productivity growth, there is no means of raising living standards except in the short term if people spend more than they earn.

The puzzle of why productivity appears to have stopped growing is no closer to being solved and it casts a shadow over Mr Osborne’s Budget. Even in the Autumn Statement last December, which included the economic revival in its forecasts, the picture of the longer-term outlook for the public finances was worse than last March. The deficit would certainly be lower with faster growth, but without productivity improvements, the OBR could not honestly predict the economy would keep expanding at its current pace for the next five years.

So, what exactly does Osborne’s “full employment” amount to?

If it is more of the same — low-paid, low-quality, labour-intensive, poor-productivity jobs — that is promised continued misery for millions. There will also be a short-fall in tax take, which means a squeeze on welfare and services.

It means, too, a weaker Britain, because Britain is no longer making it any more. Our marker of failure is that a quarter of all the containers going out of British ports came in full of goods, and are going out full of air.

Take a bit of historical perspective, from Larry Elliott in The Observer:

Forget Harold Wilson and the jumbo jets that allegedly cost Labour the 1970 election. Forget Nigel Lawson and the import binge of the 1980s. Britain has never seen bigger current account deficits than those it is notching up right now.

Back in the 1960s, a deficit of 1% of national output would have been seen as dangerously high. A 3% deficit would have had investors heading for the exits, prompting a run on sterlingThe shortfalls in the third and fourth quarters of 2013 averaged 5.5% of GDP, we learned last week, and yet the pound is seen as a safe-haven currency.

Which all might explain why I’m looking for hidden meanings in Blish’s Cities in Flight:

There was money aboard the city, but no ordinary citizen ever saw it … It was there to be used exclusively for foreign trade — that is, to bargain for grazing rights, or other privileges and, supplies which the city did not and could not carry within the little universe bounded by its spindizzy field.

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Filed under Britain, ConHome, economy, fiction, Financial Times, George Osborne, Guardian, Observer, politics

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