The real rate of worklessness is quadruple the official rate

 In reality, about 21.5% of British workers are either officially unemployed, inactive, or employed part-time even though they really want full-time work.
  • Government statistics put unemployment in Britain at just 4.5% — a record low not seen since the 1970s.
  • But the real rate of unemployment is four times that.
  • We walk you through the evidence that shows why official unemployment numbers are so misleading.

LONDON — Unemployment in Britain is now just 4.5%. There are only 1.49 million unemployed people in the UK, versus 32 million people with jobs.

This is almost unheard of. The last time unemployment was this low was in December 1973, when the UK set an unrepeated record of just 3.4% unemployment.

The problem with this record is that the statistical definition of “unemployment” relies on a fiction that economists tell themselves about the nature of work. As the rate gets lower and lower, it tests that lie. Because — as anyone who has studied basic economics knows — the official definition of “unemployment” disguises the true rate of unemployment. In reality, about 21.5% of all workers are without jobs, or 8.83 million people, according to the ONS.

That’s more than four times the official number.

Here is how it works. First the official numbers from the ONS, showing unemployment at 4.5%:

ONS ONS

For decades, economists have agreed on an artificial definition of what “unemployment” means. Their argument is that because there is always someone who is taking time off, or has given up looking for work, or works at home to look after their family, that those people don’t count as part of the workforce. In addition, the unemployment rate can never truly hit zero, because even when people change jobs they tend to take a break of a few weeks between them. Very few people quit on Friday and start at a new place on Monday. In the UK and the US, technical “full employment” has, as a rule of thumb, been historically placed at an unemployment rate of somewhere between 5% and 6%. When unemployment gets that low it generally means that anyone who wants a job can have one.

Importantly, it also means that wages start to rise. It becomes more difficult for crappy employers to keep their workers when those workers know they can move to nicer jobs. And workers can demand more money from a new employer when they move, or demand more money from their current employer for not moving.

The UK right now should be a golden age for workers — low inflation and low unemployment. Now is the time to get a job. Now is the time to ask for a raise. It doesn’t get better than this. Wage rises ought to be eating into corporate profits as bosses give up their margins to retain workers, and capital is transferred from companies to workers’ pockets. Trebles all round!

Of course, that isn’t happening.

Wages in the private sector have not started to rise. Public sector wage rises are capped at 1%. There has been a little uptick in new hire rates, but the overall trend is flat. This is part of the proof that shows real unemployment can’t be just 4.5%:

weekly wages starting salaries Pantheon Macroeconomics

More importantly, wages are not keeping pace with inflation. Here (below) is wage growth after inflation has been taken out. Workers’ real incomes are actually in decline, which is weird because “full unemployment” ought to be spurring wages upward. Overall inflation ought to be driven by wage inflation. Yet wage inflation isn’t happening:

unemployment wages Pantheon Macroeconomics

So what’s going on?

Why does Britain have no wage inflation, if the labour market is so tight?

The answer is unemployment is not really that low. In reality, about 21.5% of British workers are either officially unemployed, inactive, or employed part-time even though they really want full-time work. (The ONS has a chapter on that here.) Some of those people — parents with newborns, university students — may not want jobs right now, but they will want jobs soon. Even when you take those out of the equation, the true rate of people without jobs who want them looks like this, according to analyst Samuel Tombs at Pantheon Economics:

slack labour unemployment Pantheon Macroeconomics

Note especially that the rump of “inactive” workers — the black bars — has stayed roughly the same for two straight decades.

The situation is worse from the perspective of men. The percentage of inactive male workers has tripled in the last 40 years, as more and more women are drawn into the workforce to replace them:

economic inactivity unemployment ONS

That last chart explains a LOT about politics in the UK right now.

On paper, Britain is supposed to be doing well — growing economy, low unemployment. So why did Jeremy Corbyn’s Labour party get so many votes at the last election? (Answer: People still feel poor, their wages are not rising, and 1 in 7 workers is out of work.) Why did a majority of people vote for Brexit? (Answer: the economy for men is basically still in recession, and men don’t like losing their economic power, so this was a good way of “taking back control.”) And why are so many people trapped in the “gig economy,” making minimum wage? (Answer: Because the true underlying rate of unemployment means companies can still find new workers even in a time of “full employment.”)

So yes, it’s great that we have “low unemployment” in Britain.

But it would be better if economists (and the business media) were a bit more upfront about how our definition of “unemployment” actually masks the real rate of worklessness, which is quadruple the official rate.

http://uk.businessinsider.com/unemployment-in-the-uk-is-now-so-low-its-in-danger-of-exposing-the-lie-used-to-create-the-numbers-2017-7

 

Unconnected and out of work: the vicious circle of having no internet

Jobseekers must spend up to 35 hours a week on online applications, or risk losing benefits. When you can’t afford a computer, this is no mean feat

….In Wigan, Lisa Wright, 47, a former factory worker who has been unemployed for three years after the food processing plant she worked for closed, is doing a mandatory six-month community work programme. Alongside 30 hours of community service each week, she has to put in 10 hours on Universal Jobmatch.

“I can only get to a computer in Wigan library on Thursday evenings, Fridays and Saturday mornings,” she said. “There’s sometimes a queue so you can hang around for up to an hour. That’s the only time I can check my emails, which means if I get sent a reply to a job application on Monday I don’t see it for days. It feels like you’re constantly doing things wrong and struggling just to keep up. I met a kid last week doing 200 hours’ community service for robbing a shop. I’m doing 780 hours’ community service and my only crime is being unemployed.”….

read more here: https://amp.theguardian.com/society/2015/apr/09/unconnected-and-out-of-work-the-vicious-circle-of-having-no-internet

 

19 million Brits are on the edge of poverty even though nearly everyone has a job — and it’s going to get worse

LONDON — New research shows that millions more people in Britain are struggling to make ends meet since the financial crisis and predicts that the situation could drastically worsen over the next few years as inflation spikes.

Research by the Joseph Rowntree Foundation released on Wednesday found that:

  • 30% of the population, 19 million people, are now below the “minimum income standard” [MIS].
  • The number below MIS has risen by 4 million since 2008/9, or a 5 percentage point rise;
  • 11 million people have incomes below 75% of MIS and are at high risk of poverty;
  • 8 million people are just about managing to get by.

MIS is an income benchmark calculated by the Centre for Research in Social Policy (CRSP) at Loughborough University. It is based on extensive surveys of people in the UK, asking them what they believe is a reasonable income.

MIS in 2016 for a single person of working age was £286.53 per week before bills, equivalent to £14,899 a year. For couples, it was £353.21 a week, or £18,366 a year. For a couple with two children, it was £776.28 a week, or £40,366 a year.

These are relatively modest budgets. The Institute for Fiscal Studies (IFS) found last year that the average income for a childless couple in the UK was £581 in 2014-15, or £30,212. That is over £10,000 more than they need under the MIS system.

The fact that so many people in the UK fall short of this relatively low threshold is alarming.

It also comes at a time when the UK is experiencing record low unemployment levels. New data released on Wednesday shows that Britain’s unemployment level remains at 4.8%, a 10-year low. Just 1.6 million people are officially unemployed.

Families with children have the highest risk of incomes that fall short of the standard, according to the report. More than half of families with children and just one parent in work are below the MIS — 56%.

The Joseph Rowntree Foundation, a social policy and development charity, says the rising risk of poverty is due to sluggish income growth rather than any increase in unemployment.

The charity says: “The price of a minimum “basket of goods” has risen 27-30% since 2008, and average earnings by only half that amount.”

Britain’s employment market has seen the rise of the so-called “gig economy” since the 2008 financial crisis, with more and more people doing low-paid, self-employed jobs such as driving Ubers or delivering food for Deliveroo. Trade union TUC estimated this week that the irregular hours and lower earnings of these types of workers means the government is missing out on £4 billion of tax revenue a year. This means these workers are missing out on pay too.

The Trussel Trust, a charity runs the UK’s only national network of food banks, said last April that food bank usage was at a record high of 1.1 million. Almost half a million emergency food supplies were given to children.

The Rowntree Foundation’s report is supported by Office for National Statistics data, which last year found that 33% of people were in poverty at least once between 2010-13 compared to an EU average of 25%.

read more: http://uk.businessinsider.com/theresa-mays-jams-joseph-rowntree-foundation-finds-4-million-people-just-above-poverty-line-2017-2

 

Benefits sanctions overused to reduce claimant numbers, critics claim

Work and pensions committee hears that sanctions have seen millions withheld from claimants since coalition tightened conditions

There is a broad political consensus that job seekers must fulfill certain obligations as a condition of receiving unemployment benefit. This consensus is breaking down, however, over how harsh this conditionality should be and whether it is effective in getting people back into work.

Ministers claim that benefits sanctions send a clear message to the tiny minority of claimants who abuse the system, making them more likely to look for jobs, and ending the so-called “something-for-nothing” culture. They have said sanctions are a “last resort” imposed on people unwilling to work.

Critics, however, say that the sanctions system has spiralled out of control since the coalition tightened benefit conditionality in autumn 2012. Ten years ago, typically a thousand people a month would be sanctioned; by October 2013 that figure hit 12,000 and currently stands at around 7,000. In some areas up to 10% of all unemployment benefit claimants were sanctioned.

Sanctioning is no longer a last resort tactic aimed at the stubbornly workshy, say critics, but a crude way of pushing down claimant numbers and cutting back on the benefits bill. The work and pensions committee has heard estimates that sanctions have seen £275m withheld from claimants – who are already living on the breadline – over the past two years. The biggest impact has been on vulnerable individuals, such as people with mental illness, who are unable, rather than unwilling, to comply with the benefit conditions.

read more here: http://www.theguardian.com/society/2015/jan/20/benefits-sanctions-overuse-claimant-numbers-reduce

Unemployment ‘being rebranded as a psychological disorder’

Unemployment is being rebranded as a psychological disorder, with an increasing range of interventions being introduced to promote a ‘positive’ psychological outlook or leave claimants of welfare to face sanctions, according to a new analysis carried out by social science researchers from Hubbub and Birkbeck, University of London published today.

The research, published in a special edition of BMJ Medical Humanities – Critical Medical Humanities, exposes the coercive and punitive nature of ‘psycho-policy’ interventions in Government workfare programmes designed to get unemployed people back into work. Ill-defined and flawed constructs such as ‘lack of motivation’ and ‘psychological resistance to work’ are being used to allocate claimants to more or less arduous workfare regimes, the paper argues.

Drawing from written accounts of the lived experience of workfare as described by those undertaking it, the authors document the impact of psychological coercion, from unsolicited emails extolling ‘positive thinking’ to ‘change your attitude’ exercises – with people  looking for work  frequently perceiving such interventions as relentless, humiliating and meaningless.

Increasingly, workfare – mandatory unpaid labour under the threat of benefit sanctions – also includes coaching, skills-building, motivational workshops and training sessions that use psychological approaches to address apparently negative perceptions and instil approved characteristics such as optimism, confidence, aspiration, motivation and flexibility.

Commenting on the study, Lynne Friedli, co-author of the paper and researcher with Hubbub – the current residents of The Hub, the Wellcome Trust’s dedicated space for interdisciplinary research – said: “Claimants’ ‘attitude to work’ is becoming a basis for deciding who is entitled to social security – it is no longer what you must do to get a job, but how you have to think and feel. This makes the Government’s proposal to locate psychologists in Job Centres particularly worrying.

“By repackaging unemployment as a psychological problem, attention is diverted from the realities of the UK job market and any subsequent insecurities and inequalities it produces.”

Robert Stearn, from the Department of English and Humanities at Birkbeck, University of London, added: “Methods drawn from psychology are being used to redefine the aims of workfare. Job Centres and welfare-to-work businesses demand that the only emotions claimants have are employable ones. At the same time, the expected outcome of a forced, unpaid work placement has become just ‘a positive change in attitudes to work’.

“Punitive benefit sanctions underwrite these uses of psychology. But the damage done to people is ignored, by both government-contracted positive psychology courses and the professional bodies that represent psychology.”

Critical Medical Humanities is a special edition of BMJ Medical Humanities, guest edited by William Viney, Felicity Callard and Angela Woods from Durham University.

The research originates from Birkbeck’s Department of English and Humanities. In the 2014 Research Excellence Framework, 75% of research in the department was recognised as ‘world-leading’ or ‘internationally excellent’

Published by Birkbeck College here: http://www.bbk.ac.uk/news/unemployment-being-rebranded-as-a-psychological-disorder

People choose to be poor and disabled – this is the logic behind the Tories’ £12bn of welfare cuts

The idea that benefit claimants can be scared or starved out of poverty is a complete myth

We’ve known since May that welfare cuts under the Conservative government would be brutal, but it wasn’t until the weekend that we found out just how bad they’re going to be.

It’s now been revealed that £12bn worth of welfare cuts will be included in next month’s budget, with even more rolled out in the autumn spending review.

Such cuts are based on nothing more than the Tory myth that poverty is a choice which people can be scared or starved out of. Osborne’s logic appears to be that if the Tories make life for poor people insufferable, they will simply choose to be well-off. As such, poverty is a lifestyle choice or a moral failing.

By framing the issue in this way, the Conservatives have narrowed the conversation, and hope people won’t be able to see the wider structural inequalities and economic failings, for which they are responsible.

But in reality, the reason why there are teenagers who will leave school this year and sign on for Jobseekers’ Allowance – rather going up to Oxford University like David Cameron and George Osborne – isn’t because of choices they made as individuals. They didn’t choose to be born into a family who could not send them to Eton or St Pauls, nor did they choose to be born into the most savage economic climate in living memory.

Nor does anyone “choose” to be disabled. Or to belong to a social class, gender or ethnic group which has been economically oppressed for centuries by the establishment.

Nor do unemployed people choose to not be in jobs which simply do not exist.

Being further deprived of their right to live with basic dignity will not mean that people on welfare will simply decide to become employed or non-disabled. Rather, these welfare cuts will serve to test, punish and degrade them further. Under existing cuts to welfare, there have been reports of welfare claimants, disabled and unemployed, who have died after being sanctioned.

In July of last year, diabetic David Clapson was found dead with just £3.44 in his bank account, without food, electricity or essential medicine in his home after his benefits were stopped.

Just last week, it emerged that Iain Duncan Smith is refusing to reveal how many people have died after having their benefits stopped, despite the Information Commissioner telling him there was no justification for his refusal. Quite why he would seek to block the figures being public is tragically transparent and represents the real cost of welfare cuts.

read the rest of this article in the Independent here: http://www.independent.co.uk/voices/comment/people-choose-to-be-poor-and-disabled–this-is-the-logic-behind-the-tories-12bn-of-welfare-cuts-10338790.html

A4e staff jailed for DWP back-to-work training fraud

Six employees at a back-to-work recruitment company have been jailed for a fraud that saw them falsely claim almost £300,000.

They worked for Action 4 Employment (A4e) which helped people gain training to get into work.

They made up files, forged signatures and falsely claimed they had helped people find jobs, enabling them to hit targets and gain government bonuses.

Four more employees received suspended sentences.

Following a 13-week trial at Reading Crown Court, four people were found guilty of taking part in the fraud in January. Six others previously admitted their part, and a further three were acquitted.

Prosecutor Sarah Wood said between them they created 167 false claims which cost the Department of Work and Pensions (DWP), which contracted A4e to carry out the work, £288,595.

Some falsified files using the names of family members, while others offered bribes in the form of vouchers to get people to fill out false forms, the court heard.

Read the rest of this BBC story here: http://www.bbc.co.uk/news/uk-england-32139244