North-east England's 'bounce back' is not all good news

This article of mine was published on The Guardian's Comment is Free yesterday. Do take my advice in the final paragraph and join the anti-cuts march in Newcastle on Saturday.  

 

Earlier this week the Financial Times reported good news, of a sort, about job creation in the regions that have been most badly affected by recession: northern England (including the north-east, where I live) and the Midlands. Unemployment in the north-east is now down from a high of almost 12% just over a year ago to 9.1%, reportedly due to an increase in private sector job creation. In other northern regions, there has been at least a small drop in the jobless rate. This might appear to support Tory claims that the private sector can compensate for job losses resulting from public sector cuts, spearheading an economic recovery in areas of high unemployment. But scratch the surface, and it's not difficult to identify the problems with this assumption.

This "bouncing back" is from a particularly poor base, as it is happening in areas of the country previously hit very harshly by the recession. The north-east still has the highest unemployment rate of any region. There is also the small matter of the increase in employment not leading to any evident economic growth: coalition policies threaten to prevent any long-term recovery as they suppress spending power and discourage investment. With a triple-dip recession possibly on the horizon, it is clear that austerity isn't working.

According to the Office for National Statistics, the north-east saw employment grow by 2.2% in the four months up to November 2012, compared to a national increase of 0.4%. But what jobs are being created? What we are seeing is a partial shift from unemployment to under-employment. Those who want full-time jobs settle for part-time work. Many who want secure, permanent employment have to settle for insecure, temporary posts. Workers of varying ages and from a range of backgrounds can't get the secure work they crave.

It is true that some of the jobs growth in the north-east is secure employment with decent pay. The region's annual exports have grown from £8bn to £14bn in the last five years, enabling job creation in areas such as the car industry. But a great deal of the current increase in jobs appears to be part-time or low-paid work, such as in hotels, bars and restaurants. Many young people especially are still struggling to find meaningful work, whether recent graduates – taking on jobs that don't require a university education so they can make ends meet – or those who are less well qualified.

It has been suggested that a large public sector in the north-east has previously "crowded out" the private sector – the logic being that public sector cuts can therefore facilitate private sector growth. But there is no reason why a large public sector workforce should act as a deterrent to private sector investment. What appears to be happening, however, is that private firms are exploiting high unemployment – as a consequence of severe cuts to the public sector – and cuts in public sector pay to hire workers more cheaply. Cuts and unemployment are therefore being utilised to hold down private sector wages. Across public and private sectors alike, there is a race to the bottom in pay and conditions.

Meanwhile the public sector cuts become more drastic, with no end to austerity in sight. Newcastle Council estimates it will be making 1,300 of its employees redundant as a result of cuts imposed by central government on its spending. Other local councils in the region will add thousands more to the newly jobless. Mass redundancies in the public sector are so severe that any modest private sector jobs growth cannot possibly compensate for them.
Thousands of skilled, experienced and qualified workers will lose their jobs, thrown into an uncertain future in which they will either fail to find work or settle for temporary or low-paid jobs. The fear of unemployment will, as it does already, discipline those still holding on to their jobs into accepting pay freezes and pension cuts. This may suit government and employers, but it is a rotten deal for the rest of us.

The coalition wants to pit public sector workers against private sector workers, just as it tries to divide us into "strivers" or "shirkers". These are false dichotomies: an ideological distortion, not a reflection of economic and social reality. Opposition to the government must unite those who are its victims, while rejecting the myth that private sector growth can flourish as public services, jobs and pay take a hammering. This will be a key message on the streets of Newcastle this Saturday, when the north-east's trade unions and community campaigns will march in unison "to stop the cuts and save our services".

Share