If unemployment is at an all-time low, then why are we all skint?

So much for the Tory slogan that “work is the best way out of poverty”.

The UK jobless rate has fallen to 4.5 per cent of the workforce. According to definitions used in the USA and France (and elsewhere, probably) that means we have full employment and people should be able to demand higher wages or walk out and get another job.

In practice, we know that doesn’t happen. Most of the jobs are extremely low-paying, or zero-hours work, and we have no fewer than six million people who do not pay taxes because they simply don’t earn enough.

And with inflation at a recent-years high of 2.9 per cent, we know that average pay isn’t even rising to compensate for the increase in prices.

So what does the low unemployment rate mean?

It means a huge rise in profits for rich employers who dictate pay rates.

They have been able to use ‘austerity’ to threaten British workers for the last seven years, and now they have the opportunity to say economic instability caused by Brexit means they cannot afford to put up people’s pay. They have the credit ratings agency Moody’s to back them up.

Luminaries like Professor Simon Wren-Lewis of the Mainly Macro blog have said that the prime duty of UK economic policy at the moment should be raising interest rates, as this will lessen the risk of economic shocks like that which we’re told Brexit threatens.

But Tory austerity has ensured that interest rates stay low. The reason?

To ensure that pay is kept artificially low.

It also reveals another telling fact:

The Conservatives are happy to keep the UK economy weak, in order to impoverish the working population.

The trouble is, this doesn’t even make economic sense for employers!

With less money available to working people, there is less for them to spend. This means demand for products will drop and the economy will weaken further.

The Tories are happy for this to continue, at least for the foreseeable future, because they are focusing on short-term profits for their friends and party donors.

Ben Brettell, a senior economist at Hargreaves Lansdown (whoever they are), has said it seems workers don’t have the bargaining power they once had – which suggests a surprising ignorance of politics since the rise of Thatcher.

Neoliberal economic policy – as followed by Thatcher, Major, Blair, Brown, Cameron and May – has made a priority of depriving workers of any bargaining power. They are now entirely at the mercy of employers and government policy.

So, if another crash happens – as seems inevitable under current Tory-fuelled conditions – it won’t be the fault of the workers.

That will be scant comfort when the Tories penalise us all for it, as they did from 2010 onwards.

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9 thoughts on “If unemployment is at an all-time low, then why are we all skint?

  1. Josef

    I’m confused now. Both me and my wife are healthcare workers (nurse & paramedic). We struggle now. How will raising interest rates which will cause us more hardship help us?
    I admit that I’m not great with economics but honestly can’t see the benefit for workers to have even less in their pockets.

    1. Mike Sivier Post author

      I’m afraid my best explanation was in the article. I suggest you visit Mainly Macro for further help.

  2. Jeffrey davies

    Oh dear hiding figures that really
    Should be shown those working for all the poverty pimps
    Maximus remploy salvation army mind heart it’s endless
    List even tescos and all those others who takes a slave all
    These still unemployed yet not cased has oh dear me they can’t alf

  3. Dez

    I have no faith in any Cons or Government figures plucked from their magic data tree,
    it is all PR or their fake news. Does employed include the massive and growing self employed gig economy exploiting with low cash pay and no overheads. How many reduced timers are there out there all keeping income below the benefits reduction radar and many more in the black market cash economy. Would be interesting if the Cons employment numbers could be broken down into these new type of zombie economic workers where much of it is not real employment with benefits and pensions. They are blinkered about future pensions, that will be required for those retiring (if they live long enough) and have not contributed to any private, company or government pension scheme.

  4. Zippi

    Employment does not mean payment. £ook at Call-Me-Dave’s Big Society! £et the unemployèd volunteer, like that will pay their bills! Another word for employ is USE!

  5. Zippi

    “So, if another crash happens – as seems inevitable under current Tory-fuelled conditions – it won’t be the fault of the workers.” It wasn’t our fault last time; it was engineered by the wealthy. Why else is it that, despite the financial crisis, wealthy people became significantly wealthier? I have been informed, by somebody close to certain persons, that it was all a game.
    Regarding so-called full employment; how, on Earth, do these people arrive at these figures? Whence comes their data? Are they aware of how many people are holding down 2, 3, or more jobs?
    Parasites don’t usually kill their host, for it is not in their best interest but it seems that the Tories are set to do just that.

    1. Mike Sivier Post author

      I wasn’t saying it was the workers’ fault last time. Sorry if that wasn’t clear.

  6. Barry Davies

    That is because they count the 100’s of thousand who have been sanctioned or otherwise denied benefits as working. Just another day another con.

  7. It's Me

    I am employed, but I haven’t had any paid work for twelve years.Where the logic is in that, I have no idea.

Comments are closed.