Jobs, jobs, jobs

January 31, 2013

Something strange is happening in the jobs market, says Mike Tuffrey, and employers should look carefully at the claims they make.

The UK economy got smaller in the last quarter of 2012. Actually it’s smaller today than five years ago – 3.2% smaller to be precise. That means less output produced, fewer goods & services exchanged and investments made. Less activity overall – official.

At the same time, we hear news like this: McDonald’s UK is to create at least 2,500 new jobs in 2013, taking the total to 93,500 by the end of the year. During the last five years McDonald’s has added more than 20,000 people to its workforce.

It turns out that McDonald’s isn’t alone. Official data for the whole country says the number of people in work increased over the last five years. Total employment reached almost 30 million at the end of 2012, up by more than half a million on a year earlier and the highest figure since records began in 1971.

How can more people be employed if overall we are doing less? The answer is an unprecedented squeeze on employees’ earnings, leading to what economists call a ‘jobs without growth’ economy, with labour productivity and living standards falling. That’s because many of the new jobs are part-time, temporary, low paid, and highly flexible with limited benefits like pensions.

Does this matter? Isn’t a job better than no job? Well, yes, but the cost to the public purse is large and rising. People in work who can’t afford their rent can claim housing benefit. The Government says spending like this is up £6.3 billion since 2007 – that’s a heck of a subsidy to low paying private employers.

Indeed campaigners say that between 3.8 million and 5.5 million people in the UK earn less than the ‘living wage’ per hour – an estimate of the amount needed for an adequate level of warmth and shelter, and a healthy palatable diet.

So which is it – better a low paid state-subsidised job or no job at all? Europe’s young people might have a view. Across the EU, one in five 16 to 24 year olds is looking for work (22%). In the UK, nearly a million (957,000) young people aged 16-24 are unemployed. In countries like Spain, more than half (55%) are in the same boat.

One way forward is to raise the minimum wage to ‘living’ levels. Of course, some will say that would cost jobs and damage employment creation; but they said that last time a minimum was set and the statistics say otherwise. Instinctively I prefer to set the basic rules – like minimum wage levels – and let the market economy function freely, than have millions reliant on endless state subsidies, with huge costs in administration, assessment and fraud prevention.

In any event, my advice for companies is to be careful about trumpeting numbers created if you can’t show they are good, durable jobs. And for companies backing the new CSR Europe campaign ‘Enterprise 2020’ – to innovate skills development, job creation and new options for career development – to be sure your own house is in order. Coca Cola Enterprises, L’Oréal and Telefónica are among those being cited with CSR programmes in this area.

Employment, like charity, begins at home.

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