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Falling unemployment rates fail to paint the whole picture

Every month two sets of economic figures are released on the same day, says David Ellesmere. One of them, the Government likes to talk about. The other never gets mentioned.

The first is the unemployment figures. Unemployment has been falling for some time now which is obviously good news for people who’ve found jobs. But you would expect with more people in work that we’d all be feeling better off.

This is where the second set of figures come in – those for wage rises. And here it is a completely different story. This month’s figures show that wages fell – not just compared to inflation but actually fell.


This is why there is a cost of living crisis. Prices are rising faster than wages and most of us feel worse off. When David Cameron and George Osborne talk about how great the economy is doing, for many people it sounds like a sick joke.

The Government clearly doesn’t want to talk about falling wages. Is this because they are embarrassed about it or because they don’t understand the real hardship that ordinary families are facing?

Here’s a clue:

Mark Simmonds is a Conservative MP. He recently resigned as a Foreign Office minister, not for any matter of principle, but because he wasn’t paid enough.

It’s worth just detailing the “pittance” Mr Simmonds was expected to survive on by ungrateful taxpayers. His pay as a minister was £90,000 a year. He also employs his wife as his office manager at £25,000 per year. He is also allowed to claim up to £28,000 a year to rent a second home in London.

It shows just how out of touch Tory MPs are. Even earning five times the average wage they still think they are poor.

It helps explain why –even with Government borrowing still so high – David Cameron thought it was a priority to give a huge tax cut to millionaires.

One reason why more jobs haven’t led to higher wages may be as a result of the increase in people who are self-employed.

The Government likes to portray this as a good thing: that it is entrepreneurial people starting up their own business. Undoubtedly for some people this is the case and working for themselves is hugely rewarding. Yet for others “self-employment” is a particularly nasty form of exploitation.

I spoke to a taxi driver a few weeks ago who is “self-employed”. He takes all his fares through one company so to all intents and purposes he is their employee. But because he is “self-employed” he gets no holiday pay and no sick pay.

He was given a job to take someone to an airport and then bring them back at the end of the day. It was pointless going and coming back (it would have cost a lot in fuel that he wouldn’t get paid for) so he had to stay there. But of course he was only paid for the two journeys, not the waiting time, so effectively he was earning less than the minimum wage.

His “employment” is so insecure that he would actually prefer to be on a zero-hours contract. Trying to get a bank to lend money for a mortgage is virtually impossible.

Interestingly, income from self-employment such as this is not included in the official wage figures. If it was – as Labour is calling for – it may present an even starker picture of the Cost of Living Crisis.

Needless to say the Government is opposing this. It would rather ignore the problem than try to do anything about it.

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