THE BLOG

More Unemployed Misery as Falling Wages and Self-Employment Woes Hit

17/07/2014 11:18 BST | Updated 15/09/2014 10:59 BST

Today's official unemployment figures show a familiar pattern to those who watch them regularly.

According to the Office for National Statistics (ONS), in the last three months employment went up by 254,000, unemployment went down by 121,000, and the number claiming out-of-work benefits fell 36,000 to just over one million people.

The government predictably crowed, David Cameron saying:

"Today's figures show more people have the security of a job than ever before. Full employment is a key aim of our long-term economic plan."

Interesting that he used the word 'security', almost as if he was trying to push our understanding of these figures in a specific direction.

There is plenty of evidence to show why he might want to do this.

Start with another catastrophic fall in pay, which only went up 0.3% in the last year (and only 0.7% for those who do not receive bonuses, a figure which does not include 97% of Department for Work and Pensions staff).

This couldn't come at a worse time; inflation has been going up again recently and now stands at 1.9%.

To put this into context, someone earning an average £26,000 salary this year would see their pay go up by just £78 while the cost of things they buy goes up by £494 (assuming they spend everything they earn).

This only applies to those who don't pay for housing; including these sees their purchases increasing by £676 thanks partly to the Chancellor's desire to see a housing bubble before the next election and to gamble taxpayers' money on achieving it through his 'help to buy' scheme.

Those working but getting endlessly poorer provide fertile ground for anti-benefits rabble-rousing, with disgraced newspapers leading a witch hunt on behalf of billionnaire owners who might be required to pay more tax as an alternative to cuts targeting the poorest.

The government plays a big part in this too, demonising claimants and enabling jobcentres and work programme providers to cut off benefits nearly one million times last year while the mainstream press maintains an information blackout on the suffering caused.

The unemployed need to be able to afford to take work and wage increases are vital to ensure this can happen.

'Security' is an interesting concept to apply to those on zero-hours contracts, with estimates of the number involved increasing to 1.4 million recently.

The coalition may have announced it wants to end exclusivity - the right for an employer to ban you from working for someone else even when he gives you no work - but it has confirmed it will sanction those jobseekers who turn down zero hours jobs even though they could be considered 'non-jobs'.

Cameron's pretend 'security' is likely to ring hollow to many newly self-employed people. The latest figures show that more than 400,000 new registrations took place in the last year, not far off the 550,000 employee jobs created.

Unemployment actually only fell by 383,000 in the last year, meaning it would have gone up without this unusually-high level of self-employment.

Why is that a problem?

As we have written before on UnemployedNet, the swathes of public sector redundancies instituted by the coalition are driving this.

Some of those who have worked for the state struggle to get work in the private sector, and the thousands who have been laid off in each area then find themselves chasing the same jobs.

One refuge in this situation is to set up a small company or register as self-employed, and try to sell your services in the open market, which in practice often means back to your previous employers and contacts.

The fly in this ointment is twofold: many others are trying to do the same thing at the same time, and many local authorities and other public bodies have a ban on employing consultants and other external suppliers.

The continuation of redundancies in the public sector over the next few years is likely to entrench this cycle; more self-employed people chasing work which barely exists.

The result of this pattern is that average earnings fell to an average of just £10,400 (adjusted for inflation) between 2000 and 2012, well below the £13,125 someone on the minimum wage can expect for a year's work.

These aren't included in the official wage information released by the ONS, and this poverty-level pay would bring down the average significantly.

There are other problems with including this status in the official count of jobs.

We covered a story last year which showed advisors on the government's Work Programme were pushing unemployed people into self-employment as a way of claiming payments.

The companies delivering this scheme get paid the same for getting a participant into self-employment as they do for getting them into a paid job, leading some to suggest that this route is being exploited.

The coalition can crow, but the reality is that the ONS has exposed some gaping holes in the UK 'recovery'.