Go to Main Website

Back to Front - Supply and demand


IF YOU wanted to put young people off higher education, you couldn't make a better fist at it than the Labour government. Figures published in August suggest that sixth-formers with their A-levels are contemplating an average cost of £33,512 to get a degree. Not government figures, of course – don't expect them to reveal anything; these figures come from the NatWest bank.

Not surprising, then, that 31 per cent of students admitted skipping lectures (lectures that they have paid for!) because of the pressures of part-time jobs. At the same time, the average starting salary for a first job after graduation actually fell this year, to £13,860 from £14,090 last year.

Well, that's market forces for you. But how can it be, when Britain – we are continually told – is suffering a skills shortage? Surely supply and demand should be tending to force up wages?

You'd think so, but there are other forces at play. Other interesting figures out in August revealed that unemployment has risen by 250,000 in the past 12 months (according to official figures, it's now at its highest since 2002), while the employed workforce has also risen by a similar amount. According to International Labour Organisation yardsticks, it stands at 1.68 million, or 5.5% of the workforce.

In one of those typically unpleasant expressions of how the capitalist mind works, the rise in UK unemployment was seen as a plus for Britain, and the pound rapidly rose in the foreign currency markets, reversing previous losses.

So where are the extra workers coming from, if the number of UK unemployed is rising so quickly? The answer is simple: in the main, the additional workers are coming from Eastern Europe, about 400,000 of them in the past year. Many of them are working for wages so low (£40 a day for decorating tradesmen in London) that workers in normal housing simply cannot afford to to stay in the trade.

And many of those unemployed never get told of the jobs that are available, as privatised job agencies increasingly advertise vacancies solely in Poland.

That's the government's solution to capitalism's age-old problem of the supply and demand for labour. Traditionally – and records on this go back centuries, to the Black Death at least – tight labour markets have enabled workers to band together to raise their wages. Now, through the European Union, the government has effectively created a limitless supply of labour.

And there's Bulgaria and Romania to come. How nice, for employers, at least.

The two countries are due to accede (as the language has it) to the European Union at the start of next year, and already government ministers are facing all ways on whether they should have carte blanche to enter the British labour market.

Listening to the debate, you'd think there was some kind of EU law saying we had to allow it. There isn't, not yet, anyway, and most EU countries don't even allow workers from the last tranche of accession (which included Poland) to work freely inside their borders.

Blair spent most of August in Barbados. Now he's back, expect more preaching from him about the benefits of immigration for the labour market. Perhaps he should spend some time on the labour market himself. Soon.