The silent British jobs crisis

Lazy and workshy

The Jarrow Marchers: feckless and workshy

In 1936, at the height of the Great Depression, unemployed workers from Jarrow marched almost 300 miles to Westminster, led by their Labour MP Ellen Wilkinson, in protest against poverty and unemployment. When they finally got there, their petition was accepted and little more was done. The last marcher died in 2003, though one man who took part in the final leg of the protest held on until 2012 – just long enough to see the same catastrophic mess happen all over again.

The Work and Pensions Secretary Iain Duncan Smith, who has done so little to help the unemployed yet thinks he has done so much, was involved recently in what is usually called a ‘heated debate’ with radio presenter James O’Brien (available here). While there was, as usual, more heat than light, O’Brien was the first interviewer I’ve heard to actually put the concrete figures – not just about unemployment, but about vacancies – to Mr Duncan Smith.

The government have

identified two key problems with the current system:

  • work incentives are poor, and
  • the system is too complex.

We are reforming the system to help people to move into and progress in work, while supporting the most vulnerable.

Reforming the benefit system aims to make it fairer, more affordable and better able to tackle poverty, worklessness and welfare dependency. We are committed to overhaul the benefit system to promote work and personal responsibility.

So the problem, in their estimation, is that there aren’t enough incentives to get into work. The welfare system has trapped people, and the most effective way of tackling the problem is by changing the psychology and incentives of the unemployed.

That’s what the government say. It’s also what the Daily Mail – owned by the 45-year old Viscount Rothermere, a friend of David Cameron who inherited his £1.02 billion fortune from his dad – would have you believe. But what are the actual facts?

According to the Office of National Statistics, there are 2.5 million people unemployed in the UK. That is 7.8% of the working population. The government will constantly tell you that this is down on last year, and indeed it is – by 0.6%. But before you pop out the champagne, it’d be wise to dig a little further.

A sudden burst of laziness?

A sudden burst of laziness?

The first thing to notice about this chart is that unemployment rather mysteriously correlates with the wider economic crisis. How strange! What stood at 5.3% in 2007 reached a peak of 8.5% in 2011. This seems to put into question the claim of the government that the problem is the welfare system, rather than the wider economy…

The second thing to notice is that, after the sudden rise in 2007/8, the unemployment rate was ever-so-slightly beginning to trend down by  2010. This is in keeping with the very tepid growth that stood when Gordon Brown left office. But then, under the Coalition, we see unemployment dramatically sharpen upwards again, to 8.5%. So the boasts of the government that unemployment is falling essentially amount to “We made it worse, and now we made it better again.” Except even ‘better again’ is a stretch: unemployment now is essentially exactly where it was when the Coalition came to power, with a hell of a lot of added misery in between.

So next time you hear a Tory (or a Lib Dem, if they even still exist) boasting that unemployment is falling, remember that.

Now how do these figures break down?



More than half have been unemployed for over six months. And a third have been unemployed for over a year. It is this final category that is known as the “long term unemployed”. Of those 879,000 long-term unemployed, 442,000 have been unemployed for more than two years. And for all the boasts of IDS and Co, this number has decreased by only 1000 since the summer.

So in Britain today there are: 2.5 million unemployed, of which 879,000 have been unemployed for more than a year. But I’m afraid it gets worse.

There are 974,000 unemployed people under 25, and this is up 11,000 since the summer. The youth unemployment rate in Britain is 20.8%. All that talk of a ‘lost generation’ is no exaggeration. And unfortunately, one of the first acts of the new coalition was to scrap Labour’s Future Jobs Fund, which it subsequently discovered was actually quite a success.

But no! Don’t let out a breath yet! It gets even worse.

The number of people underemployed – that is, people who are working part-time but would like (and in fact probably need) to work full-time – has risen by one million since the crisis began, now standing at 3.05 million people. This is 10.5% of the entire workforce.



So when you add it all together, there are 2.5 million people unemployed – without work at all – and 3.05 million people underemployed. In other words, there are 5.55 million people in the UK today who want full time work but do not have it.

So let’s recap for the final time before the cherry on the cake.

Unemployed: 2,500,000

Underemployed: 3,050,000

of which

Youth unemployed: 974,000

Long-term unemployed: 879,000

And how many vacancies are there in the UK? How many jobs have these lazy scroungers rejected?

Drum roll please!

“There were 487,000 job vacancies for November 2012 to January 2013…”


Oh bollocks.

So there you have it. For the 2.5 million jobless in the UK today, there are just 487,000 vacancies. In other words, less than half the number of youth unemployed alone.

These are the facts you will rarely hear a government minister or apologist refer to. But they are there in black and white. And when they are raised in the IDS interview, his only response is to say ‘Well I didn’t say there was a magic wand’. Great, thanks!

There is a silent jobs crisis in Britain today, and all the government has done thus far is fiddle the statistics and make it worse. So the next time you hear a government minister say they are on the right track, remember what they choose to ignore.

Oh, and by the way Mr Cameron: there is an alternative.

Update: Since the time of writing – that is, in just sixteen hours – the unemployment rate has gone upIt now stands at 2.52 million. Most stark has been the case of under 25s: youth unemployment has risen from 974,000 to 993,000 – now standing at 21.2%. The total number of people wanting full-time work but unable to get it therefore stands at 5.57 million, with youth unemployment just under one million. Great job guys! Keep it up!


Syriza and false dawns

I have just returned from a gathering at Friends House in Euston, for a talk by Alexis Tsipras. Tsipras is the head of SYRIZA, and by virtue of that party’s success in the Greek elections of 2012, Leader of the Opposition. He spoke vividly about the crisis in Greece: Between 2008 and 2012, GDP declined by a shocking 20%, and there is no end in sight as Greece enters its sixth year of recession. Official unemployment now stands at 26%, up from 24.8% the previous quarter and 20.7% this time last year. For the young it is even worse: 57.8% of those between 15 and 24 are unemployed. And in both instances, women suffer more than men: 29.7% of women are unemployed against 23.3% of men, and 65% of all women under 25. With funding for public hospitals cut by 40% many are going without drugs, and food banks and homelessness have proliferated across the country. The minimum wage has been cut by 22% (and 32% for the young) and real wages have, according to some estimates, fallen by an unbelievable 25%. And yet, in spite of all this, the Greek national debt has continued to dramatically rise.

This is a crisis of staggering proportions. For point of comparison, unemployment in the US during the Great Depression peaked at 25%; in Germany, it only took 30% to propel Hitler to power. We rightly look back at that time as an era of shocking suffering and incredible political incompetence. Well, it seems that history does indeed repeat itself, for we are witnessing the same thing all over again – though traces of tragedy far outweigh the elements of farce.

And quite apart from the grim economic realities, our times also find echo in the disturbing rise of the fascist party Golden Dawn, whose leader has openly described himself as a ‘racist’, and who are now polling as high as 12%.

It is against this backdrop that Alexis Tsipras was speaking, and indeed against which the importance of Syriza has grown. In 2009, their vote share stood at 4.6%. When parliamentary elections were held in May 2012, they quadrupled their number of seats and received 16% of the vote. When the mainstream parties failed to form a government (the social democratic and former governing party PASOK having been almost wiped out), new elections were held in June, at which Syriza received 27% – just under 3% less than the conservative New Democracy party, who now lead the government in Athens.

The success of Syriza therefore marks a sadly rare turn to the left in times of economic crisis, and despite some reports that the police are particularly supportive of Golden Dawn, wider Greek society has thus far avoided the descent into scapegoating that all too often accompanies economic crises. It was suggested at the talk that this may have something to do with the heroic role played by the Greek left against the Nazis, and later against the military junta that ruled from 1968-74.

Though Tsipras was disappointingly vague on detail, he did offer a compelling understanding of the true nature of austerity. The Greek government is presently in a desperate scramble to sell off anything it can find, including beaches, ports, and the water supply. There is even talk that museums and historical sites could be put up for sale. ‘All that is solid melts into air…’ This is a historic moment: the first time that the shock therapy so frequently meted out by the West to the poor of the world is turned on the West itself. And as Slavoj Zizek brilliantly points out, “Greece is not an exception. It is one of the main testing grounds for a new socio-economic model of potentially unlimited application: a depoliticised technocracy in which bankers and other experts are allowed to demolish democracy.” And if this sounds melodramatic, you probably do not know that Germany proposed only last year to appoint a ‘budget commissioner’ with the power to overrule the elected Greek Parliament.

The aim is simple, and though cloaked in beneficient rhetoric, it occasionally erupts to the fore as in the German suggestion above. The aim is to demolish all alternatives to neoliberalism and all barriers to the accumulation of profit. Whether the European political class genuinely believe this will lead to recovery, or whether they are simply using the fog of crisis as a cover, is immaterial. The end result is the same. The living standards and bargaining power of the working people of Greece (and Portugal, and Ireland, and Spain, and on and on and on) will be broken; those spheres of public life separated from the endless pursuit of profit will be eradicated; and the power of business and finance will reign supreme and unchallenged across the continent. Tsipras understood all this, and articulated it well; certainly far better than some.

But there is a problem. We’ve been here before. Francois Hollande was elected French President in May 2012 on a broadly anti-austerity platform. By November, he was implementing spending cuts. The right were quick to crow that this proves the truth of their facile mantra, excavated from Thatcher’s acidic mouth, that ‘There Is No Alternative‘. Of course it proves no such thing. Or at least, not in the way they think it does.

I intended to ask Tsipras a question, but wasn’t picked. A girl in the audience thankfully asked something similar however, in just three words: Euro or drachma? The answer Tsipras gave shows a grave misunderstanding of the problem facing Greece, and does not bode well for the success of any future Syriza government.

His answer to the question – should Greece keep the euro, or return to its old currency the drachma – was (paraphrasing): ‘It does not matter whether we have the euro. Look at Britain. You have no euro, does that mean no austerity?’ At this, some people in the audience laughed – haha, what a clever point. No. It is a stupid point, for reasons I will make clear in a moment. Tsipras then continued ‘But that does not mean we will waste our bargaining power. Greece is just one part of a long chain in the eurozone.’

Quite apart from the contradiction in the latter part of the answer – how can membership of the euro simultaneously ‘not matter’ and be a powerful bargaining chip? – the main problem for Greece is precisely its membership of the euro. For all the talk of the Greek debt crisis, or the Spanish debt crisis, or the Irish debt crisis, none of these countries are the most indebted in the world. That honour, in fact, belongs to Japan. You’d expect, then, for the Japanese debt crisis to be all over the news too. Yet it is nowhere to be found. For over fifteen years, pundits have been predicting an imminent sovereign debt crisis – which would manifest in rocketing bond yields, as has been observed in Greece:

Historical Data Chart

In fact, this has been the result:

Yes, you are reading that right. The axis on the first chart (Greek 10-year bond yields) reaches 50. The axis on the Japanese chart reaches 2. What the hell is going on here? Greek debt is at 170% of GDP, and the rate of interest the Greek government must offer lenders rockets accordingly. The Japanese debt is 220% of GDP, and not only does nothing bad happen, it actually gets cheaper for the government to borrow. For over ten years Japanese debt has got bigger and bigger and 10-year bond yields have barely budged. Two-year bond yields are effectively zero. Those who have followed the drama over the downgrades of the United States by S&P in 2011 and the United Kingdom earlier this year will recognise a familiar pattern.

For good measure, let’s compare some more. Here’s Portugal…

Historical Data Chart

…and Ireland…

Historical Data Chart

…and Italy…

Historical Data Chart

…and Spain.

Historical Data Chart

Now here’s Britain…

Historical Data Chart

…and here’s the United States…

Historical Data Chart

Well isn’t that just odd. One the one hand you’ve got Portugal, Ireland, Italy, Greece and Spain – the so-called ‘PIIGS’. The price of their debt shot dramatically up. And on the other hand, you have Japan, the UK and the US, who have all been censured by the international credit ratings agencies, and all of whom have experienced the precise opposite of the PIIGS. The causation cannot lie in the size of the national debts – the national debt of the UK for example is larger than that of Spain. Nor can it be the nationality of the bondholders – while it is true that almost all Japanese debt is held domestically, the same is not the case for the UK. Nor can the cause lie in commitment to austerity, as Messers Cameron and Osborne like to pretend – the United States and Japan have made no concerted effort to cut spending, whereas Greece and Spain are the paragons of austerity. So what could possibly be the difference? Greece, Ireland and Spain on the one hand…Britain, Japan and America on the other…Hmm…

The difference is shockingly simple. Greece, Portugal, Ireland, Italy and Spain are all in the eurozone. That is, they do not control their own currencies. Unlike Britain or, for that matter, most other countries in the world, the countries of the eurozone have surrendered that power to the European Central Bank. That means there is a very real possibility that Greece or Spain or even France could literally run out of money. Unless the ECB is prepared to step in (which, under Mario Draghi, it has become more willing to do – hence the declining yields), those who have leant money to the eurozone countries are at real risk of losing it, especially if the governments of those countries give in to popular pressure and default on their debt. In contrast, there is no such risk for those holding British or American or Japanese bonds. It is impossible for those countries to be forced into bankruptcy. The only thing in question for those bondholders is the value of the money they get back, and that depends on all manner of factors (not least of which is the growth of the national economy). And in a time of general economic crisis, sitting your money in literally riskless bonds is a far safer bet than investing in companies that may well make a loss. This, incidentally, is a sure-fire test of stupidity. If you ever hear a British or American politician compare their country to Greece or the eurozone – and it happens disturbingly often, from Cameron and Obama down – you can be sure that person does not have the slightest clue what they are talking about, and ignore them accordingly.

So to return to Alexis Tsipras by way of Francois Hollande. In the happy event of a Syriza election victory, three things could happen. First: the German and European rulers could recognise they are fighting a losing battle and radically reverse their position in favour of a Marshall Plan-style reconstruction, and allow German wages and inflation to rise. This is what Tsipras articulated as his aim. Second: Syriza could argue for the above, fail to achieve it, and end up forced by the spectre of bankruptcy into continuing austerity measures. Third: Syriza could argue for the above, fail to achieve it, and leave the eurozone. This would allow Greece to adjust more naturally by devaluing the new drachma against the euro. It would not be painless, but it would be far less so than the austerity programme thus far.

The problem for Syriza therefore lies in this. The first option – a complete turnaround not just in Euro-German policy, but in over fifty years of German political culture – is incredibly unlikely. It is not unthinkable if the cost would be the collapse of the eurozone, but it is very hard to imagine. In the event of a Syriza victory, the expectation then must be one of immediate failure on its main objective: Frankfurt and Brussels will not be willing to reverse course. Yet if Syriza is still trapped in the view that the currency doesn’t matter – a surprisingly conservative conception of the neutrality of money – the third option will never seriously occur to them. Which leaves only option two, and all the economic suffering and political darkness that would come from such a disappointment of people’s hopes.

In sum, Syriza represent an important movement in the fight against austerity. They understand the political agenda behind the economic policy, and they show that a radical critique can find voice in a parliamentary democracy. But until they understand fully the role of the euro – as presently constituted, a neoliberal weapon extraordinaire – and act accordingly, they will remain doomed to repeat the failings of France. If the only alternative to Golden Dawn is a false dawn from Syriza, the future of Europe looks very dark indeed.