Employment has risen, despite a stalled economy, with the rush for barista positions showing how our job market is changing
With economic news usually so bad in Britain, Europe and the US, it's hard to know how to react to news that looks good, at least on the face of it. Despite the lack of growth in the last quarter of 2012, employment rose again in Britain (by 154,000), bringing the year's increase to 584,000.
How can that be when the UK economy is stalled? Good question and no one has a certain answer beyond Britain's much-vaunted, Thatcherised flexible labour market. It offers a sharp contrast to rigid Spain and Italy, where unemployment is much higher. Meanwhile France has attracted a terrific raspberry from a US tyre maker. Rescue your ailing tyre plant where staff work only three hours a day? "Do you think we're stupid?" Maurice Taylor asked the French minister who had rashly (shamelessly?) put out feelers for a takeover.
The Guardian tucked the new employment figures away in a corner of the financial pages – not gloomy enough to warrant more? – whereas the Times and Daily Mail decided the important detail was the ministerial claim that most extra jobs are now going to British-born workers (surely not quite the same as the "white British" label beloved of the tabloids). That is in contrast to the lax immigration policies of the New Labour era when three in four jobs went to foreigners, the papers emphasised.
Well, that may be, though these things are tricky to measure. Ministers claim that by cracking down on bogus students (quite right too) and immigration rule changes that exclude the low-skilled – along with IDS's benefits reforms – have contributed to the shift. "British jobs for British workers", as Gordon Brown famously promised, but did not quite deliver.
I have always assumed that it's better for individuals and their families to have work than remain unemployed and have long been puzzled why so many jobs in what we now call hospitality industries are held by young foreigners, not young Brits. In the wake of Costa's revelation that its Nottingham outlet had 1,701 applications for just eight jobs, Leo Benedictus has a charming article in today's Guardian about the challenge of being a barista – quite different from being a barrister, Hermione dear.
But he doesn't explain why so many such jobs go to Poles or Italians. You encounter that awkward fact all over Britain in my travelling experience, even in some remote areas with high unemployment. Is it education and motivation among mobile English-speaking EU citizens who will probably go home? Or does the benefits system not make it worthwhile for young locals to try? Unemployment among the 16 to 24 year olds remains high – though many are students.
I happened to be in Costa in byelection Eastleigh for a panini lunch on Wednesday and was struck by the fact that it was pretty busy in a town of only middling prosperity (more people in it than in Poundland round the corner). That's the way it is in Britain now, plenty of people who have enough money to enjoy Costa's and plenty who don't. "It is Costa which pay its taxes, unlike Starbucks and Caffe Nero," I assured a colleague.
But it's also hard work for staff (mostly local in Eastleigh, I think) getting the coffee and panini orders right, all for the £7.15 an hour that Benedictus reports. "I was going to be there [in Starbucks in Belfast] all the time anyway, so I might as well be paid," explained one barista.
Coming back along the M3, I used Starbucks to write my report because it has the free Wi-Fi I needed. It was busy too, a young family cheerfully slurping ice-cream at the next table, Brits who can afford it.
But that's the rub of the employment figures (as the FT predictably notes in its report). Unemployment is up 10,000 to 2.5 million – lower than analysts were predicting when the recession and austerity first bit deep – and the jobless rate inched up to 7.8% from 7.7%. That's low by Greek or Spanish standards (25% plus) and at 29.7 million there is a record number of people in work, 13.8 million of them women.
However, the price paid for that flexible labour market – which makes it both easier to hire and fire than in a French tyre factory – is that pay is still falling in real terms as average earnings again fail to keep up with inflation as they have since 2009, up 1.2% in the fourth quarter against inflation rate of 2.9%.
That appears to confirm trends that suggest much of Britain is heading towards a low productivity/low wage economy – the evidence being that more workers are producing the same amount of goods and services, as Larry Elliott notes, pricing themselves into work by accepting lower pay in tough times. It's the right call, but it's a tough one.
There is a macro-economic price to be paid as well as a personal one. Together with higher bills, lower in-work benefits and higher taxes, that constitutes serious downward pressure on demand, which helps keep the economy in the doldrums. If individuals are still paying down debts they acquired in the boom decade and companies are nervous about investing their cash piles in an uncertain economy.
It's government spending, via the public sector, that keeps the ship afloat. That's why it's so hard for George Osborne to meet his own targets – he's caught in a downward spiral when even the 4G mobile spectrum sale tanks – and why Sir Mervyn King, outgoing governor of the Bank of England, wanted to pump some more helicopter funny money into the economy but (as we just learned) was outvoted by 6 to 3.
When so staid a figure as King is sounding a bit like a leftie, times must still be pretty scary. But more jobs is always better than fewer. Better to see a coffee cup half full than half empty.
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