Underemployment is the major problem facing Wales

Western Mail

Despite Government claims to have ‘record’ levels of employment and to have ‘created one million private sector jobs’ the reality is very different for far too many people.

There are huge numbers of ‘underemployed’ who want to work more hours but cannot.

The Prime Minister and Chancellor repeatedly boast that in the past quarter UK employment reached a ‘record’ 29.7 million. No context, no nuance: instead a cynical use of a very misleading figure.

Leaving aside that there is a real crisis of youth unemployment and that real wages have been falling, there are more people of working-age now than there were pre-recession. Consequently, as a proportion of this working age population, the employment total is well below any figure achieved under Labour during the pre-banking crisis period from 1997-2008.

Next the ‘million new private sector jobs’ aren’t what they seem.  Apart from the 520,000 jobs lost in the public-sector, fully a fifth of those ‘new’ private-sector jobs were magically created by reclassifying lecturers at sixth form colleges as private sector rather than public sector.

But the ultimate Government fiddle of employment data is the great underemployment cover-up.  Surveys show that over one million part time workers in Britain want to go full time but employers cannot afford to offer them more shifts or hours.

In other words Britain is facing an underemployment crisis where employers cannot afford to pay employees for enough hours to guarantee their subsistence, especially if they have dependents.

In Wales 2005-2008 (pre-recession) there were, on average, 86,000 underemployed workers, representing a fairly standard underemployment rate of 6.5 per cent of the working age population.

But in the last three years, 2009-2012, there were an average of 134,000 underemployed workers in Wales, an underemployment rate of 10.3 per cent – nearly half as much again as the standard rate – and an increase of 48,000.

So one in 10 Welsh workers are being thwarted from working as much as they wish – often thwarted from bringing themselves above the benefits threshold.  There simply are no extra hours in the Welsh economy for people to work the fuller week they want to.

The situation is of particular pressing concern to young workers, already penalized by flagship government cuts in England to Educational Maintenance Allowance and Housing Benefit; one in every five young people in the UK aged 16-24 out of education are what the TUC describe as is ‘involuntarily unemployed’.

Involuntarily, not because they don’t want to work, but because they want more work – the very young people penalised and branded as lazy and work-shy because they take what remaining benefits they can to remain afloat in low-paid part-time jobs.

Women, too, are disproportionally hit, being more likely anyway to face underemployment, at a rate which has risen even faster than for men since the banking crisis. One in eight women are involuntarily unemployed, some forced into taking fewer shifts by sky-rocketing childcare costs and a flood of men entering the part-time work market that had previously been women-dominated.

Furthermore, how are they supposed to compete in a labour market already saturated and against hundreds of youngsters between the ages of 16 and 24 who every week are demoralised by being rejected as both ‘over qualified’ and ‘under experienced’?

Underemployed workers earn on average £7.49 an hour which is £3 less than the average hourly pay for a full-time employee.  Underpay can therefore be added to the list of social malaises brought on by this government’s misguided and punitive policies. Where in all of this is the ‘pathway out of poverty’ Cameron and Osborne repeatedly tout?

And what of the welfare savings the government is currently pushing for?   Underemployment means people need tax credits and other benefits to stay afloat, directly costing the government money that could otherwise be spent on desperately needed job creation policies. Instead they allow people to flounder at tax payers’ expense and then demonise and harass them for their dependency.

It is true that job creation is expensive and that public investment will be needed, increasing borrowing in the short term in order to cut borrowing in the future by getting people into work at decent wages so they pay taxes instead of drawing benefits.

Rising underemployment in Wales and across the UK is another symptom of the Government’s economic failure which is strangling growth and causing a flat lining economy.  The social cost is very high and so is debt, the deficit and borrowing – the very targets the Government was so determined to bring down.

It is high time we had a growth not a cuts policy.

http://www.walesonline.co.uk/news/news-opinion/peter-hain-underemployment-major-problem-3314946