Wednesday, 15 August 2012

UK unemployment hits lowest in a year

The fixation with average, broad statistics is getting really frustrating.

Take the GDP.  The government wants to project the belief that everyone benefits from growth, and that higher GDP means more money in your pocket.  A 0.2% contraction in GDP may hence seem quite benign, especially when figures about unemployment are not that dire.  Nobody looks into the distribution of the proceeds of the growth (and even of the decline) in GDP, e.g. has the median income increased, have the households paid pack the back-breaking debt?

The world GDP roared ahead by more than 3% over the past few years, so why is everybody that gloomy about the UK?  Well, because the UK is much worse than other similar economies and than it used to be.  By the same token, little comfort in that Britain's GDP will "only" nose-dive by some 3.5% since 2005, if most people are significantly worse off.  The implication is we are only 3.5% poorer as a nation.  Well, you and me wish it were that rosy.

If we look at unemployment, the quality of jobs, the distribution of earnings and sustainability of labour force are crucial for a robust economy.  I would rather live in a country where 9 out of 10 people make around £30k per year instead of one in which 2 out of 10 make £80k and the rest some £15k per year.  The fact that people move into "self-employment" looks like cheap statistical engineering.  Are we cheating on ourselves?  Are Brits more "entrepreneurial" just because they lost their jobs and that's the only label they can have without pulling a red face?  If instead of saying "I have been fired" people say "I am self-employed" and that makes any difference at all, then fine, but it just looks embarrassing.  Ministers claim the latest unemployment stats show the strength of the private sector.  It actually shows that consumers, employees and tax payers got a raw deal, and businesses (especially the big ones) are pampered by the government.  If any employment is the reward, I am not sure this makes sense.

Now let's look at available income.  Since 2005 the CPI went up by 22.5% (footwear went down by some 23% and education costs up by 68%).  So seven years after the height of the "best economic performance in modern Britain's history" you can't send your kids to school but they might wear fancier shoes.  Fashion aside, I'll just assume you preserved your job and your salary increased by 1% each year, that means your income went up by some 7%.  So in real terms, your wallet is 15% thinner in 2012 than it was in 2005.

What is Mr Cameron doing about it?  Certainly, he makes sure Britain is open for business, and business gets as much of the remaining 85% of your wallet as possible.  Good luck!

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