Plenty of work and everyone’s poorer

By James Andrews | Yahoo! Finance UK 

'If there wasn't something wrong with your minds,' continued Owen, 'you would be able to see that we might have "Plenty of Work" and yet [still] be in a state of destitution.’

Those words, written in 1910 by Robert Noonan, were one of the central arguments deployed in the socialist classic ‘The Ragged-Trousered Philanthropists’. They also ring true today.

The latest figures from the Office for National Statistics show that despite austerity and public sector cuts there were 32.1 million jobs in December 2012. That’s 4,000 more than in September 2012 and a staggering 406,000 more than the year before.

The number of people claiming unemployment benefit was also down, with 7,000 fewer people claiming Jobseeker’s Allowance in March than in February and 77,500 fewer claiming it than a year before.

On top of that, there are 488,000 more people employed than last year, with 60,000 more full time jobs being added in the last three months alone. We’re working more hours too. Close to a billion a week, more than 40 million more than the worst point of the crisis in August 2009 and more than in August 2008 before the great banking collapse happened.

So why do we all feel so poor?

More work, less money to spend 

Since July 2008 there have only been two three month periods where wages have risen faster than the costs of living. Jobs might be coming back to the economy, but they’re paying a lot less in real terms than they did before the crisis.

People are working more for less, over the last five years inflation has averaged 3.3% while wage rises have averaged 1.9%. Those lucky enough to have been employed are now earning less in real terms than they were five years ago. Those on a fixed income, relying on savings or who have lost work have been mercilessly punished by price rises.

This also explains how the number of people in jobs stayed the same in the latest figures – and the number of hours worked is rising – but the number of unemployed Britons rose.

You’re only classed as “unemployed” if you’re looking for work and available for work. As more people seek jobs to meet rising costs, more people are looking for work. 

In the three months to February some 57,000 more people started looking for work than found it – boosting the number of “unemployed” Britons despite the number of people in work remaining unchanged. In fact, the percentage of people either working or looking for work is at its highest since 1991.

Other research – into the economic position of households  – clearly shows how much worse things have become. Food and energy prices are up and income hasn’t matched it, leaving people with less to spend. 

Office for National Statistics figures show that we have the same disposable income per person as we did in 2006 – and less than we did in 2009. So we have less money than four years ago, even after working 44 million extra hours a week.

At the same time, people are saving more to try and protect themselves from the economic uncertainty. Since the recession struck in 2009, Britons have been saving more on average than they did for a decade, even as disposable income has failed to rise.

So we have less money, spend less of the money we have and work even harder to live this reduced lifestyle. No wonder rising numbers of jobs aren’t making anyone feel good.