Article 3WSZ9 The Guardian view on record employment: Not the whole picture | Editorial

The Guardian view on record employment: Not the whole picture | Editorial

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Editorial
from Economics | The Guardian on (#3WSZ9)
Economic insecurity means that real unemployment is double that which is officially recorded. A new institutional framework to deliver and maintain full employment is needed

Britain's employment problem would on the surface appear to have been solved. Officially just one in 25 Britons are now unemployed, the lowest rate since the winter of 1974-75. Younger workers look to be finding jobs more easily than ever. Older workers are staying in employment for longer. Although the economy has created over 1m jobs since 2010, real wage growth remains flat. Britain is a jobs factory but for insecure, low-paid work. More people are employed, but on static real - that is, inflation-adjusted - wages. Real wage growth averaged 2.9% in the 1970s and 1980s, 1.5% in the 1990s, 1.2% in the 2000s. It is zero today. This is not normal, yet the authorities are determined to believe it is so.

The Bank of England is in denial. Wage growth is the clearest signal as to whether monetary policy is tighter or looser than the economy can sustain. Instead of focusing on that, the Bank concentrated on the record low employment and raised interest rates this month, putting pressure on indebted households. The Bank has been criticised for "clear signs of 'groupthink' among its leadership". It seems to be still suffering from it. But the Bank is not to blame. The guilty are in power. The Conservative party's achievement has been to strip away bargaining power from employees and have them work on the terms offered by employers. The result has been widespread use of zero-hours contracts, self-employment and other forms of underemployment.

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