The Crisis in the Economy How it affects working people in Britain

The Crisis in the Economy When we talk about the crisis in the economy we are really talking about two crises. The name of this group, Kent People Before Profit, expresses the situation quite succinctly. There is a crisis in capitalism and there is a crisis that is affecting the working class, with sections of the class facing a much more severe crisis than others. There has been a lot of discussion about these crises about the crisis in Capitalism which has been growing since the later decades of the twentieth century and deepened considerable with the situation that arose in 2008. The effect of the crises, economic, Covid and climate on the ethnic minorities has also been widely debated. This must be a key factor in our thoughts. I do not want to dwell too much on these issues beyond putting them into context. What I want to do is to consider the position which the class as whole finds themselves. I want to put the needs of people before profit! First, a little bit of theory. One of the early analyses of capitalism came from Adam Smith, in his book An Inquiry into the Nature and Causes of the Wealth of Nations. He established the fact that labour is the source of all wealth. However, he could not explain where profit came from. It was here that the genius of Marx came into play. What Marx showed was that labour not only creates wealth but also preserves the wealth stored in the means of production. Marx differentiated constant capital (the cost of paying for the means of production in which stored labour is preserved) and variable capital (the capital paid to workers). In the process of production extra value is created (surplus value). But Marx goes even further, he notes that, in order to increase the value obtained from the workers, they use ever more sophisticated means of production, they mechanise operations. This leads to a deskilling of workers, but more importantly, it also leads to a contradiction in the whole system. As the cost of constant capital increases in relation to the variable capital, the inevitable result is that the rate of profit falls. This is not just a theoretical idea about capitalism, it is a mathematical certainty. It is this declining rate of profit that leads to crises of capitalism. However, nothing is quite so simple in capitalism, as Marx understood, the reality is hidden and we have to look below the surface to understand what is happening. There are ways of mitigating against this tendency, as Adam Smith noted, the workers seek to increase their wages, the employers seek to reduce them. They do this through mechanisation, increasing the rate of working, extending working hours, moving production to countries where the standard of living is much lower, and by encouraging workers to compete which each other. However, they also face another problem, they have to find a market for what is produced. Rosa Luxemburg goes into great detail about this problem, providing a critique of Marx in claiming that he did not deal with this problem. Her claim is that capitalism has continually to expand the market for its goods, extending capitalist relations to newer areas in terms of geography and in terms of sectors within capitalist economies, as seen with the developments in this country with respect to education, beginning with university students with the requirement to pay for their education and to have to borrow enormous amounts of money in order to exist during their studies, and extending now to the school system. It is also seen, with even more disastrous results, in the health service, which is beginning to create serious problems for the working class. This nicely brings us to the crisis that I wish to talk about. That is the crisis faced by working class people in modern Britain. We start from the fact that Britain is one of the richest countries in the world. And yet there are many people in this country who are reliant upon food banks. These are not just people who are not in work, many working families, indeed some families who have members that are key workers are being supported by food banks. There is a great deal of pontification about obesity, with suggestions of sugar and salt taxes, but a refusal to accept the basic fact that obesity is one of the many consequences of poverty. There is the pseudo concern about underachievement of children from working class homes at school, ignoring the fact that many children go to school hungry. A recent alert from the Children’s Society referred to their petition calling on the Government to provide the long funding to Councils that they need to support families in crisis. ‘11.4 million people in England already live in an area with no crisis support. Without consistent funding, more schemes are at risk of closure, cutting the safety net for families who have nowhere else to turn’. The situation for people in work is a source of real concern. A recent Report from the Trades Union Council, written by Tim Sharp begins with the fact that insecure work has soared after the last financial crisis as employers offered many workers only temporary or zero hour contracts. But more than a dozen decades on since the bank-led crash, policymakers have failed to introduce measures to tackle it. The Report outlines the facts that insecure work is widespread, it includes workers on zero-hour contracts, agency, casual, seasonal workers and others who do not ave fixed term contracts, and low paid self- employed workers. The figures are shown in the table indicating that there are three and a half million, that is 11% one in every ten workers who are in insecure work. 1. insecure work is widespread Who is in insecure work Contract workers Zero hour (excluding the self-employed and those falling into the categories below 876 800 Other insecure work – including agency, casual, seasonal and other workers but not those on fixed term contracts 824 400 Low-paid self-employed (earning an hourly rate less than the minimum wage) 1 910 000 TUC estimate of insecure work 3.600 000 Proportion in insecure work 11% [Source: Labour Force Survey. The total number in ‘insecure’ work includes (1)agency, casual,seasonal and other workers, but not those on fixed-term contracts, (2) workers whose primary job is a zero hour contract, (3)self-employed workers who are paid less than the minimum wage.] Nearly one in four (23.1%) of those in elementary occupations including security guards, taxi drivers, and shop assistants are in insecure work. It is the same for more than one in five (21.1% ) of those who are process, plant and machine operatives. Very large numbers of those in skilled trades and caring, leisure and other service roles are also in precarious employment. The Report goes on to state that only the employers gain from this flexibility. They, the Employers, are under no obligation to offer work. They can have staff for the hours they need them. Workers are increasingly finding that shifts are being offered – and cancelled- at less than a days notice. Polling for the TUC shows that 84% of zero-hour workers have been offered shifts with such little notice, while more than two thirds (69%) have suffered short term cancellation. It is very clear that Workers do not want these contracts. When considering these issues, it is important that we also consider the question of the income that is going into working class families. First is the question of the minimum wage. I struggled to find figures for the distribution of wealth and income in the United Kingdom. The best I found was from a Report produced for the TUC by Alex Collinson in October 2019, so pre-Covid. No doubt, the situation will have worsened since then. The key information that I gleaned from this report was that in 2018, workers on the median income earned £12.73 per hour by comparison, the top 1% earned four times as much (£63.18) In a hypothetical 37-hour week, this would add up to around £2340 for that 1% compared to a UK average of £471. For example, the top 1% of managers and directors earn £111 per hour, whereas the top 1% of those working in skilled trades occupations earn £32 per hour. The disparity between different occupations is clear from the chart below. This graph shows the income distribution of different sections of the community, beginning on the left with the lowest earners moving to the right as earnings increase. You will note a gradual rise until we move into the top half of the earning group when there is must faster rate of increase. When we reach the top 5% of earners we see a massive increase. If we now turn to the question of the minimum wage, social security benefits and pensions, we find an even greater contrast. The following information is taken from the Updating Report April 2021 on The National Minimum Wage in 2021, produced by the Low Pay Commission, to be found on the Government web-site . The Low Pay Commission is required by the Government to recommend the rates for the National Living wage, but they have to work within certain parameters, namely the effect of their recommendations on the employability of workers, in other words the demands of employers! ‘The National Minimum wage rates effective from 1 April 2021 are show in the table below: National Living wage £8.91 21 -22 Years Old Rate £8.36 18 – 20 Years Old Rate £6,56 16 – 18 Years Old Rate £4.62 Apprentice Rate £4.30 Accommodation offset £8.36 Low paid workers were most likely to be furloughed and lose pay as a result. Due to these considerations, the approach of the Low Pay Commission was to recommend rates that minimise any ‘significant risk’ to employment prospects, as per their remit. This led us to recommend a 2021 NLW rate of £8.91. This is lower than our best estimate of the on-course rate of £9.06, but importantly, so the Report states) it is modestly higher than the increase in prices. (A loss of £22 per month which is significant when you are on a low income). The Report states that ‘Young People’s greater vulnerability led to lower ratings. This year has been particularly challenging for young people, They are more likely to work in the sectors that have been hardest hit by lockdown measures, including hospitality and non-essential retail. More than half of workers aged 16 – 18 work in these affected sectors. Partly as a result of this, young people were more likely to be furloughed. Around 18% of all furloughed employments were workers aged under 25, despite this age group making up just 11% of all jobs. Many of those furloughed experienced changes to their pay. The Commission was particularly concerned about unemployment among young people because they are highly susceptible to scarring. This means that if a young person spends time out of work, they are likely to face poorer labour market outcomes in the longer term, lasting for several years beyond any unemployment spell. By the end of August, unemployment rates had already started to rise to levels not seen since 2015 for all the age groups eligible for the youth rates. As a result of these factors, the unit recommended relatively cautious increases in the youth rates for 2021’. The Report goes on to refer to the high degree of uncertainty in the labour market and the large variation in the health of businesses between sectors.’ The situation facing young people has to be put in an even wider context. Young people of 16 and over are independent people, there is pressure for them to be given the vote; they have shown, in particular by their involvement in issues such as Climate change, racism and matters around gender, that they have a greater understanding of social and economic issues that many of those in positions that enable them to take appropriate action. And yet, Government policy ensures that they are placed in a financially dependent situation, at best they can expect to earn at a rate of three quarters of what is considered a minimum living wage, this itself being inadequate as the Commission admits. However, the situation is far worse. It is extremely difficult for young people to start out in a career. The Commission reports that more than half of young people work in hospitality or non-essential retail. This is not a matter of choice, it is a fact of necessity. To enter any profession or start out upon a career now requires experience. The only way, except in exceptional circumstances, to gain that experience is to work for no pay or for rates in most cases below the minimum rate. Young people are being exploited. I was shocked to see that the minimum rate for apprentices was lower than the 16 – 18 year old rate!! Whilst considering this question of apprenticeships, we have to look deeper into how we educate our young people. What must concern those of us who are older, and remember the progressive years of education in the 1960’/70’s, when the nature of teaching radically changed and the curriculum broadened, is the state of our present education system with it academisation, the stress on managerialism, the extent of testing and the substitution of training to pass the tests as opposed to understanding and the development of the each and every pupil/student. The imposition of University fees and the system of loans means that young people who go onto university face a life time of debt which can only be a damaging burden placed upon them. A further damaging change has been the loss of what so many workers in previous generations and the country as a whole gained great benefit from, and that is the apprenticeship system. Modern day apprenticeships bare no relation to what the older generation understood by the term. Apprenticeship lasted for up to seven years; young people left school and went into employment; the firms took them on and trained them is all aspects of the job they intended to follow; youngsters worked side by side with older skilled workers, they spent time on the various jobs; in addition to learning about the job they learnt about themselves, about live, about working with other people; in doing actual work they came to understand what work is all about, its discipline, its demands and its rewards; along side the practical experience that also extended their education learning the theoretical aspects of their work at colleges, and other forms of higher education, but in a context which they saw as relevant to them, something that many did not find at school. The apprenticeship system laid the base for our industrial excellence. All of this training was paid for by industry. Industry also sent young people to University paying their fees and giving the scholarship because they recognised that their future depended upon training the future work force. This is what my generation and the following generation benefited from. Society as a whole, the economy included gained from the system which successive Governments have undermined through short term policies which have looked to reduce investment in people mistakenly believing that this would lead to greater profitability. The TUC has response to the Government consultation on flexi-job apprenticeships scheme, calling for clear safeguards, quality training and decent pay and conditions, falls way short of what the TUC should be demanding. Universal Credit replaces Child Tax Credit, Housing Benefit, Income Support, Income-based Jobseeker’s Allowance (JSA), Income-related Employment and Support Allowance (ESA) and Working Tax Credit. Your Circumstances Monthly Standard allowance Single and under 25 £344 Single and 25 or over £411.51 In a couple and your are both under 25 £490.60 for both of you In a couple and either of you are over 25 £596.58 for both of you Note Minimum Wage at £8.91 for a 37 hour week and a four week month amounts to £1318.68 If you have children, you’ll get an extra amount for at least two children. You only get extra for more children if they were born before 6 April 2017 and you claimed for 3 or more children before that date. Extra monthly amount For your first child £282.50 (born before 6 April 2017) £237.08 (born on or after 6 April 2017) For you second child and any other eligible children £237.08 per child If you have a disabled or severely disabled child £128.89 or £402.41 If you need help with childcare costs Up to 85% of your costs (up to £646,35 for one child and £1108.04 for 2 or more children The extra amount you can get in certain circumstances is shown in the table below If you have limited capacity for work and work-related activity £343.63 If you have limited capability for work and you started your health-related Universal Credit or Employment and Support Allowance (ESA) claim before 3 April 2017 £128.89 If you provide care for at least 35 hours a week for a severely disabled person who receives a disability-related benefit £163.73 The above information on Benefits from the Government Web Site. The basic state pension is £179.60 (£718.40 per four week month). Although many women get considerable less that this amount because of the failure of the Government to honour provisions that have been made, as per example counting year of bringing up children as qualifying years. All of the above facts, gleaned from the Government web-site are of great relevance when we consider the economic crisis as it affects working people. I have concentrated my comments on young people because they are to a large extent ignore in discussions on the economy. This is not to belittle the problems faced by those workers forced to exist on Universal Credit or on state pensions. All of these figures have to be compared to the incomes of other sections of the community. To provide some comparisons, I include the following table of monthly earnings. Please note that the figures for the earnings of the average, the top 1% of earners and managers and of workers in skilled trades are from 2018, whereas the rates for living wage, Universal Credit and child benefits are for 2021, so that the comparisons are even worse that that indicated. The differentials between the richest sector of society and the main mass of society has widened considerably in recent times, particularly post Covid. Figures are for a four week month) Top 1% of earners (2018 figures) £11 360 UK Average earnings (2018 figures) £1884 Top 1% of managers (2018 Figures) £16 428 Workers in skilled occupations (2018 figures) £4736 National Living Wage (2021 figure) £1318.68 Universal Credit (2021 figure) £411.51 Child Benefit per child (2021 figure) £237.08 The rates of employment (in 2019) are shown in the table below Working age population 16 – 24 years old 76% White people 78% Other ethnic groups 66% Pakistani and Bangladeshi 56% The number of young people between 16 and 24 who are employed is 54% with 73% employed of people between 50 and 64. Statistics do not tell us all there is to know about the economics of working class people. We have seen under Covid that the whole situation is even more precarious than it has been in normal circumstances. Furlough has by and large been a means of helping businesses rather than supporting workers, although it has provided relief to many. The fear now is that many of those worker placed on furlough will not have jobs when furlough ends. Many jobs that remain will involve worse conditions of work and pay. What is of considerable concern is the recent development of Fire and Re hire. Figures from the TUC suggest that 20 million workers around the country could be affected. Many of these workers are in trades and occupations that hitherto were considered as safe and well paid. There is no doubt that employers are exploiting the situation to strengthen their position in relation to their workers. In this they are being aided and abetted by the Government, whose policy through out the Covid crisis has been to place the priority on maintaining the profitability of companies and businesses at the expense of the population at large. There are signs that workers are fighting back, but as yet they are not getting the complete and necessary support from their Trade Unions, and very little support from the Labour Party, who seem to share to a large extent the position of the government with respect to preserving the economy in terms of business and commercial interests. We come back to where we started. Kent People before Profit places the interests of the working class first and foremost. Any analysis of the above statistics, or of the performance of the economy, the government, and the ruing class in terms of the Covid crisis, of the crisis created by climate change and of the needs of working people, shows without doubt that capitalism is a failing system. We have to support all efforts to defend and improve the lives of working people, whether this be in supporting housing campaigns such as Homes for All, the Grenfell campaigners, those fighting fire and rehire, the Black Lives Matter movement, the climate campaigners, those fighting for equal rights in every respect, and those simply defending their jobs and their livelihoods. It is by united working class action that we can progress with the ultimate aim of ridding the world of capitalism and bringing in a socialist revolution. Addendum (From the Canary) Rates of hunger are more than 150% the national average in one out of every six local authorities, according to researchers who created a map showing where millions of UK residents struggle to access food. The University of Sheffield Institute for Sustainable Food modelled data from the Food Foundation and for the first time was able to identify food insecurity at a local authority scale. This new analysis of the national data collected during the pandemic breaks down experiences of food insecurity into three distinct groups. Three groups of food insecurity Firstly, those who are hungry but were unable to eat food because they could not afford it, or were unable to access food in the previous month. Secondly, those who are struggling to access food, including those who may have sought help within the last month with access to food, have cut back on meals and healthy foods to stretch tight budgets, or indicated that they struggled to access food in some way. Data showed that in some places, 28% of adults were struggling. And thirdly, those who worry about food insecurity or being able to continue to supply adequate food for their household. Highest and lowest areas of food insecurity The map shows it is England where the areas with the highest and lowest rates of food insecurity are located. At one end of the scale, the majority of local authorities in Yorkshire and the Humber are in the top 20% of local authorities with the greatest percentages of adults going hungry, while in the East of England, the majority of local authorities are in the 20% that have the lowest percentages. While no-one should have to go hungry, struggle to get or worry about having enough food, in some places it is at proportions that are especially shocking, particularly as we are a wealthy country Dr Megan Blake, University of Sheffield The areas worst hit by food insecurity are Wycombe, in Buckinghamshire, with 14% of people estimated to be hungry and nearly 30% of people struggling to access food. The area also has high estimates for numbers of people who are worried about having enough food (22%). This is followed closely by Hull, with 13% of people being hungry and more than one in five adults who struggled to access food. The locality with least hunger, struggle or worry was St Albans. The research found that in one out of every six local authorities, rates of hunger were more than 150% (one-and-a-half times) the national average. And in one in 10 local authorities, the rate was almost double. Food insecurity is undermining our chances of recovery after Covid-19. We need to urgently address this issue that pervades so many of our communities Dr Megan Blake, University of Sheffield “We must address this problem” Dr Megan Blake, from the University of Sheffield Institute for Sustainable Food, said: This new map, for the first time, makes visible the patterns of food insecurity across the UK. While no-one should have to go hungry, struggle to get or worry about having enough food, in some places it is at proportions that are especially shocking, particularly as we are a wealthy country. If we are going to recover from Covid-19 we must address this problem. She added: We hope this clear breakdown of the data will be a useful resource for local authorities and the Government to use to address the challenges facing all people living with food insecurity, and that help can be tailored and targeted to those communities who need it, as the answer is not as simple as opening more food banks. Food insecurity is undermining our chances of recovery after Covid-19. We need to urgently address this issue that pervades so many of our communities. No-one should have to be hungry. According to data from the Food Foundation, in January 2021, 4.2% of adults across the UK reported that during the previous month they had been hungry but unable to eat at least once. We have spent billions to help those most in need and combat food insecurity throughout the pandemic. This includes the £429.1 million Covid Local Support Grant, which was created to help families with food and fuel bills Government spokesperson Almost half of local areas in the north of Ireland and in Yorkshire and the Humber had very high percentages of people who were hungry in January. The data from the Food Foundation was from an online survey of 4,231 adults in the UK conducted on January 29 to February 2 this year. A Government spokesperson said: We have spent billions to help those most in need and combat food insecurity throughout the pandemic. This includes the £429.1 million Covid Local Support Grant, which was created to help families with food and fuel bills.