Self Unemployment and fiddling the numbers

We are living through a golden age of near full employment according to the Department of Work and Pensions and the Office of National Statistics.

Despite a slow growing economy and low levels of business investment unemployment is back to levels not seen since the 1970s.

I have mixed views about this. I do think that there are lots of good things about the UK labour market. The combination of the National Minimum Wage, Tax Credits, and increased workplace protections have made the labour market more flexible, drawing in more workers. That flexibility has benefitted employers, who have hired more people.

But there is something going on that makes me sceptical. I remember what 1970s full employment was like and this isn’t it.

Some of this scepticism is because I think that the Labour Force Survey isn’t really up to the job of measuring unemployment in a complex labour market with high levels of self employment, zero hours contracts and part time working.

This was one of the first blogs I ever wrote:

https://jon-chadwick.com/2017/03/18/unemployments-rising-in-the-chigley-end-of-town/

While employment has been rising, so has the number of companies. The number of new businesses created in the UK between 2007–08 and 2015–16 grew from 3.4m to 5.6m, higher than in any other OECD country, The number of businesses with employees grew much slowly than the number of sole traders. The number of employees grew by 15%, while self-employment (including those operating as a sole trader or as a partner in a partnership) grew by 25%..

We can see the same effect more dramatically by comparing the growth of companies with employees and the growth of companies without employees:

The growth in business ownership is driven entirely by sole traders, and the number of foreign-born sole traders more than doubled between 2007–08 and 2013–14, accounting for one-third of net growth in the sole trader population over that period. There increase accelerates after the credit crunch.

There are some other things that we know about sole traders.

Sole traders on the whole have very low incomes. The mean annual taxable income (from all sources) of sole traders was £21,000 in 2015–16 (£10,000 below that of employees) median income was just £13,000, with 36% (1.5 million people) earning below £10,000. The income sole traders derive from their business (profit) is even lower on average (£12,100) and has fallen by £3,300 (21%) in real terms since 2007–08

There is also a very high turnover of business start up and closure. Between 2014–15 and 2015–16, the sole trader number of sole trader businesses grew by almost 70,000, but this was 650,000 start ups and 580,000 closures, with sole traders moving in and out of business ownership.

20% of newly set-up sole traders are not trading after their first year; 60% have ceased trading by year 5 and 80% have ceased after 12 years.

The growth in sole trader self employment co-incides with the long term decline in UK productivity since the credit crunch, a trend that has got worse since the Brexit vote. Business investment is low, productivity growth is low, wages are low, self employment is high

The UK definitely has a “long tail” of unproductive companies, much longer than Germany and France. The Bank of England regularly identifies the long tail as the main reason for UK’s poor record on productivity

Sole trader businesses typically are low profit/low investment businesses. 1 million sole traders (23% of the total) had total business costs below £1,000 in 2015–16, 2 million had business costs below £10,000. 300,000 had no business costs at all. Low investment, low productivity, low profit.

It could be that low interests and a willingness to live on very low wages, supplemented by tax credits, has allowed “zombie” businesses which make no money to survive, unproductive.

It is also possible that productivity is a misleading measure – craft products. If all of the sole traders were running artisanal bakerys, making craft gin or small batch cheeses then productivity would be falling but only because that is what customers want. But this doesn’t match with the low investment, low profit model.

The final thing we know is that the typical sole trader is an older man. Some of these are white collar workers laid off in the credit crunch who have returned to their previous industries as self employed consultants. Others are people forced into fake self employment in the gig economy by employers trying to circumvent the National Minimum Wage.

But some of this is however is the result of the Department of Work and Pensions encouraging people into fake self employment.

For someone who has paid their stamp you are entitled to 6 months of Job Seekers Allowance. JSA is a non-means tested benefit worth £73.10 a week. Once the 6 months are over JSA ends, and instead you go onto Income Support, a means tested benefit. For people with savings or a redundancy payment Income Support pays no money, but you are still required to go through the hassle of regular interviews and job applications.

Job Centre Plus has any easy solution for people in this conundrum. Register a business with Companies House and sign up for New Enterprise Allowance Scheme. NEAS pays a non-means tested benefit worth £1,274 over 26 weeks, just for completing a business plan. This puts you back onto benefits, and gets rid of the hassle of interviews and job applications.

After Ian Duncan Smith made such a big fuss over closing apparent benefit loopholes it is rather suspicious that this one was allowed to remain open, particularly as it has the effect of reducing unemployment.

What’s even more suspicious is that since 2010 the number of companies struck off the register by companies house has acce

OK. It’s not really suspicious. It’s a deliberate manipulation of unemployment statistics.

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/articles/ukproductivityintroduction/januarytomarch2019

https://www.ft.com/content/b6513260-b5b2-11e7-a398-73d59db9e399

https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf

Widdecombe, L’Ouverture, Somerset v Stewart 98 ER 499

Anne Widdecombe announced her arrival in the European Parliament this week with a speech that made a spectacularly ill judged comparison with slavery.

Widdecombe’s views on slavery, the British Empire and the last few hundred years of British history maybe eccentric and unpleasant, but she isn’t the only person with crazy views about Empire.

I learnt about the abolition of slavery at school.

It was a pretty uplifting story, that most people will be familiar with.   William Wilberforce established the Committee for the Abolition of the Slave Trade in 1787, whose campaign led to the 1807 Abolition Act, and the 1833 Anti-Slavery Act.  The campaign was largely led by Quakers, and was helped by Josiah Wedgewood who produced a popular medallion with the legend “Am I not a man and a brother”.

A plucky campaign by the new emerging liberal middle classes brought about a change in the law, establishing a tradition of liberal middle class progressive activism that exists to this day.

I started to ponder this narrative after I read Ibram X Kendi’s masterpeice Stamped from the Beginning: The Definitive History of Racist Ideas in America.  If you haven’t read it, then read it. Now.

Reading the book made something stick in my mind, a detail I had noticed before but never really thought about.   Shakespeare’s Othello features a black lead character, a free black lead character.   Although the action takes place in Venice Shakespeare never has to explain to the audience why Othello is free, and of high status, and not a slave.

Which made me think that there were black people in Tudor London, but that they weren’t slaves.

It turns out that that there were black people in Tudor England, and there has been research on the subject, including Miranda Kaufmans great “Black Tudors”

But this didn’t really answer the question.   If black people weren’t slaves in Tudor and Stuart England when did they become slaves?  

We can trace some points on the trail along the way.   The first European slave markets were opened in Lagos in Portugal in 1444, before Columbus or Vasco de Gama.    The first black Africa slaves arrived in Latin America with the Conquistadors in the first decades of the C16th.   Britain had some unsuccessful attempts at establishing colonies in North America, but at the time King James I/VI comes to the throne and Shakespeare premiers Othello a century later Britain doesn’t have a new world Empire to send slaves too. 

James I/VI is a lot more enthusiastic about colonies, and Britain soon gains lands in the Caribbean.  The first slaves to enter British territory are probably bought from Spanish or Portugese slave owners in the first few decades of the C17th and sent to British plantations in the Caribbean.   

The first slaves arrived in Britain’s North American colonies in 1638 with the arrival of Caribbean slaves to Boston, then the Massachusetts Bay Colony. 

At that point each colony, as it wrote it’s constitution, was allowed to decide for itself if it want to make slavery legal, and in 1641 the Bay Colony voted to abolish slavery, the first British colony to do so.

For the next few decades the importation of slaves into the North American colonies was slow, until the establishment of Carolina in the 1670s, and the creation of the Royal African Company to increase the supply of slaves.  Even so the largest importers of slaves were still the Spanish and Portuguese colonies in Latin America, and the British plantations in the Caribbean. 

In 1712 slaves in New York City revolted, the first of a large number of revolts against slavery that spread across British North America, which lasted through the C18th.

At this point James Somerset enters the story.  Somerset was a slave, purchased by Charles Stewart in the North American colonies.   In 1679 Stewart travelled to England, bringing James Somerset with him.   Somerset lived in the United Kingdom until 1771 when he tried to escape.   As punishment for his attempted escape he was to be sent to the Caribbean, however with the help of some abolitionists he was able to move a writ of habeas corpus.   

The case was heard by Lord Justice Mansfield at the court of Kings Bench February to May 1772 at the end of which Somerset was set free.  The judge found that slavery had never been approved by statute in England and Wales, nor was it supported in common law.

The Somerset judgement effectively made slavery unlawful in the United Kingdom.   The number of slaves in the UK at the time was tiny, but the judgement had a profound effect on the transatlantic slave trade, making it illegal at least for ships travelling through British ports. From that point on the only debate would be how slavery would be abolished and whether compensation would be paid.

The Somerset judgement had a profound effect on the direction of American politics.  Previously the southern colonies of British North America had been loyal to the Crown, and discontent was concentrated in northern cities like Boston.   From the Somerset judgement onwards slave owners in the southern British colonies turned against British rule. 

A similar case was heard in Scotland  – Knight vs Wedderburn – confirmed that the Somerset judgement applied north of the border too.

After the revolution of 1775 and the War of Independence Britain lost many, but not the majority of it’s slave plantations. It also lost it’s main airports, according to Donald Trump, but that might not be historically accurate

A further huge blow to slavery was dealt in 1791 when Toussaint L’Ouverture led the first successful slave revolt, liberating Haiti from French rule and freeing the slaves.

The loss of Haiti broke France as a slave power, and removed one of the most powerful arguments in favour of slavery in the UK – if we gave up slavery the French would take over the trade and gain a strategic advantage.

In 1793 20,000 British troops landed in Haiti to seize the island.   Having defeated the French L’Ouverture inflicted an equal defeat on the British, inflicting huge casualties.   The defeat of both French and British troops by an army of former slaves brought home the realisation that an economy in which a small number of white Brits held large numbers of black Africans as slaves was precarious militarily so far from the British isles.

The formation of the Anti-Slavery movement, while important was largely after the fact.   By the time the 1807 Act was passed slavery was dead in the British Empire (although a form of bonded labour continued in British India).  

The major Caribbean plantation owners had long since sold up and bought land in the newly independent USA long before their business became illegal.

This doesn’t discredit the work of Wilberforce and his campaign completely, nor does it make the political campaigns of white middle class liberals a waste of time.   It is however worth noting that Turner’s great abolitionist painting “Slavers Throwing overboard the Dead and Dying—Typhoon coming on” was only painted in 1840, after slavery was made illegal, and nearly 50 years after the events it depicts.   Still a great work of art though.  

Current British politics contains 2 false narratives about Empire. The Brexity right’s world view is a jumble of Imperial nostalgia, trade deals with the Commonwealth and the 2 world wars. The middle class left world view is one in which plucky white middle class lefties ended slavery, or brought down apartheid.

Britain desperately needs a history of Empire that is based less around the domestic concerns of white people, but one which tells history through the eyes of James Somerset or Toussaint L’Ouverture.   Without that historical perspective we will be trapped forever between conflicting visions of the past, unable to understand the present.