Lots of people are wondering why the employment figures aren't worse, since we're in such a slump. Well, if you measure them properly, they are.
BBC economics editor Stephanie Flanders angered Iain Duncan Smith by calling low unemployment figures a 'puzzle', but she was on to something, writes Aditya Chakrabortty. Photograph: Richard Saker
I've checked the cuttings and no, it's not a trick of my memory: last August, Iain Duncan Smith really did accuse Stephanie Flanders of peeing in public.
The BBC's economics editor hadn't done anything nearly so indecorous, you understand. Her supposed sin was to describe as a "puzzle" the fact that unemployment hadn't shot up amid the slump, and to speculate gently about why. "Carping and moaning," complained the welfare secretary; the dole figures were simply proof that the coalition's austerity was working. By interrogating them, Flanders was exhibiting the bias typical of the Beeb's focaccia-eating lefties. According to the not-quiet-enough man of British politics, the BBC star was simultaneously "dumping on the government" and "peeing all over British industry": skills taught at presumably great expense at Flanders' alma mater of St Paul's.
Ministers are naturally protective of those jobless stats: they're about the only bit of good economic news around to cling on to. The economy remains wedged in the U-bend. The public-finance targets look either broken or thoroughly bent. And the export boom, the historic surge in business investment and all those other unicorns promised by the Office for Budget Responsibility are still stubbornly elusive. At least the labour market affords a less gloomy vista. Even though more than 2.5 million people are out of work, 2012 was the best year for employment growth since the bursting of the dotcom bubble.
But perhaps the most important explanation is that the headline figures miss important groups, such as the part-time workers who want to go full-time but can't, or the freelancers and self-employed who are barely attracting enough work or customers to get by. Neither of these groups are out of work; but nor are they fully employed. And while they are included in some totting up by the Office for National Statistics, it is pretty basic stuff.
Well, we now have possibly the best study yet of Britain's hidden unemployment problem. In a paper soon to be published in the National Institute Economic Review, David Bell and David Blanchflower (the former rate-setter at the Bank of England who saw the slump of 2008-9 coming) have compiled what they call an "underemployment index": the net sum of all the extra hours at current wages that Britons want to work, but can't. Until 2007, they find, as many people felt over-worked as felt under-worked. Then came the crash.
Today, Britons would work an extra 20m hours if they could only get them. That's equivalent to putting another half a million on last month's unemployment total, to take it over 3 million. Had this hidden unemployment been taken into account in the headline figures, according to Bell and Blanchflower, the jobless rate at the end of last year would have been not 8%, but 10%.
We're conditioned by previous slumps to think of the victims as those who just can't find work: a Jarrow Marcher, say, or Yosser Hughes. But the face of this depression (because that's what it really is, and we should stop fannying around with euphemisms) is the shopworker on a zero-hours contract, the part-timer who can't go full-time, the self-employed consultant whose phone hasn't rung for days. Nominally, these people are in work; in reality, they don't consider that they have a working income. And, Bell and Blanchflower find, full-time employees increasingly want more hours – so they too increasingly count as underemployed. This must be as a direct product of how British wages since the banking crisis have failed to keep up with inflation, so that real incomes are now 10% down from 2008 – and show no sign of picking up any time soon.
I have three main conclusions. First is a comparison with the spectre who has haunted Britain for the past week. Because while Thatcher consigned huge swaths of manufacturing workers to the scrapheap, she never oversaw the kind of general working immiseration hinted at in these figures. Like her, David Cameron promises that if you want to work hard and get on, you can, but now the figures are against him. This spells bad news for him in 2015.
Second, on unemployment, on disability living allowance and, this weekend, on the effect of benefit caps, IDS and his ministers keep making claims that are unsupported by their own data. Much more of this and voters will surely treat each announcement from the Department of Work and Pensions as about as kosher as a Tesco value burger.
Finally, were I working for Labour, I'd update this index of hidden unemployment and ensure that it, and the latest squeeze on wages, were highlighted on the same day as the ONS's jobless figures. This depression may not resemble its predecessors; but that doesn't mean its victims should go unrepresented.
Guardian
