The explanation is probably the same as last time.

From The Independent:

Real wages across the UK declined for a sixth consecutive month in August. Growth in pay packets continued to lag behind a jump in inflation triggered by a dramatic fall in the pound since the UK voted for to leave the EU.

Official data on Wednesday showed that basic wage growth was 2.1 per cent during the three months to the end of August when excluding bonuses, unchanged from the previous three-month period and marginally higher than the 2 per cent pencilled in by analysts, but well below inflation.

Figures earlier this week showed that inflation had hit a five-year high of 3 per cent in September, piling fresh pressure on the Bank of England to raise interest rates next month...

“Pay packets are taking a hammering,” said TUC general secretary Frances O’Grady. “This is the sixth month in a row that prices have risen faster than wages. Britain desperately needs a pay rise. Working people are earning less today in real-terms than a decade ago...”

Wednesday’s data also showed that job creation across the UK is continuing, albeit at a slightly slower pace. The number of people in work rose by 94,000 during the period, about half the increase in the three months to July but still a relatively strong rate of growth.

Last time we had headlines like this, somebody delved a bit deeper and worked out that wages for existing jobs were increasing as normal, in line with inflation but that all the extra jobs tend to be lower wage jobs, which drags the overall average down.

Which sort of makes sense; if a local manufacturer pays good wages, then people have extra money to spend on coffee, dragging average wages down You wouldn't expect loads of coffee shops to open up first paying low wages and then magically a manufacturer to set up business there, dragging average wages up

This effect also explains why UK productivity/productivity growth is so low. The reverse applies in France, which has much higher unemployment, but average productivity of those actually in work is much higher than in the UK.

The Germans have a different mentality and score well on both counts, of course, but then again, they have ghastly anti-capitalist measures like explicit and implicit rent controls, which is why they are all so desperately poor.

Fun with numbers: Falling unemployment vs falling median wages.

From the BBC:

UK unemployment fell in the three months to January but there was a sharp slowdown in wage growth.

The Office for National Statistics (ONS) said the unemployment rate fell to 4.7% - it has not been lower than that since the summer of 1975.

However, wage growth has slowed significantly to 2.2% from 2.6% in the previous three-month period. Wages are rising above the rate of inflation, which is currently 1.8%, but the gap has narrowed...

Chris Snowdon at the IEA reconciles this apparent contradiction:

A one per cent drop in median earnings, as shown in the FT graphic, does not mean that people have been slogging away in the same old job on lower wages than they received before the recession.

Nor should it be inferred that life is rosier in France and Spain where median earnings are slightly higher than they were in 2007. When it comes to wage data, you only count if you have a job. The unemployment rate in France is twice as high as it is in Britain. In Spain, it is four times higher.

Understanding changes in the labour market helps us to explain the counter-intuitive finding that median incomes have risen since 2007 while median wages have fallen. Part of the reason is that people who were previously on benefits have found work, thereby raising their own incomes, but have disproportionately taken jobs that pay less than average, thereby lowering the median.

In general, this has made people better off. If, on the other hand, the economy had shed large numbers of low-skilled jobs, the median income would have risen mathematically without benefiting anyone.
-------------------------
His article also mentions this:

But whilst there is no evidence that wages are falling, it is true that they have fallen and that whilst median earnings are rising they have still not returned to the levels seen in 2007. 

That is what the Financial Times chart actually shows and the FT offers several reasons for this, including the relatively high inflation rate between 2008 and 2011, but averages can be misleading and there is one statistical explanation that is so important that the ONS dedicated a whole webpage to it in 2015.

There is another obvious explanation for that. Let's assume our employer has been allocating £100 of pre-tax profit ('value added') to wage costs since 2007.

Back in 2007, the maximum he could pay out was £100 less 17.5% VAT less 12.8% Employer's NIC:

£100/1.175 x 1/1.128 = £75.49

Fast forward to 2017, the maximum he can pay out is £100 less 20% VAT less 13.8% Employer's NIC less 3% Workplace Pension contributions (assuming the median employee has opted in, which is questionable but let's run with it):

£100/1.20 x 1/1.138 * 1/1.03 = £71.10.

Those tax changes would cause a +/- 6% decline in reported total wages over the period, or 0.6% a year on average.

Fun Online Polls: Boris Johnson, Saudi Arabia & Migrants in Germany

The results to last week's Fun Online Poll were as follows:

UK Foreign Secretary criticised Saudi Arabia for starting proxy wars in the Middle East…

This is a terrible breach of diplomatic convention and he is endangering our weapons exports to a valued regional ally - 2%
Well said, that man! - 32%
He should have gone a lot further and mentioned their human rights abuses - 62%
Other, please specify - 4%

Top comment Pensieve: It's about time that someone told the Saudis we know what they're doing (even if we are beholden to them for a lot of our oil). Well done, Boris. PS I ride a bike and use a woodburning boiler for heating, so stuff your oil!

Good, I was with the majority on that one, thanks to everybody who took part, a good turnout with 99 votes.
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This week's Fun Online Poll:

What percentage of the 1.2 million Arabs who arrived in Germany in the last two years are in gainful employment?

Enter your guess HERE or use the widget in the sidebar.

Once you've entered your guess, you can check your answer here. The paragraph starting "On the bright side" is rather ironic, methinks.

Killer Arguments Against LVT, Not (355)

I must have done a couple of similar debunkations before, but this is another one which has been bugging me, where the answer is blidingly obvious if you stick to, er, actual hard facts.

The KLN goes thus: "Ah, but if somebody loses their job, how will they pay the LVT?"

Let's gloss over the fact that the two-thirds of the population have exactly this problem with rent or mortgage payments (i.e. privately collected LVT) and that somehow or other as a society we cope with this (via mortgage holidays, housing benefit or mortgage subsidies, social housing etc), it's not a big problem if you look at the numbers on short term unemployment.

According to this:

... the short-term unemployment rate, i.e. the number unemployed for six months or less expressed as a percentage of the labour force, fell to a six-year low of 3.3% over December-February and is below its 3.5% average since 1995. This suggests that job losers and people entering the labour force are finding work relatively swiftly – consistent with the message of strong demand from the vacancy rate. The current 3.3% rate is close to the 3.2% level reached before the start of the last interest rate upswing in November 2003.

So one in thirty people are between jobs at any one time. A lot of that is probably 'voluntary' and many of those will have a partner who is still in work and who can pay the LVT. So call it 2% max.

As long as there are rules in place to distinguish between people whose employer has gone out of business/who have been made redundant through no fault of their own/are likely to find another job soon; and general shirkers/the long term unemployed, they could simply exempt such people from LVT. A crude way of doing this would be to give people a cumulative six-month exemption in any rolling five or ten year period, or whatever, which they can 'use' if they are made redundant. There is no perfect right or wrong formula.

So there would be a non-collection rate of 2%, which is no lower than for any other tax anyway, tuppence ha'penny in the grander scheme of things and a great reassurance to everybody in general.

And for the long term unemployed and sporadic earners, there's always social housing (which is like LVT and a Citizen's Income rolled into one).

Nigel Farage Shows His Conservative Side

If you said to me, would I like to see over the next ten years a further five million people come in to Britain and if that happened we’d all be slightly richer, I’d say, I’d rather we weren’t slightly richer, and I’d rather we had communities that were united and where young unemployed British people had a realistic chance of getting a job.

I think the social side of this matters more than pure market economics.

I've long hated the word "communities", because most people no longer live in "communities". Eastenders and Coronation Street, societies where neighbours work together and go down the same pubs and shops may suit the needs of soap opera writers, but in the real world, we don't live like that any more. We really haven't lived like that since the late 70s when car ownership took off and we had more choices. People are far more atomised in terms of work, rest and play, and anything you do is not going to change that because in reality, that's how people want it.

To talk of "united communities" ignores the fact that people unite when they have to or want to, and I don't believe that the "social side" matters that much in those situations. OK, when we had actual communities, things like trust mattered more. You couldn't go stiffing the bloke who lived 3 doors down from you. But when you have people moving around the country for work, what difference is there between a Pole and a Welshman?

I'm not against the idea of restricting people based on economics - that if you don't, people will come here to live on benefits, but I have problems with the idea of the "social side", because I've generally got on just fine with all the immigrants I've met, whether Polish, Pakistani or American. What's the concern about the "social side"? That we'll end up being ruled by Sharia Law? If history teaches us anything, it's that the effect of the majority in an area is far more powerful on the immigrants than vice versa. What's the biggest effect on the white population of Asians coming to the UK? We now have lots more people who are good at programming? We have replaced fish and chips with chicken tikka masala? But on the other side, the impact has been far greater. Indian households have adopted western attitudes to sex and marriage. Sure, they may still get married at the Sikh temple, but they probably chose their husband, and probably had boyfriends growing up, unlike their mothers.

And as for getting young, unemployed people into a job, you do that by reforming the benefit system. People from Eastern Europe shouldn't stand a chance with applying for service jobs compared to British people for whom English is their first language but there's lots of them in Starbucks and Costas. The problem is simply that a lot of people won't take a minimum wage job when they can live on benefits.

So where's the money going?

Is it just me, or is there a bit of a mismatch between these two stories?

From the BBC:

BAE Systems is to cut 1,775 jobs at its yards in Scotland and England and end shipbuilding altogether at Portsmouth. The firm said 940 staff posts and 170 agency workers will go at the Portsmouth site, which will retain repairs and maintenance work.

Some 835 jobs will be lost at yards in Govan and Scotstoun on the River Clyde in Glasgow, Rosyth in Fife and Filton, South Gloucestershire, near Bristol.

The cuts follow a drop in work after the end of aircraft carriers work. BAE Systems said it had made the cuts because of a "significant" drop in demand.

From the BBC:

The cost of two new aircraft carriers being built for the Royal Navy is expected to be almost twice the original estimate, the government is expected to confirm this week.

In the latest budget, the Ministry of Defence is set to estimate the cost of the two ships at £6.2bn. The department says it is renegotiating the contract to avoid further significant rises. Six years ago, when the contract was approved, costs were put at £3.65bn…

Of the latest cost rises, the Ministry of Defence said: "Negotiations between the MoD and the Aircraft Carrier Alliance [the ship-builders] regarding the re-baselining of the Queen Elizabeth carrier programme are at an advanced stage…

HMS Queen Elizabeth, which will not be finished until 2016 at the earliest, will be delivered before HMS Prince of Wales.

The Aircraft Carrier Alliance is of course primarily the self-same BAE Systems.

Cameron talks shite on immigration and education

From The Express (just for a change):

MIGRANTS are flooding to the UK because British youngsters are not "capable" of working in factories, the Prime Minister has said.(1)

Speaking at an apprentice event in Oxford today, David Cameron said migrants from eastern Europe should not be blamed for coming to the UK to fill the void left by under-educated British workers.(2)

But the Conservative leader has been slammed for his "denigration" of British workers by Ukip, while Labour called for Mr Cameron take "positive action" to get more British workers into apprenticeship schemes.(3)

Mr Cameron said:

"You can go to factories in our country where half the people come from Poland, Lithuania or Latvia. You can't blame them, they want to work, they see the jobs, they come over and they do them. But as a country what we ought to be saying is 'No, let's get our education system right (4) so we are producing young people out of our schools and colleges who are fully capable of doing those jobs'."(5)

The welfare system required reform so it "does not pay to be out of work" (6) and immigration needed to be restricted, he added.

"Let's have sensible controls on immigration (7), particularly from outside the EU where we can cap the number of people who come," he said.(8)

Where to begin?

1) The unemployment rates in the three countries he mentions are 9.7%, 17.4% and 9.1% respectively (as against 7.8% for the UK), so it's hardly surprising that the brightest, best and most committed go abroad to look for work and some of them end up here.

But those people are not particularly representative of all Polish, Lithuanian or Latvian people - the lazy ones stay at home and don't work in factories either. If you start with the unemployment figures, you can easily argue that people in those countries are even less suited for "factory work" than we are.

2) Agreed. On a personal level, you can't blame them. The few Poles I've met, I've liked (even though they're a bit racist) and their shops sell a mean pickle.

But we are where we are, and a UK government has to give priority to the interests of existing UK citizens - a few of whom have lost their jobs and many of whom have seen their wages pushed down as a result of immigration (and as a result of high house prices and rents, separate topic).

3) Things have come to a sorry pass when Cameron can be simultaneously and justifiably attacked from right and left.

4) Education is a good thing in and of itself. I have it on good authority that Polish state schools are far better than English ones, so it would not surprise me if Poles are on the whole "well educated" (like the Germans). Doesn't explain their high unemployment rates though, does it?.

5) But how much "education" do you need to work in a factory? You need some innate ability, a bit of on the job training and a lot of commitment. And why do employers prefer the best, brightest and most committed Eastern Europeans to the least employable native Brits? Because they work harder and better for lower pay, is why.

If we improved our education standards so that everybody is at least capable of "factory work" (a desirable aim in itself), what will happen to all the next generation? They will still expect higher wages than the Eastern Europeans, so they still be less likely to be employed in factories.

And if we turn out a generation made up exclusively of scientists, engineers and entrepreneurs, then they will be setting up more factories (hooray) but by definition, they will be employing even more cheap labour from abroad (who would work on the shop floor if they have the skills and qualifications to be the boss?).

Or maybe all these freshly turned out scientists etc would take the opportunity to leave the UK and move to a more business-friendly country not run exclusively by and for landowners (who will do their level best to prevent new factories being built, let alone new housing for all the factory workers).

Analogy - doctors and nurses from poorer countries coming to work in the UK. The UK wastes enough money on so-called health services, but what sort of return do African countries get on training nurses and doctors who promptly bugger off to less sunny climes?

6) It's called a Citizen's Income, Dave. Google it.

7) Of course a policy - whether on immigration or anything else - needs to be "sensible", that is meaningless guff, like "fair". But why does that automatically mean reducing the absolute numbers?

Given the admitted quality of some Eastern European workers, perhaps we'd be better off with more of them (and obviously fewer Somalis who come over here to sponge).

Whether that means more or fewer immigrants in total is neither here nor.

8) Another open goal for UKIP.

Osborne's Help To Waste Time Programme

From the Independent

In his speech to the Conservative Party conference in Manchester, the Chancellor will unveil the full requirements of a £300m-a-year Help to Work programme starting next April. It will impose the most stringent conditions ever on the long-term unemployed as Mr Osborne pledges to end the option of “signing on as usual”.

Instead, 200,000 people a year who have claimed jobseeker’s allowance for three years will lose benefits unless they take up one of three options after two years on the Work Programme:

• Thirty hours a week for six months of community work such as making meals for the elderly, cleaning up litter and graffiti or charity work, plus 10 hours of “job search activity”.
• Daily attendance at a jobcentre  to search for work instead of a  brief interview once a fortnight.
• A mandatory intensive regime for claimants with underlying problems such as mental health, drug addiction or illiteracy.

People who refuse to take part will lose four weeks’ worth of benefit for their first breach of the rules and three months’ worth for a second offence.

Which pretty much means that people who don't want to work will turn up every day at the Job Centre, do a cursory, mandatory look at the jobs and then leave. Why spend 6 hours a day cleaning up litter when you can spend 30 minutes a day at the job centre? It's utterly spiteful, will cost more money and will have no effect on the unemployed.

Neal Lawson, who chairs the left-leaning pressure group Compass, said the long-term unemployed “need deep long-term help to get them working”. “Short-term gimmicks to light up the Tory conference will cost the taxpayer more and further stigmatise the most vulnerable in our society,” he added.

No, they really don't. I've recently been working in Newbury, not far from the Job Centre, as it happens, and there's enough business to keep it open. However, I also counted at least a dozen retail jobs in the town, few of which were asking for experience. Some part-time, some full-time. I'm sure that a lot of the long-term unemployed could start working in Greggs without much "long-term help".

As it is, instead of just converting to LVT and dishing out the money as CI payments and closing down the pointless job centres, we're going to have a choice between paying for the software and bureaucracy of daily check-ins at Job Centres (at whatever absurd rate the government pays) or paying a bureaucracy of people in a new quango (with a fancy website) offering advice to people who don't want to take a job because of the effects on their benefits. 

Slow news day

From the BBC:

The rate of unemployment in the UK dropped to 7.7% between May and July from 7.8% in the previous three months. The number of people unemployed fell 24,000 in the period to 2.487 million.

The governor of the Bank of England, Mark Carney, has said that interest rates are unlikely to be raised before the rate falls to 7%.

Our new Homey-in-chief can whistle for it, long term rates have doubled over the twelve months (from an all-time low of 1.5% to a historically still very low 3%).

From the BBC: Wales unemployment falls by 7,000

From the BBC: Northern Ireland unemployment rate continues to fall

Three hundred fewer people claimed the dole in August, bringing the total claimant count to 62,200.

From the BBC: Scottish unemployment up by 10,000

As per usual, they don't publish a separate figure for England, let alone dedicate a whole article to it, but by adding and subtracting, it appears the number of "unemployed" in England has fallen by 26,700.

Glad to have cleared that up.

Mark takes the opportunity of a fortuitous but hardly earth shattering "rise in numbers in employment" stat to remind the unemployed

that their being unemployed is all their fault ... but subtly, of course ...

Mark Hoban, the minister for employment, said the figures painted a "positive picture of the UK labour market."
 
He added: "There are now more jobs available than at any time since the end of 2008, and more hours being worked than ever before – which shows that there are opportunities out there for people who want to work and get on in life."

But some people, who perhaps understand things slightly better than Mark - despite him holding the office he holds, would beg to differ with his analysis.

The jobless rate as measured by the labour force survey stood at 7.8% in the three months ending in June, unchanged on the quarter to May.

That may seem at odds with recent reports of the economy going like the clappers but it isn't.

For one thing, an increase in the working age population means that the UK has to create a lot of jobs simply to stand still. 

Employment grew by 69,000 over the quarter but unemployment fell by just 4,000. The number of people employed in Britain has almost recovered to the level at which it stood before the deep recession of 2008-09, but the employment rate is 1.4 percentage points lower at 71.5%. 

That's because the number of people aged between 16 and 64 has increased by 673,000 in the past five years.

The second reason the unemployment rate is unlikely to fall sharply is that the UK is a low-productivity economy in which companies will respond to any pickup in demand by making existing employees do more. There are plenty of part-time workers – 1.4 million currently – who would like full-time employment if it was available. 

It will take a prolonged period of economic growth for these under-employed workers to be used to their full capacity, and only then will the rate of new hiring really pick up.

The Carney Short Straddle*

From that recent paper...

We find that rises in the home- ownership rate in a U.S. state are a precursor to eventual sharp rises in unemployment in that state...

What mechanism might explain this? We show that rises in home-ownership lead to three problems: (i) lower levels of labor mobility, (ii) greater commuting times, and (iii) fewer new businesses. Our argument is not that owners themselves are disproportionately unemployed. The evidence suggests, instead, that the housing market can produce negative 'externalities' upon the labor market. The time lags are long. That gradualness may explain why these important patterns are so little-known.

Let's add a possible explanation (iv) to that list as follows:

Politicians mainly want to stay in power, so they target the median or marginal voter; tyranny of the majority etc.

* Two-thirds of adults in the UK are owner-occupiers, so tenants don't matter (especially as most politicians seem to be BTL landlords nowadays).
* The bulk of owner-occupiers and landlords subscribe to the insane assumption that rising house prices make them richer.
* Two-thirds of working age adults in the UK are in work, so the unemployed don't matter.
* A third of voters are pensioners, but their votes can reliably be bought with promises of higher state pensions next year, they play little further part in the debate. Low interest rates are a two-edged sword - they don't like losing income from their savings, but they can be bribed with rising house prices the same as everybody else.

The largest easily identifiable sub-set of lowest-common-denominator target voters is thus owner-occupiers who are in work who believe that rising house prices make them richer, and the majority of these also have a mortgage and little in the way of savings.

The new Bank of England governor (who is of course entirely independent and did not discuss and agree this with the government beforehand) came up with a fantastic win-win strategy:

The promise that interest rates would not go up as long as unemployment stays fairly high!

The median target voter might be ever slightly worried about losing his job but as long as that is fairly safe, his next biggest concern is the amount he has to pay on his mortgage every month (or so the thinking goes).

Broadly speaking, the median target voter couldn't care less about other people who are unemployed because "it's all their fault" and he has little interest in there being an increase in employment because he already has a job; but now he has every interest in there being no increase in employment (or fall in unemployment) because high unemployment guarantees him a monthly windfall gain of several hundred pounds - as well as pushing up house prices (DoublePlusGood).

So in political terms, assuming that it is these median target voters who decide the outcome of the next general election, the UK government has absolutely zero interest in getting unemployment down.

There's your explanation (iv) on a plate.
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* People have often referred to the Greenspan/Bernanke Put, which basically says that if share prices or land prices threaten to fall, interest rates will be cut to push them back up again. So they guarantee a floor price for owners of shares or land.

What the UK government is doing is now akin to a Short Straddle. They are gambling on everything staying pretty much the same - high unemployment (but not so high as to cause social unrest - blaming the unemployed for unemployment only gets you so far) combined with low interest rates.

If everything stays much the same, they are quids in. it's only if it tips too far in either direction, they are in big trouble, but they won't be the ones paying to sort out the mess, so what do they care?

"I'm a believer" declares himself proud of his achievements ... and is still happy to quote "industry figures" ...

But one suspects this "everything is firmly on track, but we are doing some of it at a slower pace than we might have suggested to make sure it is all done properly" is, with a post summer recess "getting ready for 2015" reshuffle in the offing, written to try and forestall yet another round - as was the case at the last reshuffle - of renewed whispering from his close colleagues that the great man has obviously achieved much but risks suffering from burn out and deserves to be given something quieter to do...

or possibly suggestions from some of them, with an eye on exactly how much of that deficit has been trimmed by 2015 and how bad it might look if on top of not having addressed that to any great degree they have also failed on the "welfare revolution" and "curing unemployment", that "measured against his own promises he has failed and has to go, now, before the whole project goes pear shaped..."

Questions have been raised about whether the dramatic pace of our reforms is too difficult to implement. But these doubts ignore my department's proven track record of delivering change and show a lack of ambition from the people raising them. Look at what has already been achieved.

We promised a benefit cap and it began, on time, in April in four London areas. It will be completely rolled out by September. We introduced the new personal independence payment as planned and on time. Automatic enrolment started last year, and now 1 million people have been registered into a workplace pension. People are using our Universal Jobsite website for more than 5m job searches a day. Our Work Programme has launched and the industry tells us that so far 321,000 people have found a job through it.

I am proud of this record. But my main concern about the delivery of our reforms is that we bring them in safely. I have no desire to follow in the disastrous footsteps of the last Labour government and rush out changes to meet an artificial timetable, only to be forced to scramble to sort it out when it goes wrong.
I find it nothing short of amusing that the opposition is now calling for universal credit to be delivered faster.

While I welcome its support for this radical transformation – following its rejection of all our other reforms – I won't take lessons from a party that brought us tax credit chaos and oversaw the decay of the welfare system".

A Tale of two press releases ....

First Up - The Department for Work and Pensions - Number of people claiming Jobseeker’s Allowance falls across the UK

The number of people claiming Jobseeker’s Allowance has fallen in every UK region over the last month, according to figures released today by the Office of National Statistics. The total number of people claiming the benefit is now lower than in May 2010.

This was part of an overall fall of 330,000 in the number of people claiming the main out of work benefits over the last three years.

According to the ONS, this was accompanied by a significant fall in unemployment of 57,000 on the quarter – a figure which included 20,000 fewer unemployed young people.

The statistics also show:

• the number of people in work rose by 16,000 over the last quarter
• the number of people in permanent jobs increased by 49,000 over the last quarter, more than offsetting falls in temporary and part time work

Second - the Office for National Statistics -  Labour Market Statistics, July 2013

For March to May 2013, compared with December 2012 to February 2013,

• there was a small increase in the number of employed people,
  
• there was a fall in the number of unemployed people, and
  
• there was a rise in the number of economically inactive people aged from 16 to 64.
  

For March to May 2013 there were 2.51 million unemployed people, a fall of 57,000 compared with December 2012 to February 2013. The unemployment rate was 7.8% of the economically active population for March to May 2013. Compared with a year earlier there were 72,000 fewer unemployed people. 

The number of people who had been unemployed for up to one year fell by 104,000, compared with a year earlier, to reach 1.59 million for March to May 2013. 

The number of people who had been unemployed for over one year increased by 32,000 to reach 915,000, the highest figure since 1996. Looking in more detail at the 915,000 people who had been unemployed for over a year, just over half (474,000) had been unemployed for over two years, the highest figure since 1997.

Just Fancy That - or "compare and contrast" - a déja vu edition

1. The Manchester Gazette yesterday, singing the praises of Hazel Blears’ work experience scheme.

2. The Manchester Gazette yesterday, on the subject of "A Fair Day’s Pay For A Fair Day’s Work" complete with a special mention of the work being put in on this important campaign by one Hazel Blears...

It further coincides with a renewed call last month by Salford and Eccles MP Hazel Blears for all employers, including her fellow Parliamentarians, to end the practice of offering unpaid internships. Not only are they unlawful, Ms Blears believes that they are morally wrong because they give an unfair advantage to young people from better off backgrounds who can afford to work for free.

She took to the floor of the House of Commons to ask Prime Minister David Cameron to ensure that the National Minimum Wage was enforced, and that there would be no “exploitation” of students graduating from university in her constituency, and from across the country, this summer. As the law stands, anyone who works set hours and has set responsibilities is entitled to be paid at least the National Minimum Wage.

So according to Hazel and apparently the Manchester Gazette it is (still) definitely the case that forcing graduates to take unpaid internships in order to gain experience is very very wrong, but having unemployed non-graduates do unpaid work experience under a scheme to which Hazel attaches her name is fine... especially if it offers up a "photo op" or two...

See also Just Fancy That - or "compare and contrast"

"Just one in eight people placed on flagship back to work scheme have found a lasting role"

The Daily Mail does the numbers...

Just one in eight people placed on the Government’s flagship employment scheme has been found a lasting job, official figures revealed yesterday.

Of the 1.2 million people who have started on the Work Programme since it was launched in June 2011, only 132,000 have had a job lasting more than six months – just 11 per cent of the total. But the Department for Work and Pensions insisted the true headline employment figure was 13 per cent rather than 11, as 118,000 people had not been on the scheme long enough to qualify as having had a lasting job.

The scheme, which has been personally championed by the Prime Minister, pays private sector firms such as A4e and G4S to find jobs for the long term unemployed.

Employment Minister Mark Hoban insisted the figures represented a ‘significant improvement’ in the performance of the £5 billion scheme to get the long-term unemployed back to work. In its first year it found jobs for just 2.3 per cent of people.

In the original version as published in the paper this morning, they neatly calculated that £5 billion divided by 132,000 is a nice round cost - to you, the taxpayer - of £40,000 per job.

If you apply common sense and assume that most of those 132,000 people would have found a job anyway, the true cost per marginal additional job is £100,000s of course.

Also noteable is the amount of Indian Bicycle Marketing coming from the Labour MPs, instead of saying "This is shit, we'd shut the whole thing down", they say "The Work Programme is a great idea but the Tories are running it really badly - if we were in charge, it would all be so much better." for which there is not a scrap of evidence.

Well at least we now know what "a success" is ....

because the Work Programme is a success, 'giving hope' to the unemployed, as Minister for Employment Mark Hoban told us all on the 17th of this month, and today the Department for Work and Pensions published the Work Programme statistical summary June 2013  which summary contains the latest Work Programme official statistics on referrals to the Work Programme, attachments to the Work Programme and Work Programme validated job outcomes and the numbers of sustainment payments (but no consolidated information at all on "actual cash sums involved") made to Work Programme "Prime" providers up to 31 March 2013, which tells us that:-

From June 1 2011 to March 31 2013

• There were 1.20 million referred to the Work Programme and 1.16 million attached to a provider;

• 132 thousand Job Outcome payments were made to providers, which represents 13.0% of eligible Referrals. 

Work and Pensions Minister Mark Hoban hailed the figures, saying the Work Programme was helping those written off by system get back into work:  "That is a lot of lives transformed as a consequence of this programme, people who have been able to achieve their aspiration to look after themselves and their family,***" he told BBC News.

Unsurprisingly perhaps the Labour Party sought to pour cold water on this clear and obvious to all success :-

Liam Byrne MP, Labour's Shadow Work and Pensions Secretary, responding to today's Work Programme figures said:

"The Work Programme hasn't worked for over a million people.   Three years into the parliament and nearly nine out of ten people on this flagship programme have been failed. Worse of all, the government missed every single one of its minimum targets and in nearly half the country, the Work Programme is literally worse than doing nothing. No wonder the benefits bill is £21 billion higher than planned and no wonder the Chancellor himself was forced to attack 'under-performing' back to work programmes.   We can't go on like this. We desperately need a change of course starting with a compulsory jobs guarantee that would make sure everyone out of work long term would have to take a job after two years."

*** he probably means those lucky enough to actually have found some sort of work via the WP, but equally he could also be referring to the owners/shareholders in the Work Programme Prime Providers ...

Update : Thursday 27th pm.

The obviously deeply cynical Patrick Butler of the G, who rather than take the word of Mark Hoban and whatever other members of the Grand Alliance ranks who have been primed to go around telling everyone what a "roaring success" the WP is; has done some investigating and number-crunching of the published stats and, gosh, brave man wishes to dispute the Mark and Co version of what story those stats tell:-

The government's flagship welfare to work scheme has come under fire after official figures show it is still failing to help the most disadvantaged people into jobs.

Just 5.3% of people on incapacity benefit were helped into employment for at least six months by the Work Programme in its second year of operation, well below the government's minimum performance benchmark of 16.5%.

Providers also failed to meet the contractual benchmark for getting young people aged 18-24 off unemployment benefit and into jobs, and marginally missed the minimum target for getting jobless clients aged over 25 into sustained work.

Across the three jobseeker groups, successful job outcome levels stood at 24.9% against contracted levels of 27.5%.
 
Ian Mulheirn, director of the Social Market Foundation thinktank, even hinted that whilst the official figures represented "a big improvement on the first year of the programme, failure to meet the targets could put some work programme providers in danger of having their contracts terminated".  

But he quickly added, no doubt to reassure those ERSA members who had read that whilst quaffing coffee and biscuits, and suffered a choking fit; that "Poor performance against the DWP's minimum levels cannot be taken as evidence that providers are doing a bad job or that the scheme offers poor value for money: we simply do not know whether an alternative approach would fare better or worse in current economic conditions", and then went for some further muddying of the waters by concluding that "what it does show is that the scheme was poorly designed with serious consequences for long-term unemployed people"

"Ministers launched the £5bn work programme in 2011 with the explicit aim of getting 2.4m long term unemployed and sickness benefit recipients back into the job market".

Only 2.25 million short of "target" then ... and it would appear the improvement in WP outcomes will have to be "phenomenal" to get any where near it.  Something that Mark and Co appeared to acknowledge recently when they announced that get tougher with the unemployed who are 'making the Work Programme fail' regime

Nick Clegg gives a master class in Indian Bicycle Marketing

Exhibit One from The Deputy Prime Minister's Office, April 2012:

Helping young people into work through the Youth Contract

We introduced a £1 billion Youth Contract in April 2012 to help young unemployed people get a job. The Youth Contract is a range of support to make it easier for businesses to give young unemployed people a job, training or work experience.

It will provide nearly half a million new opportunities for 18 to 24 year olds, including apprenticeships and voluntary work experience placements.

Exhibit Two, from Personnel Today, 25 June 2013:

A survey of 200 employers has found that the government has failed to win their support for the coalition's flagship policy for tackling youth unemployment, the Youth Contract. None of the employers polled by the Recruitment and Employment Confederation (REC) had used the programme to employ a young person to date.

Nearly half (46%) of respondents, who have responsibility for hiring decisions at their organisation, confirmed they had heard of the scheme, but did not intend to use it, and almost one in three (30%) were "not aware" of the Youth Contract.

Exhibit Three, from an inteview with the self-same Deputy Prime Minister in Lib Dem Voice, 24 June 2013:

We’ve got a much bigger issue, which is a generational issue as we all know, which is that the squeeze has fallen harder on the shoulders of the younger generation.

That’s why I’ve come to the view that one of the urgent bits of work we need to do both in government and more widely is look at the way in which we support particularly that generation of 16-24 year olds, the education-into-work group, who are very poorly served at the moment by a hotchpotch of different and often conflicting government initiatives which are very confusing, a pea-soup of acronyms, and the money is not well spent.

One of my top priorities over this summer is to really get to grips with this, because we’re spending hundreds of millions of pounds as a society and we’re not serving them well at all.

Emailed in by BobE.

Rainfall causes droughts - shock

Tim Worstall didn't fully understand that report explaining the possible causal link between increasing rates of owner-occupation and later increases in unemployment.

He highlights one possible explanation - that if a private tenant loses his job in one area and can only find work elsewhere, he is more willing to move to find a job. The report itself pours some cold water on this by pointing out that the unemployment rate is lower for owner-occupiers than for tenants (which in turn can be explained by the fact that if you have a mortgage and lose your job, you don't stay an owner-occupier for very long...)

Nonetheless, there is a lot of truth in his following assertions:

What's required is a large and fluid rental sector. Maybe the Labour left has the answer: carpet-bombing the country with “affordable” housing. Sadly, this really means creating local council and housing association housing. And that's an even more illiquid market than the owned-housing one.

I did once press a housing charity lady very hard on the question of how long it took to move from one subsidised house in one local council area to another in another. I had to press hard because I don't think she really wanted to reveal the answer: somewhere between two and five years seemed to be that time span.

Which he then uses to draw a completely incorrect conclusion:

So if home ownership increases the unemployment rate by reducing labour mobility, then council housing must do so even more.

1. We are agreed that labour mobility is good for employment and that renting rather than owning is good for labour mobility, so a "large and fluid rental sector" must be A Good Thing.

2. And we are agreed - on the facts - that the waiting list for council housing is very long. The fact that disproportionately many social housing tenants are unemployed is possibly misleading, as this is self-selection. If you are unemployable/unemployed, you are more likely to end up in a council house than as an owner-occupier.

3. And why is it so long? It is not because local housing officers are so woefully inefficient, it is because there is not enough of it, and once you've got a council house, you play safe and stay where you are rather than go through the Hell of trying to get another one somewhere else.

4. So if we built enough* council housing, the waiting list would be days or weeks rather than years. The sector would be "larger and more fluid"

5. Hey presto - problem sorted. Lower unemployment, lower rents (even in the private rental sector) and one in the eye for the Homeys!

So his closing argument is like saying that "rainfall causes droughts". It doesn't. It's lack of rainfall which causes droughts, I think you'll find.

* Social rents usually do not include an extra charge for location value which private landlords rather unethically demand, they are set just high enough to cover actual costs. But council housing is anathema to the Home-Owner-Ist élite because they can't earn any more from it. So supply is severely constrained for political reasons and is outstripped by demand.

So in this context, "enough" means that the quantity is increased to match demand and/or that rents for the more desirable council housing is increased to dislodge a few unemployable people in potentially high employment areas.

As long the rents actually received more than cover the running costs (which they very much do, even if you knock off the large number of tenants living for free), how is this a bad deal for anybody? If you turn up your nose at the thought of living on a council estate, so what, nobody's forcing you to apply for one.

Just Fancy That - or "compare and contrast"

To be found at the personal web site of Hazel Blears MP

Item 1: Name and shame firms which use unpaid interns says Hazel

Hazel is calling on treasury chiefs to name and shame companies found to be employing unpaid interns.

Her Majesty’s Revenue and Customs has revealed that during 2012/13 it ordered nine firms to pay £200,000 to people who had worked for them as unpaid interns. But it has refused to identify any of the companies involved.

Under the law, anyone with set hours and responsibilities should be paid at least the National Minimum Wage.

Hazel called for Treasury officials to do more to enforce the law when she met with Treasury officials and employment minister Jo Swinson about the problem in January...

Item 2: Kids Without Connections was launched by Salford and Eccles MP Hazel Blears last year when young people did placements with local firms.

Ms Blears began the scheme after becoming increasingly concerned by the number of young people who told her they had missed out on jobs because they did not have the experience, but they could not get the experience because they had not had a job.

But within a couple of months of celebrating their involvement in the first Kids Without Connection at a special Parliament reception, around half of the 23 young people involved had found meaningful jobs.

Ms Blears is now inviting companies interested in offering a young person up to four weeks of unpaid work experience during the second Kids Without Connections scheme to learn more about what is involved...

Obviously some types of "unemployed people" deserve to be paid at least national minimum wage whilst gaining all important work experience and some - those from poorer backgrounds, whose families may not have connections among relatives, friends and colleagues to help them get work experience, it would appear - don't.

No doubt Hazel can explain why the distinction?

Unemployed (and lonely*?) - then join "our free dating service" 'jokes' Mark Hoban

From the "check against delivery" advance text of A team effort – role of employers in improving welfare outcomes, a speech by Mark Hoban, Minister for Employment. Originally given at Reform Research Trust - Major Policy Conference, Association of British Insurers.

"We are part way through a programme to modernise and reform the support we offer to the unemployed. Last December, we launched an online dating agency for jobseekers and employers called Universal Jobmatch.

"Using state of the art technology, we have made it easier for employers to search for the best qualified candidate for a job and we will help jobseekers search and apply for a much wider range of jobs. 24 hours a day, 7 days a week and as easily from your own home as from the job centre.

"Universal Jobmatch can be accessed through Gov.UK. To date there are over 2.4 million registered job seekers and 400,000 employers using the new matching service. Try it and it’s free."

* signing up guarantees many an interesting interaction with one of Mark's oh so friendly "advisers" and coming soon to further "spice things up" The Universal Credit Claimant Commitment!