Last Saturday on this blog I wrote about the weird unemployment statistics in relation to a contracting economy, yesterday's 0.7% contraction serves only to underscore my points about the strangeness of those unemployment statistics. Quite honestly the downturn in Britain's output is not only a frightening disaster for the British economy, it sits diametrically with the recent modest fall in unemployment. How can unemployment be going down when the economy is so flat? The answer lays in five possible areas:
- The government's manipulation of the unemployment figures
- Companies hiring part time workers instead of full time workers
- Self employed people across all industries are not signing on
- Self employed sub contractors in the construction industry are not signing on.
- Temporary posts created by the Diamond Jubilee and the Olympic Games.
For the second quarter we have seen construction output plummet. It shrank by a huge 5.2 percent in Q2 (second quarter of this year) and this backs up why unemployment figures are falling and yet the country is slipping further into the worse double dip recession for over 50 years. Brickies, sparks, plumbers, chippies, plasterers etc are usually self employed, if they do not have work the majority of them do not bother to sign on. Contrary to popular belief of Tory government ministers and Secretary to the Treasury, David Gauke in particular, who believe it is morally wrong for these people to be paid in cash, most of them do have accountants, and even cash is put through their books. For this kind of worker, not only have this government made it a humiliating experience for them to sign on but because of the nature of their work and them never knowing when they will work from one day to the next, the government has made it virtually impossible for them to claim the benefits they are entitled to and have subscribed to. By forcing these construction workers to turn up for bogus and costly welfare to work programmes (which government hired scandal hit companies like A4e offer in return for being paid billions of taxpayers money) makes these workers unlikely to claim as their work can disappear and reappear often at a day's notice. They may simply and genuinely be unable to keep appointments to sign on, or be available to work for nothing, if they are forced to do this they could miss vital proper paid work, so they don't sign on, it's "Hobson's Choice". In the construction industry approximately one third of workers are self employed and it is a large proportion of these workers who are not being recorded in the official unemployment figures, it 's much the same for self employed people across all industries; further adding to the skewing of unemployment data. Proof of this is seen in consumer confidence which is at all time low, people may not be signing on while waiting for more work to come in, but because they are not earning they are short of cash so they are not spending and this is depressing the economy. If this keeps happening growth will not return and at best we will bump along the bottom and at worse our economy will contract further, pushing us ever nearer a depression.
The government manipulates unemployment data by forcing people onto work programmes for which they do not get paid; Thus reducing the number hours the company requires its permanent workers to work. This is why there is a sharp increase in the number of part time positions advertised. If companies are in receipt of workers sent by workfare programmes who are not on their payrolls, then of course they will be able to reduce the number of hours worked by their permanent staff and if they do advertise for extra staff the chances are it will be for part time workers. The government should be forced to publish the number of part time positions which are included in their overall figure of jobs being made in the private sector. It's all very well for them to boast that this quarter 80,000 jobs were created in the private sector, but if most of them are part time or low waged, this not only skews the unemployment figures it also harms growth in the economy. Yet another key reason why we are seeing the disparity between gross domestic product (GDP) and the unemployment figures.
It's galling to listen to Tory MPs and other government apologists use the Construction industry as an excuse for for falling output, inferring that if it wasn't for the construction industry then everything would be fine and the economy would be growing, it's not only galling its completely stupid.
The British construction industry employs around 2.4 million people in over 700 different types of job and there must be just on the law of averages enough people out of work and not claiming unemployment benefit at any one time to markedly skew the employment statistics
The construction industry is the UK's largest industry responsible for more than £80bn worth of output every single year and around a huge 8% of the UK's GDP.
There are approximately 175,000 construction firms in the UK responsible for the employment of over over 2.4 million people and to tick over it will require around 100,000 number of workers to be qualified to NVQ 2 standard each year. Thinking about this and adding together the Tory government cancelling the former Labour government's BFS programme (Building Schools for the Future) and their cuts to higher education and the future jobs programme as well as cutting Educational Maintenance Allowance (EMA) are all affecting employment. The government trebling tuition fees will have a major effect on skills in the coming years. A band of English universities charging higher tuition fees have suffered steep drops in applications for study this September, according to official figures.
This alone is going to have a huge detrimental effect on the construction industry and will impede future economic growth. Professional trades such as architecture, mechanical and civil engineering could also lose 20% of their manpower to retirement over the next ten years, so the need for new recruitment and training in these areas is pressing. Where is new blood going to come from if university entrants are dropping off due to young people being unwilling to saddle themselves with massive debts between £40,000 and £70,000? This will also hit the medical profession too, where are our future doctors, surgeons, consultants and professors going to come from? The private sector will not pay to train them, the private health industry is only interesting in making a profit for their shareholders, not in investing in the future health of the country.
You don't have to be a brain surgeon to understand why this government have reduced this country to the economic mess they have, the evidence is all around.
To add to Osborne and Cameron's gross mismanagement of the British economy, Government borrowing is now set to rise an extra £20bn making the total of extra borrowing around £170bn more than the former Labour government would have had to borrow. Borrowing money to pay rising benefits bill as opposed to borrowing money to invest in the country's future speaks for itself. Osborne is wasting billions of pounds.
Quite frankly is it surprising that economists and now big and small business leaders alike are viewing the Tory government's handling and in particular George Osborne's handling of the UK economy as an utter disaster?
The latest dire news that the economy shrank by 0.7% is not only a disaster for public finances and businesses, it is having a catastrophic effect on household up and down the land.
To hear the excuses from Osborne and the Tories and their apologists is not only galling, it is an insult to our intelligence. To be told that it's not Osborne and the government's fault, that it is all the fault of the previous Labour government (especially when the former Labour government handed the economy over in recovery with 3.1% overall growth and unemployment falling in real terms) and it's also the fault of the unseasonable snowy weather (in winter); unseasonably wet weather; unseasonably hot weather (in summer); Gordon Brown (the Tories default blame position); mega rich paying too much tax, the EU and the Eurozone crisis; Greece, Italy and now Spain; the Global economy; The royal wedding; the Diamond Jubilee (despite government telling us at one point they would be great for the economy); the "bloated" public sector (even though the private sector is more bloated and costing us much more G4S for example); public sector strikes (which had fallen drastically in recent years and only started again since this government insists on antagonising people and robbing their pensions) welfare fraud (which only accounts for £1.1bn as opposed to a loss in tax revenue from Tory doning companies at around £120bn); welfare dependency (despite there being NO jobs); pensioners for growing old and not dying quickly enough (even though many have provided for their own age and actually pay tax and are now being forced to fund Osborne's tax breaks for millionaires).
The excuses go on and on and at the moment in order to buffer their appalling handling of the eocnomy, Cameron, Osborne their Tories apologists are telling us that the Olympics will be fantastic for the country and that next quarter GDP will rise as a result. I hope so, but realistically looking beneath the surface I ask; "will it"? For one thing I have absolutely no faith in this government handling anything correctly and I am not basing this on my personal opinions of them, or simply on conjecture, I am basing it on the very real fact that since assuming power this government have not handled anything correctly, in fact they have been grossly inept and horrendously incompetent, everything and every policy has ended up in a total car crash, from causing panicking at fuel pumps to privatising the NHS, so excuse me if I doubt very much they will handle the Olympics legacy with any kind of competence. Quite honestly in all my life of seeing governments of both colours come and go, I have never, ever seen one quite as arrogant, deceitful and incompetent as this Tory led so-called coalition.
The private sector has struggled to fill the gap made by public sector cuts and when the Olympics draws to an end the majority of posts created by it will also end. Naturally with work on major projects such as The Shard and the Olympics drawing to a close, the construction sector looks even more bleak.
This government's appalling myopic view over education and training is also going to have a major effect on the construction industry
The time for Downing Street's lame excuses is well and truly over, the public is finally running out of patience and not that I am any great believer in the markets, with bankers etc having caused the whole global economy to almost go over the edge of a cliff, but they are running out of patience too. All the excuses put forward by Osborne, Cameron and Clegg this past 18 months do not amount to anything, when they took over the economy it was growing and in recovery, it isn't now it is in recession and that is nobody else's fault except the clowns in Downing Street, who have never held down a proper job, have no experience in business and have no experience of being in power and running this country yet are so arrogant that they think they know it all and refuse to listen to anyone else. It is they and they alone with their insane austerity measures and massive VAT hike that has sent this economy plunging by 0.7% in Q2 - or an annualised rate of 3%, they were warned repeatedly not just by Ed Balls, who incidentally like it or loathe it, has been proved exactly right, but they were warned by the world's leading economists too. Other countries have just been sitting back aghast watching the "Osborne experiment" and just waiting for it to fail - and now it has! you cannot treat a country's economy the same way you would treat your domestic household economy they are two completely different beasts, it's like trying to say a cat could be a dog, it can't and it never can be.
The hope that monetary policy alone, in the shape of low interest rates and £375billon of quantitative easing (QE - printing money) would steer the economy off the rocks has proved wrong.
It may have saved the financial sector from collapse but that is about all.
Perhaps George Osborne has forgotten what he said about QE when he was in opposition and the banks were collapsing around the world? I haven't so I'll remind him, he said:
"Printing money is the last resort of desperate governments when all other policies have failed."This was George Osborne's damning indictment of quantitative easing in 2009, when he was in opposition, now over two years on and several rounds of QE later, it appears he has changed his mind. He may like to ponder on the fact that at least the QE undertaken by the Labour government had a specific goal in mind and served a purpose and was in response to the Global financial crash. Osborne hasn't any such excuse, all his rounds of QE has been in response to his own failed policies, it is just heaping failure upon failure and chucking good printed money after bad in blind panic. What will happen when George finally runs out of non existent printed money and his £500 billion maximum has been reached and we are even further in the more than we are now?
The government keep on about growth and strategy, what strategy? They haven't got one, the lot of them are running around like headless chickens and if Vince Cable thinks this government have got their "strategy" correct, then I question his judgement too. In fact, what judgement? Cable has backed the chancellor in every single one of his proposals, he is just as deceitful and incompetent as this chancellor!
Margaret Thatcher created this mess when she was in government by decimating British industry in the form of mining, steelworks, shipbuilding etc deregulating the City and forcing the country to become over reliant on the financial sector. We now import much of which we used to make (including coal) and by selling off our gas, water and electricity the Tories have given householders and even bigger burden to bear in the form of soaring utility bills.
The subsequent implosion of the financial sector and the behaviour of greedy irresponsible bankers means this country has an enormous hill to climb and we will not get anywhere even near the foot of that hill to even start the ascent, as long as George Osborne and David Cameron are there perpetually pushing us back and impeding us with their insane unworkable incompetent policies.
Putting aside a few million for filling in potholes is not going to get the economy moving again (and local authorities are not even doing this), so by all means getting infrastructure spending under way is one solution and the Government, in the last few weeks, has given guarantees worth an estimated £51billion. But all these major projects take years in the planning, if not decades to get under way and are not even due to start until 2014/15, how is that going to help now? There are plenty of ways to get the economy moving again and the Labour party has given a good account of how we could start this *now*, however, it is unlikely the arrogant Cameron and Osborne will take this up because if they do, it means admitting they got every single thing wrong.
When Tory supporting business leaders are saying Osborne has got it wrong he has something to worry about. However, it was ordinary people like me who were pointing out that the chancellor had got it wrong and that business had got it all wrong , pity in their arrogance they never listen, they know too much and it literally blinds them and they become unable to see the woods for the trees! Osborne is s now coming under intense pressure from business, the City and the Labour opposition to rethink his hardline austerity approach after news of a deepening double-dip recession dealt a severe blow to the government's deficit reduction strategy. Even the IMF has now come out and said he is wrong, pity they again kept previously backing him, giving him a ready made excuse to carry on with his insanity though, but they did. None more so that Christine Lagarde and her tailor made sound bite of the infamous shudder!
Every single major issue facing this country including the economy, Cameron, Osborne, Clegg and this mongrel coalition government full of Tory and Lib Dem incompetents has been called unequivocally wrong.
The very best thing that the Tories and the Liberal Democrats could now do for this country is to call a general election and allow the people to decide if we want to carry on letting a bunch of over privileged, under talented, inexperienced, out of their depth profoundly incompetent lying buffoons run the country into the ground. One thing is clear we cannot keep lurching from one disaster to another with this government and their alarming incompetence, something has to give somewhere and very, very soon.