Economy Booming, Unemployment Dropping So Why Are So Many People Out Of Work?
by Phil T Looker, January 21, 2014
Unemployment is in freefall the latest government figures say. So why aren't we feeling it?
People are working, but work doesn't pay. Employment is up, but tax revenue is down. The economy is humming again, yet Britain is still in debt. What exactly is going on?
The latest statistics, published today show unemployment rates have fallen to their lowest level in five years. The Coalition has presided over an incredible boom in employment, with Britain gaining jobs at the fastest rate of any country in Europe. This week David Cameron even resurrected the old dream of “full employment”; our own leader column calls it a “jobs miracle”.
So why isn’t it doing us any good?
Even with more people in work than ever before tax revenues aren't what were predicted. Why? The usual suspects are involved, part time working, zero hours contracts, and the statistical trick of only counting those claiming job seekers allowance as unemployed and classifying the long term unemployed (jobseekers allowance runs out after two years,) as not economically actice. Count the real umemployed rather than the 'scientifically' umemployed and the figure has dropped little since its peak in 2009. As it happens, two analysts at Citigroup - Michael Saunders and Ann O'Kelly - have been considering exactly this question.
They found that the problem is not corporation tax – higher profits mean revenues have grown at almost double the rate they were predicted to this spring. Nor is it VAT, which has grown by exactly as much as expected. Stamp duty has gone up by 34 per cent. Neither high-rolling executives nor ordinary shoppers have slowed down their contributions. You can read the full analysis with charts in this Daily Telegraph article.
It is an excellent analysis and confirms all of the suspicions cited by busness managers and accountants. It will be useful however, for the benefit of those who are not accountants, to expand on the bare statistics in order to highlight where the under-employed, and those who claim the lion's share of working tax credits, are coming from. See this report created by a statistician with the help of a Freedom Of Information request. Yes, its another indictment of uncontrolled immigration and the eagerness of main pary politicians to smooth the path of those who arrive in our country illegally, to full residency rights.
The problem with the Government / Office of National Statistics methodology is the manner in which the UK assigns 'nationality' to anyone who wasn't born in this country, and excludes naturalised British citizens (i.e. it doesn't include non-UK born children who were naturalised).
From Table 2 in Saunders and Kelly's analysis it is notable that of lower income tax credits families with children - i.e. whose awards include both Working Tax Credit and Child Tax Credit - over a quarter (27.13%) are migrant families.
From Table 3 this group of lower income families with children forms almost half (48.25%) of all migrant families claiming tax credits. Lower income families with children form a smaller proportion of non migrant families claiming tax credits (39.14%).
From Table 3 a slightly lower proportion of migrant families are out of work families with children (26.5%) than non migrant families (31.4%). However, from Table 2 migrant families comprise nearly a fifth of tax credits families who are out of work couples with children (19.49%) but only half that proportion of out of work single parents (10.59%).
The key issue however is that despite the increase in employment numbers there has not been a corresponding increase in the income tax take.
Clearly there has been an increase in low paid low skilled jobs. The influx of labour from eastern Europe and the subcontinent combined with Gordon Browns working tax credits has meant that the elasticity of labour supply has depressed wage growth and it may be simply that the treasury models have incorrectly forecast, in their models, this effect. Secondly, there has been a significant increase in self employment, many of these self employment jobs have been created by East Europeans typically your Polish/ Romanian builders and as such the tax take from such employment is generally much lower than PAYE as a result of cash transactions etc.
Additionally, at least from my experience, much of the self employment increase has also been driven from higher Salary earners particularly in the media and IT sectors (so fed up with high levels of Tax and what they see as Government waste) that they opt out of PAYE employment and take on contract work under IR 35 where they can reduce their Tax charge by as much as 30% to 40% as well as their NI charges.
Thirdly, the very low even negative yields on fixed income investments that have resulted from the strength of the dollar must have a significant impact on the tax take.
Unemployment falling? The Great Statistical Con Trick
Even The Guardian Now Admits Immigration Depresses Wage Levels
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One third of all British workers to be replaced by machines in just 20 years
by Xavier Connolly - 11 November, 2014In what must be bad news for anyyone earning under £30,000 per year (and that’s about 90% of the working adults in the UK) thisismoney.couk today revealed that a third of all British jobs could be replaced by machines in as little as 20 years because of rapid advances in technology, according to a new study. The research, carried out by two Oxford University academics, and commissioned by management services conglomerate Deloitte, which was published earlier this week, found that repetitive processing and support service jobs are most at risk of being replaced. Rapid advances in computer intelligence puts jobs at high risk of disappearing, the researchers found. “High risk” work areas also include office and administrative support, sales and services, transport, building and extraction, and production; just about everything then. This is not only related to increased automation and advances in 'artificial intelligence' (parsing data very rapidly) of course. Offshoring work to low labour cost economies and the ever widening wealth gap betwen rich and poor are also taking their toll. Forty percent of UK jobs(mostly in London) however, are reported to be at low or no risk , the researchers said, including positions in senior management, financial services, computing, engineering and science, education, legal services, community services, the arts and media, and healthcare. The study also found that jobs paying under £30,000 a year were almost five times more likely to be replaced by machines than jobs paying more than £100,000. In some ways this makes sense but its hard to see how a Filipina domestic on £30 a week, two pot noodles a day and a folding bed in the garage, or a Romanian women trafficked here to fill a vacancy for a sex worker, can be replaced by machines. OK, so there are plans to give us all a robot sex toy but such things will be a lot more expensive that a Romanian slave. Another big question is left unanswered too, one that always strikes me when these speculations about a futurist utopia in which the needs of the elite are serviced by robots. How are all the high paying jobs going to be sustained and corporate profits kept in growth if a third of the working population have no jobs and hence no money to spend in a consumer driven economy that will completely collapse if it is allowed to stop growing? 10% unemployment is a bad news but 30%plus?
National Minimum Wage doesn’t work, never has, never will
Just reading this report by the Equality Trust reinforces the fact the National Minimum Wage (NHW) is a completely useless piece of soundbite law designed to keep the poor quiet and their employers happy bunnies. Here’s a useless fact for you – If a Worker was paid the NMW he/she would have to work until September 2nd 2357 to earn the average annual pay of an average FTSE 100 boss.
More interestingly though is if the NMW had risen at the same speed as FTSE 100 CEO pay it would be worth £12.33 an hour today, almost double the current £6.50. Worse, Compared to the NMW’s 81% increase since it’s implementation, the price of a loaf of bread has increased by 149% and the price of gas by 192% – so in effect the NMW is going in reverse compared to actual living costs.
If NMW workers were paid the National Living Wage of £7.65 an hour instead, they would receive an extra £2,182 a year – which would help.
No good news for the low paid at any of the party conferences suggested that politicians are even thinking about reducing income inequality. In fact, a raft of policies announced on pensions, welfare and housing by Dave, Ed and the other one would likely see it increase – well done them.
Lord Freud urged to explain disabled wage comment
Labour is demanding that Welfare Reform Minister Lord Freud explain to Parliament his controversial suggestion that some disabled workers are "not worth" the minimum wage. The Conservative House of Lords member has been allowed to keep his job after apologising for the remark which was dubbed "offensive" by Deputy Prime Minister Nick Clegg and triggered a storm of outraged squealing from the politically correct left, but he was removed from frontbench duties in the House of Lords, in a move which Labour said demonstrates that he does not have the "full confidence" of Prime Minister David Cameron.
Shadow work and pensions secretary Rachel Reeves said it was "unacceptable" for Lord Freud to stay in office. In a letter to the Mr. Cameron she demanded to know whether the peer had adequately explained his outburst before being given "a clean bill of health", and whether any work had been done by Government departments on proposals to allow disabled people to be employed at below the £6.50-an-hour minimum wage.
Lord Freud was recorded at a fringe meeting of last month's Conservative Party conference responding to a Tory councillor who suggested that people with mental health problems may be unable to work because employers are unwilling to pay them the statutory minimum.
He replied: "You make a really good point about the disabled ... There is a group - and I know exactly who you mean - where actually, as you say, they're not worth the full wage and actually I'm going to go and think about that particular issue, whether there is something we can do nationally, and without distorting the whole thing, which actually if someone wants to work for £2 an hour, and it's working, can we actually..."
The conversation could easily have been referring to a young man with an autistic spectrum disorder who was employed by a supermarket as a bag packer at the rear of the tills. He was meticulous in his packing, but took forever. Unfortunately if people stated packing theor own bags he tended to bget quite aggressive about it.
Liberal Democrat leader Nick Clegg said Lord Freud's comments had "cause huge offence", telling LBC radio: "I think what was so offensive to people ... was when he used this word 'worth' and he said some people with disabilities weren't worth the minimum wage. I think that is what has, quite rightly, touched a raw nerve because it's making a comment about someone's individual value."The Deputy Prime Minister said the peer's comments were "deeply distressing and offensive to people".
But he added: "That shouldn't stop any of us having a discussion and, frankly, a difficult discussion - because some of these issues are difficult - to get more people with disabilities and with other disadvantages in life into the workplace."
Typical weasel words from a politician of the politically correct consensus parties, he agrees with the point Freud his making but is saying the minister should not have spoken plainly and unequivocally on the issue. When pressed on the point of whether it is wrong for people who wanted to work for £2 an hour to be allowed to do so, Mr Clegg said there were examples where it was accepted that people were paid below the usual level of the minimum wage.
"As a society, we say it's acceptable to pay apprentices a different kind of minimum wage. We have a minimum wage operating on a different scale depending on your age," he said.
In other words Mr. Clegg is accepting the principle that a worker must be capable of performing to an economically viable level while at the same time pussyfooting around the issue of whether government and EU rules that impose quitas of disabled workers on businesses are unfair in forcing employers to pay a full wage to sombody who cannot do the job.
How the Malign, Totalitarian Left Played the 'Disability' Card to Brand an Innocent Man a Thought Criminal
from Breitbart, London: 11 Novwmber, 2014
Another day, another "full and unreserved apology" forced on someone in the public eye by the leftist Offence Police. This time the mea maxima culpa comes from a minor government minister called Lord Freud who, apparently, has been caught out saying something truly, dreadfully, almost unforgiveably evil about disabled people.
His statement says:
“I would like to offer a full and unreserved apology. I was foolish to accept the premise of the question. To be clear, all disabled people should be paid at least the minimum wage, without exception, and I accept that it is offensive to suggest anything else. I care passionately about disabled people. I am proud to have played a full part in a government that is fully committed to helping disabled people overcome the many barriers they face in finding employment. I am profoundly sorry for any offence I have caused to any disabled people.”
We all care about the disabled. But "passionately?"
This is no ordinary apology.
It's redolent of the kind of thing you might write with a knife held to your throat by Islamic State; the sort of confession you'd make after months of reeducation in a North Korean POW camp; the stuff you might say at a Kim Jong Un show trial, shortly before being thrown into a cage of fifty starving dogs. What it most definitely isn't is the language you'd expect any person to have to use anywhere outside a totalitarian state. It's just not how real people talk. Not only is it too strained and hyperbolic but it's intellectually dishonest and politically extreme.
Why, for example, is it "offensive" to the point of total unacceptability to argue that there are some occasions where it makes sense to pay disabled people below the minimum wage?
Surely there are times when it is both economically sensible and compassionate?
Sam Bowman makes a good case here:
Many severely disabled people who would like to work thus can not do so. Markets are amoral. If a severely disabled person cannot produce more than the minimum wage’s worth of work, no employer will be able to profitably employ him. Some generous ones might do so at a loss, but we cannot assume that there will be enough of them.
What Bowman is restating here is the point that Lord Freud was trying to make at a fringe event at the Conservative Party Conference, where his remarks were recorded by a Labour party activist and then used by Labour leader Ed Miliband in parliament yesterday to ambush David Cameron.
Lord Freud's point was a perfectly reasonable, caring and practical one: how do you best incentivise employers to take on disabled people who want to work but whose productivity rate may not be the equal of able-bodied employees?
In a Soviet style command economy, the solution would be simple: the State would simply force employers to absorb the costs of taking on relatively unproductive disabled staff.
But we don't (yet) live in a Soviet style command economy. We live in a free market one where businesses not unreasonably expect to maximise productivity and minimise costs by recruiting the best available staff for any given job. It is not their role to provide a welfare safety net for the less fortunate. Indeed the law actually forbids them from doing so because corporate entities are legally obliged to pursue profits for their shareholders.
So what in effect we have is a situation in which a blameless minister has been castigated for telling the truth - and then compelled by the Prime Minister into issuing a grovelling, humiliating retraction.
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