This was originally posted in July but, with Theresa May harping on about low unemployment in Prime Minister’s Questions today (September 13), a repost seems in order:
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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