Showing posts with label underemployment. Show all posts
Showing posts with label underemployment. Show all posts

Has the economic crisis changed the class structure?


By Neil Patrick

Which class do you think you belong to? The traditional 20th century view was you were either upper class, middle class or working class. The NRS social grade system defined five classes, largely based on based on income and occupation, which went like this:

A Upper middle class: Higher managerial, administrative or professional

B Middle class: Intermediate managerial, administrative or professional

C1 Lower middle class: Supervisory or clerical and junior managerial, administrative or professional

C2 Skilled working class: Skilled manual workers

D Working class: Semi and unskilled manual workers

E Non working: Casual or lowest grade workers, pensioners, and others who depend on the welfare state for their income, this also includes students.

More recently, Mike Savage from the London School of Economics and Fiona Devine from the University of Manchester carried out The Great British Class Survey. Their results identified a new model of class with seven classes ranging from the ‘Elite’ at the top to a 'Precariat' at the bottom, reported the BBC here.

They devised a new way of measuring class, which doesn't define class just by the job that you do, but by the different kinds of economic, cultural and social resources or 'capitals' that you have.

They asked people about their income, the value of their home and savings, which together they call 'economic capital', their cultural interests and activities, known as 'cultural capital' and the number and status of people they know, which is called 'social capital'.

160,000 people completed the survey.

The full class survey was based on a theory developed by Pierre Bourdieu in 1984. This looked at a person's cultural and social life as well as their economic standing.

So what are these new seven classes?

Elite: This is the most privileged class who have high levels of all three capitals. Their high amount of economic capital sets them apart from everyone else.

Established Middle Class: Members of this class have high levels of all three capitals although not as high as the Elite. They are a gregarious and culturally engaged class.

Technical Middle Class: This is a new, small class with high economic capital but seem less culturally engaged. They have relatively few social contacts and so are less socially engaged.

New Affluent Workers: This class has medium levels of economic capital and higher levels of cultural and social capital. They are a young and active group.

Emergent Service Workers: This new class has low economic capital but has high levels of 'emerging' cultural capital and high social capital. This group are young and often found in urban areas.

Traditional Working Class: This class scores low on all forms of the three capitals although they are not the poorest group. The average age of this class is older than the others.

Precariat: This is the most deprived class of all with low levels of economic, cultural and social capital. The everyday lives of members of this class are precarious.

I think from a scientific and social research perspective, these findings make sense. But the findings concern me for several reasons.

First, the elite is quantified as 6%. And the ‘precariat’ is apparently 15%. So for every person who is enjoying a life of luxury and comfort, there are 2.5 people who aren’t really ‘living’ at all. Can we really consider that our society is a success with numbers like that?

Wealth inequality in Britain is continuing to grow at a frightening rate. A study entitled "Divided we Stand: Why Inequality Keeps Rising” by the Organisation for Economic Co-operation and Development (OECD) reported its conclusions on the causes, consequences and policy implications for the ongoing intensification of the extremes of wealth and poverty across its 22 member nations.

Income inequality in OECD countries is at its highest level for the past half century. The average income of the richest 10% of the population is about nine times that of the poorest 10% across the OECD, up from seven times 25 years ago.

Since 2008 and the start of the recession, in the United States, inequality has increased further from already high levels. Other traditionally more egalitarian countries, such as Germany, Denmark and Sweden, have also seen the gap between rich and poor expand from 5 to 1 in the 1980s, to 6 to 1 today.

It’s my contention that the argument that having a wealthy elite inspires others to work harder and greater aspiration falls apart when we have a prolonged period of recession and job opportunities become scarcer. This leads to discontent and social exclusion, especially amongst the young.

But to return to the point about social class, I percieve a different structure of the working age population based on the day to day lives of people we see around us every day:

1. The media magnet. Whether you are a TV personality, a music or sports star, a politician, even a high profile professional, you are in the public eye. Fame whether deserved or not is the principal asset of this class. Perhaps when we hear kids say, ‘When I grow up, I want to be famous’, maybe isn’t such a dumb thing after all? Fame is an asset that delivers long term value often even in situations where a person’s real work dries up for whatever reason. There’s always, ‘I’m a Celebrity Get me Out of Here’ to turn a few weeks minor discomfort into a major stipend and restore your flagging profile…

2. The new working class. These are the people that do all the real work, what’s left of it that is. Whether they are a surgeon or a shelf stacker, a consultant or a call centre worker, their lives are so crammed with work that they continually feel stressed, exhausted and trapped. Their assets are dwindling thanks to stagnant or falling pay, spiralling costs of living and depleted pension funds. Their only hope is to cling to the job ladder until they retire at 85, or whatever age the austerity measures dictate.

3. The educated under-employed. These are the people who have fallen out of the new working class and been unable to find enough work to maintain the life they used to take for granted. Many are professionals who simply cannot find a way back onto the ladder they fell off usually through no fault of their own. They include a sub-class I call the ‘self-unemployed’ – people that are trying to earn money through their own enterprises, but are really struggling to get anywhere and make any significant amounts of money. Many are pinning their hopes on an economic miracle that creates well-paid professional jobs in the economy, instead of yet more low-skill jobs working for global corporations for pin money.

4. The under-educated and unemployed. These are the biggest victims of all. Vilified by the media thanks to the desperate and/or selfish behaviour of a minority that exploit the welfare benefits system, they have the worst possible outlook. Even if a jobs miracle happens, they will be the very last to benefit as the economy soaks up those with higher skills and qualifications first. For more and more of them, increasing amounts of criminality to scratch an existence and regular anaesthetic through drugs and alcohol, provides a temporary stupor of comfort.

To my mind, this is the real structure of society in the West today. Apart from the media magnets, everyone else is suffering if not financially, then at least in terms of their quality of life. It’s the outcome of failed leadership and an economic model that doesn’t work anymore.

We need new visions, better ideas, more competent leaders and we need them fast.


See the original BBC article here: http://www.bbc.co.uk/science/0/21970879


UK: Why falling unemployment numbers are a mirage


By Neil Patrick

Well, it’s Saturday again. On this day every week, I tend to draw breath after the week’s activities, fill myself with coffee and reflect on the week’s news and developments.

Naturally enough, employment news is high on my list of topics to digest. And today is no different. Except that today, I have good news to report…well sort of.

In the UK, we are being told that we’re experiencing falling unemployment and that this is a sign of an improving economy.

Unemployment peaked at around 8.5% at the end of 2011 going into 2012. It’s now around 7.7% based on the current 3 month rolling average, or just 7.1% if you look at the latest monthly figure. So it’s showing a steady fall, perhaps even speeding towards the ‘target’ of 7.0%.

Why do I say that 7.0% is a target? Because that, said new Bank of England governor, Mark Carney, in his ‘forward guidance’ in August, is the level at which the BoE will start to increase interest rates.

Merryn Somerset-Webb, Editor in Chief of MoneyWeek described this as, ‘A dim-witted policy based on a number no-one understands’. Quite.

Carney also said he expected the UK to reach this position sometime around 2016! So we are doing great - we’re already miles ahead of where the Bank of England thought we’d be. Erm…not quite.

This figure of 7% is not some sort of magical threshold at which suddenly the recession becomes history and we all return to some sort of financial nirvana. Far from it.

If the current trend continues, we’ll be at 7% sometime around the middle of 2014. And fully unprepared to bear the even greater cost of living increases this will bring, on top of the ones which have crushed most people’s spending power over the last five years.

But as I have talked about elsewhere on this blog, raw unemployment numbers do not tell the story of what is really happening. And achieving the figure of 7% means absolutely nothing.

We know that huge numbers of people - around two million - are currently under-employed, i.e. they are working, but not earning as much as they need or want to. But they are not unemployed as such, so they are not counted.

Many more have simply given up looking for work and disappeared off the radar all together. These are not counted either.

Meanwhile, hundreds of thousands of young people have decided to avoid leaving the ‘womb’ and have stayed within the education system, hoping that during their delay, the job market will improve and give them the win-win of higher qualifications and an improved jobs market. Yep you guessed it - another artificial diminution of the unemployment total.

Just about everyone who could afford to take and has been lucky enough to be offered any sort of early retirement package (senior public sector executives for the most part – no comment) has understandably jumped at the chance. So off they go too!

Once we factor in these aspects, you can see why the raw unemployment number is virtually meaningless as an indicator of the financial well-being of the nation.

Which would be okay if it were not being used by the BoE as a barometer to judge when we are all able to afford higher interest rates on our mortgages and higher inflation in the already massively overinflated and over-taxed costs of essentials like power, transport and food.

Meanwhile, these figures have caused a good deal of self-congratulation in government circles. The government knows just as well as you and I that these numbers are an illusion. But they are gambling on the belief that most of the electorate won’t spot the ruse.

And I fear their assessment about this may well be correct. Most people I think will not be interested in looking behind the numbers to see what is really happening and this blind spot will mean that many will be more inclined to accept the idea that the economy really is improving.

I’m sorry to say it’s just not true. It’s simply more lies and corrupted statistics.


Why you are unemployed


By Neil Patrick

This morning, I have been catching up with Stefan Molyneux. In case you don’t know him, he is the host of Freedomain Radio, which is billed as ‘the most popular philosophy show in the world’.

Here is part 2 of his series of broadcasts, entitled, ‘Why you are unemployed’.

If you are unemployed, you may not care very much why, just what you can do to change it. So, if this is how you feel, I’ll save you wasting your time and suggest you don’t watch the film below (or even bother to read the rest of this post). There are no solutions or tips here about how you can change your situation. I've posted plenty of more practical advice about this elsewhere on this blog.

But if you want to get some thought provoking ideas about why jobs are getting scarcer and why the US is struggling to create well paid jobs, there are answers, or at the very least hypotheses to be found here.

And these are not the usual suspects like greed and corruption. Or QE and state subsidies of banks. Or even the damaging effects of low cost overseas labor. Stefan makes the point and it’s persuasive I think, that greed and corruption have always been part of human behaviour and they are no more prevalent today than they were in previous generations when professional working people in the US could expect a much better standard of living. It seems fair to assume that something else is at work today.

Stefan Molyneux
 Credit: Frank Licorice


I certainly agree with him that the idea that we live in freedom is a complete myth. If we were truly free, would we be sent to jail if we didn't pay our taxes? If we were free, would we be forced to adhere to the endless rules that our governments impose upon every aspect of the lives of honest hard working people?

Stefan has been described as an anarcho-capitalist philosopher. This means that he supports the free market as the best way of efficiently (and fairly) distributing wealth throughout society. The anarcho bit relates to his beliefs that state interventions in people’s live should be minimized and that the roots of all our problems today lie in over-extended state power and its endless appetite to extract wealth from citizens in the form of taxation and control. He sees this as a vicious circle that has got completely out of hand. He believes that our governments in the US and the west in general have become defacto fascist empires. And like all empires, they exert control and protect their power through the exertion of violence. Not necessarily bloody violence within their borders, but repression nevertheless in the form of taxes, coercion and the threat of imprisonment.

So watching this won’t help you get a job. It might though give you some new ideas about WHY you can’t get one and help you appreciate why it really isn't your fault.

Stefan claims that philosophers are not interested in supporting any political position. That they are only interested in finding the truth. I’ll let you decide for yourself whether or not you think THIS is the truth.




UK: One million young unemployed? No, that’s just the tip of iceberg…


By Neil Patrick

Whilst this blog is focussed on job and career matters for mature professionals, we all know that the global jobs crisis is also hitting young people exceptionally hard. And in the UK, still-inflated house prices and cautious bank lending means many remain living at home with their parents sometimes to 30 years of age or more.

But this isn't just a tragedy for the young. Unemployment and underemployment amongst the young has a profound impact on their parents' financial sitautions too.

The average age of first-time UK house buyers is now 35 years old, according to a survey by Post Office Mortgages. This compares to 28 ten years ago, and 30 five years ago.

In the early 1960s, the average age was 24.

The survey also found that half of all prospective first-time buyers believe that it will take them ten years just to save enough to raise the deposit to get on the property ladder.

With the average price of a first-time property at £137,500, the average deposit required is £27,500.

Now I actually think that this is not such a bad thing. Irresponsible lending and borrowing particularly in the US and UK housing markets are one of the major root causes of today’s western economic woes. So a sizeable deposit requirement and the self-discipline and sacrifices required to achieve this would seem to be a good thing, right?

Well not exactly. You see, whilst it might be tempting to imagine young people working and saving hard and finally reaching a position where they can finally afford that deposit down payment, that’s not what is happening in reality.

In the vast majority of cases, the deposit isn’t found in this way. So where’s is it coming from? Family. The bank of Mum and Dad - if you are lucky enough to have parents with £30,000 or so just sitting around with nothing better to do. 


So if you are one of the lucky few, this deposit hurdle isn’t a problem at all. And in fact, if you can persuade your parents that it’s just impossible for you to save so much on your income, a big deposit is arguably even less of a hurdle than a small one.

Ironically, this large deposit requirement creates a new generation of young home buyers with absolutely no personal stake in their home investment! And with interest rates so low, the monthly payments are very easy - for now…

And how many do you think have budgeted for a possible interest rate rise on their repayments…I don’t know either, but I’d be willing to take a bet…

Once we see any sort of upward movement of interest rates, then everything will start to look very wobbly.

So this is the uptown story.

Moving downtown, there’s a whole different story playing out.

The recent National Institute for Economic and Social Research (NIESR) study shows the jobs situation for 16 to 24-year-olds is much worse than even the raw unemployment figures of 979,000 suggest.

The lack of job opportunities for young people during the downturn is brought into stark relief when we consider the fact that nearly a third of those counted as being in work are actually “underemployed”, according to NIESR.

So whilst nearly a million are completely out of work, many times more than this are not getting as many hours work as they’d like.

Of those in the age group that did have jobs in 2012, 30% wanted to work more, according to authors David Blanchflower and fellow economist David Bell. They report that that standard unemployment figures - which have fallen overall in the past year - failed to give a proper picture of “labour market slack” in the economy.

In the whole UK workforce, the proportion of the workforce who were jobless or underemployed rose from 6.2% in 2008 to 9.9% in 2012, according to an index calculated by the researchers, while over the same period the unemployment rate rose from 5.8% to 8%.

Even if there were an upturn in demand, employers would be likely to extend the hours of existing workers before taking the risk of hiring new young employees.
 
So the overall picture is that total hours worked in the economy have increased since the start of the recession. But this conceals a fall in incomes, due to the use of cheaper part time contracts by employers.

So we have a two speed society amongst the under 30s. One group that thanks to modest family wealth, are enjoying a comfortable cruise through the recession. And a second much larger group who are facing a very uncertain future with low incomes and little prospect of achieving even the modest living standards that were accepted as normal in the west until the last few years.

So in different ways, both groups are remaining highly dependent on their parents and families well into their adult lives. But with growing job and income insecurity amongst the baby boomer parents, how long before even this fragile arrangement collapses?