The UK government has asserted that “employment is at a record high” with 32.5m people in work, the highest figure since 1971. It took to Twitter to trumpet its success but failed to mention further findings from the Resolution Foundation, a non-partisan think tank that aims to improve living standards for those on low and middle incomes. In response, the foundation tweeted that this “impressive employment record” takes place alongside the “biggest pay squeeze” in over two centuries and huge cuts to state welfare.
This government narrative betrays the reality behind its statements about record employment. For many towns across the UK, high levels of unemployment are directly linked to Conservative austerity policies. Places such as Dundee, Middlesbrough, Preston and Swansea are not experiencing the benefits that might be expected under record high employment.
The public sector and austerity
Take Dundee as an example, a post-industrial city reinventing itself as a tourist destination with its new V&A design museum. The city is also one of Europe’s leading digital economies specialising in video game design – now under threat because of Brexit, according to a report by the industry trade body Ukie.
A decade of austerity has had a significant effect on Dundee’s labour market. The same effect is playing out in towns in the north of England like Middlesbrough and Preston, which also have even higher levels of unemployment, and have seen hard manufacturing decimated over the past 40 years. Following Wales’s post-industrial decline in the 1960s, Swansea shifted focus to the service sector, and now also relies heavily on public-sector employment. This reliance on the service sector to provide employment is a familiar story across the UK.
Austerity was implemented by the 2010 Tory/LibDem coalition in an unsuccessful attempt to reduce the budget deficit by 2015. It saw public-sector jobs slashed by 17%, and led to a 1% pay cap on public sector workers wages in 2010 – since lifted by Wales and Scotland and in part by Westminster.
This is significant for Dundee as more than 40% of its employment is provided by the public sector. According to the Office of National Statics (ONS), in 2018 69% of Dundonians were economically active, as opposed to the UK average of 78%.
Towns and cities of similar sizes in Wales and the north of England also derive between 39% and 45% of employment from public services. Where reliance on public sector employment is around 40%, economic activity amongst residents is between 8% and 10% lower than the UK average.
In contrast, towns of similar size in the south of England yield different results. St Albans, for example, has less than 18% of employment provided by the public sector and nearly 83% of residents economically active. A similar story can be found in towns like Windsor and High Wycombe. This suggests that where public sector jobs provide a substantial part of a town or city’s employment, then higher unemployment can follow because of austerity. This stems from extensive cutting of departmental budgets across public services.
Dundee has pinned high hopes on the service sector, tourism and creative industries to boost local employment levels. In its City Plan for Dundee 2017-2026 the council claims these sectors could help overcome the city’s unemployment. But life sciences and digital technology aside, the city is effectively depending on a sector with low pay and precarious working arrangements to fix its employment woes.
Zero-hours contracts and the ‘employed’
Being classed as “employed” in the UK means working just one hour a week according to the ONS – regardless of how precarious that employment might be. The ONS claims that setting the bar higher could risk missing out people who are technically economically active.
Although numbers of people working fewer than six hours per week in the UK are “low”, working such hours could not be deemed quality employment. For Dundee, poorly paid jobs or those offered on a zero-hours contract basis might “boost” the population’s economic activity on paper. But offering uncertain hours, limited rights and fluctuating earnings, they would not provide the secure, quality jobs needed to provide financial stability.
The financial and general job insecurity attached to zero-hours contracts is well documented. They can also result in poor physical and mental health for employees. Worryingly, these types of contracts are more commonly taken up by women and young people.
Dundee needs a stable and fair job economy which is underpinned by well-funded public services and the likes of oil rig decommissioning. In 2018, the Scottish government announced the opening of its Social Security Scotland office which reports say will provide more than 1,500 secure public administrative jobs in the city.
As for places like Middlesbrough and Preston, if the government actually followed through with its Northern Powerhouse project and reversed austerity job cuts in the public sector, that would help overcome general unemployment and improve the quality of jobs. And Wales would have benefited from a tidal lagoon, providing construction and permanent jobs to the area, had the project not been ditched by the UK government. Similarly, planned electrification of its railways to improve its dated network was also abandoned by Westminster.
More broadly, the UK government should stop presenting its hollow assertions of high levels of employment “success” and look to regulate the zero-hours contracts which leave millions of workers across the country in poverty.