Employment - Motion to Take Note

Part of the debate – in the House of Lords at 3:07 pm on 6th June 2019.

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Photo of Lord Haskel Lord Haskel Deputy Chairman of Committees, Deputy Speaker (Lords) 3:07 pm, 6th June 2019

My Lords, I can understand why the noble Lord welcomes these figures. We all do; we have the highest number of people in work since records began and the lowest level of unemployment since December 1974. So I congratulate the noble Lord on moving this debate. However, I do not agree with him about what lies behind these figures. He spoke of a high rate of jobs for women. The Office for National Statistics tells us that this is due to the change in women’s state pension age, since fewer women are retiring because their pension age has been increased. There has been a significant rise in the number of self-employed from 4.75 million to 4.93 million, raising concerns that more people are in insecure self-employment in the so-called gig economy.

However, those are not my major concerns. My major concern, as the noble Lord intimated, is that employment is increasing while productivity remains virtually static and investment is declining. That can only mean one thing: companies prefer to hire expendable workers rather than raising productivity by investing in machinery and new technology. The noble Lord seems to agree with me, and he seems to want to solve the productivity puzzle by manipulating the numbers. I suggest that instead he addresses himself to the overstrong financial sector, which seems reluctant to support the intangible investments that he is calling for, especially in the service sector. He should also ask his own Government what is happening to the industrial strategy, which is meant to help provide this support and encourage the necessary innovation.

Workers are not being displaced by the new technology that the noble Lord spoke about. This explains the research from the Joseph Rowntree Foundation, which shows that 4 million UK workers are in poverty, roughly 12% of the people in work. Its research also shows that the number of people with a job but living in poverty has risen faster than employment.

It is this picture which is reflected in the report from the United Nations Human Rights Council on poverty in Britain, to which the noble Lord referred. The Department for Work and Pensions has called this report “barely believable” and “completely inaccurate”. But it is believable. It is believable because the employment figures deal with individuals, but most of us live in households. It is the household that is the significant economic unit for receiving income and making expenditure. This explains why the Government’s claim that jobs are a route out of poverty is just not true. It is a productive job, plus social housing, training and a safety net, that is the route out of poverty. Society and the economy have to go together, but that is just not happening in the noble Lord’s scenario.

What is happening is that the number of poor people out of work has fallen, but the number of poor people in work has risen. This is why there are now 2,000 food banks in Britain. This is why the United Nations report is believable. And this is why the report speaks of inequality. Increased pay and increased productivity have to go together; otherwise, all it does is increase inequality, as the noble Lord, Lord Shipley, pointed out.

There is a brighter side. Poverty among pensioners has dropped. Certain measures of well-being are high, probably because of the number of people in work. The number of skilled vacancies is also high. This requires giving priority to non-university-based further education, which the Government seem to have accepted in the Augar report. At last, after two years, the Government have recognised that the apprentice levy scheme is a disaster, which is failing young people and wasting money. Hopefully, this will now be reorganised.

With so much poverty in working families, calling the minimum wage the national living wage does not bear any relationship with reality. Fortunately, a report from the Resolution Foundation last week, to which the noble Lord referred, demonstrated that the minimum wage has not reduced employment. Both the Government and the Opposition seem keen to build on this. However, enforcement is essential. Too many employers in the UK are getting around minimum wage and labour standards by employing gig workers or operating so-called “dark” places of work. Better enforcement will encourage the investment, productivity and training. Labour’s plans for a £10 an hour minimum wage will end low pay and, together with the planned investment, bring most families out of poverty by raising both pay and productivity. Until this happens, full employment and family poverty will go hand in hand.

Of course, employment figures are backward-looking, telling us what happened several months ago. As the noble Lord, Lord Shipley, told us, quite a lot of job losses have been announced recently, so I agree with him that high employment may not go on. What plans do the Government have to make work pay, so that all families are lifted out of poverty? Experience over the last 20 years has taught us that the market-based economics that the noble Lord, Lord Leigh, seems to favour just will not do the job. All it seems to do is generate even more inequality, and we all know where that is leading us.