Has Britain turned a corner? If you believe the headlines it would certainly seem so. Wages are up, and unemployment appears the lowest for decades. If you believe the hype then the last decade has been a journey where the country followed a rabbit into the austerity hole and emerged into a Brexit wonderland. This is a fiction and the facts are more troubling. If Britain had full employment there ought to be a sharp rise in wage growth as businesses see the pool of labour – Marx’s reserve army of the unemployed – dry up. Yet wage growth has dropped from 4.1% in April last year to 2.8%. Pay packets are still smaller than they were a decade ago. Total pay is £503 a week, well below the £522 a week workers took home before the crisis began in 2008.
The “employment miracle” hailed by ministers is in fact a symptom of a British disease of economic insecurity. Unstable, precarious, low-paying and temporary jobs have become the norm for too many. The number of part-timers who can’t find full-time jobs is rising by 18,000 a month. In the middle of 2018, there were 781,000 people on zero-hours contracts. There are now 974,000. Then there is the growth in self-employment. In 2000 around 11.7% of those employed set up businesses on their own, where they earn considerably less than those with full-time jobs. That number is now 15.2%, the highest on record.
David Blanchflower, professor of economics at Dartmouth College, says in a forthcoming paper that “there is little evidence … that [the UK labour market is] anywhere close to full employment and [hasn’t] been … since the onset of the Great Recession”. The Guardian cannot see why he is wrong. A lack of well-paying jobs has a big cost for society: people are less happy and they worry more. One can be accused of being too gloomy and told that Britain has a bright future ahead. No doubt somewhere a hatter is holding a tea party with a dormouse in the teapot.
Is there any sign that Boris Johnson understands that monetary policy has failed and there needs to be fiscal intervention to bolster demand for proper jobs? Not much. Just increasing the fiscal deficit won’t help – in the US Donald Trump is spending 4.6% of GDP more than he takes in taxes (the comparable UK figure is about 2%). However, most of the cash flows via tax cuts to the richest, who do not spend it. Mr Johnson promises infrastructure spending in Labour areas that voted Tory. The economic returns from such spending won’t materialise for a decade – not in time to impress anyone who lent the Tories their votes. Mr Johnson might opt for broader tax cuts, but the cash is likely to be used by firms and households to reduce high debt levels. If Mr Johnson wanted to spend for sustainable prosperity, he’d be looking at shovel-ready projects in distressed areas. Instead the PM is eyeing a vote to restore the power of governments to time elections to suit their partisan purposes. That may be a bigger clue to the nature of Mr Johnson’s fiscal stimulus than anything in next month’s budget.
