Why Falling Unemployment Can Be Bad News For Everyone

Economic inactivity by reason (aged 16 to 64)

More people are in work than ever before claim the DWP triumphantly as the unemployment figures show another huge rise in self-employment.  Whether these people are making any money, or whether they are pensioners with an ebay hobby, does not seem to matter as the Tories attempt to spin that Iain Duncan Smith’s welfare reforms are working.

Yet all that has happened is the economy has started to grow a bit and so unemployment has fallen a bit.  This is what always happens when economies start to grow – and due to a rising population there are almost always more people in work than ever before unless there is a severe economic downturn.  It matters barely at all what governments do to unemployed people – in a recession unemployment goes up, and in a recovery it goes down.  This is because unemployed people are not responsible for unemployment, despite the multi-billion pound welfare-to-work scam pretending that they are.

Falling unemployment may be good for the country’s economy, but that doesn’t mean it’s always a good thing for the people who actually live and work here.  The key to this lies in the figures for Economic Inactivity, currently at its lowest level since 1990 according to the ONS.  This is seen by politicians of all parties as a good thing.  A closer look reveals that is far from the case.

The largest group of people who are economically inactive are those looking after a family, many who will share in their partner’s salary.  The second largest group is students, whilst there are also 1.31 million people who have been lucky enough to retire before reaching pensionable age.  The other groups include those who are long term sick, whose numbers remain fairly stable, and a million or so ‘other’ – students on a gap year perhaps, or volunteers who can afford not to claim benefits.

If the number of people who are ‘Economically Inactive’ is falling, and it is, sharply, then that means less young people who can afford to be students.  It means less parents being able to afford to stay at home with young children, and less people able to afford to take early retirement.  This is not good news if you happen to be one of those people, in fact it’s a bit shit.

What it also means is that these often more experienced workers remaining in, or rejoining the workforce, are crowding out those who are unemployed and desperate to find a job.  This is almost certainly one reason why despite dubious claims that over a million new jobs have been created,  unemployment stood at 2.46 million in the first period after this Government weren’t elected and has since fallen to just 2.24 million.  It could also explain why the number of people unemployed over 12 months was 796,000 in August 2010 and after four years of welfare reforms, workfare and sanctions aimed at this group the number has actually risen to 807,000.

A fall in Economic Inactivity really represents a downward shift in the living standards of everyone.  Those who are slightly better off are having to work longer and harder, and those at the bottom are more marginalised than ever.  It’s good news for the bosses though, as more people are chasing every job and driving down wages for us all.  And for Tories –  who can’t bear the thought of a pleb enjoying an early retirement when there’s still a few years of profit to be extracted from their work – it’s the best news of all.

Follow me on twitter @johnnyvoid