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Revealed: the harsh truth behind jobs figures

Governments on both sides of the Atlantic have good news on jobs. Apparently. The real story is of people giving up the search for work and young people, in particular, facing a life on the dole.

Figures just out on the UK show unemployment falling by 82,000, and the number of people in full-time work increasing by 44,000 between May to July 2012 and August to October 2012.

In the US, Barack Obama and his administration are celebrating the drop in the unemployment rate from October’s 7.9% to 7.7% in November. At its peak, in October 2009, it was 10%.

Good news? Not for the majority of American or British or European workers.

Look a little closer and you find that the percentage of working-age Americans who are either employed or actively in search of a job was reported as 63.6% for November 2012, two points lower than the previous month and the worst the country has seen since 1978.

This more revealing measure has now been at or below 66% since the country entered a recession in late 2007 and it is getting worse. The number of Americans “not in the labour force” has grown by almost 8.5 million since the Obama administration began. Not much improvement there.

When jobs become scarce and benefits run out, millions of people just disappear off the radar to the evident delight of the government.

Alongside the loss of jobs the global recession is driving a worldwide assault on conditions of work – for those that still have it. Michigan yesterday became the 24th US State to pass ironically-named “right to work” legislation. This prevents unions for getting non-union workers to pay subs to benefit from pay awards.

An exhaustive study by economist Lonnie K. Stevans of Hofstra University shows that wages and personal income are lower in the states with so-called right-to-work laws than in those without, though employers’ incomes are higher. In short, the laws simply redistribute income from workers to owners.

Youth jobless

  • Greece: 58%
  • Spain: 56%
  • Italy: 37%

The global contraction which has claimed millions of victims, wiping out the future for a generation of young people is set to get a whole lot worse.

The youth jobless rate has reached 58% in Greece, 55.8% in Spain, 39.1% in Portugal, 36.5% in Italy, 30.1% in Slovakia, and 25.5% in France as European governments push on with ever more punitive assaults under the guise of “austerity”. 

In the UK the current batch of statistics do nothing to hide the grim future as predicted by two studies. The Institute for Public Policy Research says that the outlook is especially bleak for young people and the long-term unemployed. The IPPR finds that hundreds of thousands are at risk of permanent “scarring” by having their “long-term outlook damaged by long periods of unemployment or by a difficult and patchy entry into the world of work.”

The IPPR analysis, based on the pattern of increase in 2011, shows that 86,000 more under-25s could become unemployed next year, taking the total to around 1.05m, while a further 32,000 people could become unemployed, reaching 926,000.

A separate study by The Jobs Economist consultancy warned that "sub-zero temperatures" would persist in the UK's jobs market as the number of people short of work hits 8 million.

The headline unemployment rate shows there are 2.56m unemployed people in Britain. But the consultancy report shows a further 3.05m are "under-employed" – desperate to find more work or longer hours but cannot – and a further 2.58m people are "economically inactive" but want a paid job.

The overall work shortage rate compared to the working age population is 23.8% – three times higher than the official unemployment rate.

This is no accidental by-product of attempts to rescue the global financial system, nor is it as many claim, the result of bad policy which could be replaced by an even more hefty dose of credit by pushing more money into the economy.

The wholesale elimination of productive capacity is a necessary consequence of the drive for profit. Like a monster, it is devouring its own in the shape of the unemployed and the under-employed. Surely it’s time to slay the capitalist dragon?

Gerry Gold
Economics editor
12 December 2012

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