A question of quality as well as numbers

Last week’s employment figures show that the number in work in Wales now stands at around 1,380,000, which is up about 1.6% on last year; and the number of unemployed is at 116,000 (down 4,000 from last year).

Given how devastating it is to be out of work, we should welcome the news that more people are finding work.  But the picture isn’t as bright as it seems at first, for 3 reasons:

It is still hard to get by.

Even if you’re one of the 14,000 in Wales that have found a job in the last quarter, chances are that it doesn’t pay you what you need to get by. The same day as the jobless figures were released, the TUC published its Jobs Quality Index, which compares UK-wide wage levels to the cost of living over a 20-year period. This shows job quality almost at an all time low, partly as a result of the gap between wages and living costs. The rate of inflation is now around 3 times the rate of increase in average wages – there may be more jobs, but wage levels are not keeping pace.

You may still not be able to get the hours you need.

The other factor which the Job Quality Index measures is underemployment ie people in work and wanting to work more hours than they can find – which is at record levels across the UK at 1.45m workers. We don’ t yet have reliable figures for the numbers of zero hours contracts in use in Wales, but even leaving those aside, we have seen a significant increase in part time work by those who would prefer to be in full time work. And given how our tax credit system is structured, it is a particular issue for those working just under 30 hours a week and looking to cross that all-important threshold so that they can access the income top-ups that they need in order to earn a decent wage.

You may not be able to get work to match your skills.

At the end of last week, the Resolution Foundation published a report which suggests that since the financial crash, the jobs being created in the UK economy are in the main very highly skilled jobs or comparatively low-paid jobs, mainly in the hospitality and care sectors. Growth in what they describe as “medium-skilled” jobs (eg some manufacturing or construction-related jobs) is a great deal slower. Some of this may be cyclical (eg construction) but some may be structural, reflecting a longer-term trend.  As we know, as substantial numbers of this type of comparatively well -paid job are permanently lost to the economy, this has a dramatic effect on living standards.

What can be done?

Improving employment conditions – increasing wages through a higher (and better enforced) minimum wage and spreading the living wage is crucial, in addition to the need to regulate working hours more fairly (and outlawing exploitative zero hours contracts) as well as better skills training, working with trade unions as partners.

Active industrial policy – through intelligent procurement, infrastructure investment and a stable regulatory and tax framework in key sectors – as well as prudent seed-funding, where necessary. Welsh ministers have been much bolder to act than their UK counterparts, with some good results.

Support SMEs – they create a high proportion of new jobs so anything which makes it easier for SMEs to grow should be encouraged – the recent publication by the Welsh Government of its SME finance review contains some clear signposts in that regard.

Cost of borrowing – some have predicted that the improved jobs outlook means the Bank of England might increase the cost of borrowing sooner than planned, making it harder for industry and businesses to borrow to invest (and create jobs). We should support those calling for the Bank of England to take into account not just unemployment but wage levels before it starts to tighten economic conditions.

Jeremy Miles is a trustee of the Bevan Foundation