UK “Jekyll and Hyde” economy

Record low pay and insecure work continue to shackle the supposed economic recovery, as official employment figures published today (August 13) reveal earnings grinding to a halt, despite a fall in unemployment.

Wage rises are the lowest on record, struggling at a rate of 0.6 per cent, the figures show. Including bonuses, for June to April 2014, pay was 0.2 per cent lower than a year earlier. This is the first time wages have dipped into negative territory since the economic recession.

The jobless total has shrunk by 132,000, but this figure hides the fact that previously unemployed people struggling under a draconian benefits system have moved into insecure, low-paying work.

Unite general secretary Len McCluskey said, “The British economy is in a Jekyll and Hyde situation. While the fall in the jobless total is welcome, we have to ask what sort of jobs have those people entered?”

Self-employment has surged as a portion of the labour force, now accounting for 4.6m people. This 10 per cent increase in self-employment over the past year is far from being a welcome sign: average annual earnings for the self-employed hover around ÂŁ10,500, which is nearly ÂŁ2,000 less than workers earning only the minimum wage.

“Self-employment is not the economic panacea that ministers crow about,” McCluskey argued. “It forces workers into a state without rights and with wage insecurity, and we are increasingly encountering people forced into ‘self-employment’ by employers who want to swerve their responsibilities.”

Following the published figures, the Bank of England slashed its wage growth forecast for the year to a painful 1.25 per cent increase, down from its previous prediction of 2.5 per cent.

That youth unemployment has experienced its largest quarterly and annual fall since 1992 is yet another indicator that the previously jobless are desperately moving into low-wage, precarious work.

The wage squeeze will continue to be felt, as the gap between inflation and wages widens. Inflation currently runs at 1.9 per cent – more than three times the rate of earnings.

McCluskey condemned the continued “wage siege” reflected in today’s figures and criticised the government’s complacency.

“With George Osborne borrowing way beyond what he promised the nation, his mindless austerity policies are costing this nation and its people dear,” McCluskey said. “This is no longer about reducing the deficit; it is about the systematic lowering of the living standards of ordinary people.

“The case is clear that Britain’s workers need a pay rise – and this can be well-afforded by the companies which are sitting on a cash mountain of reserves.

“This government’s claims of economic competency are laughable.  A government serious about job creation would not be borrowing to keep people in benefits, but would be investing to create work and skilled, decent jobs, through a mass house-building programme, rebalancing the economy away from its increasing dependency on the low-wages service sector, and tackling the chronic housing need in this country.”