As I suggested, from the beginning, the recovery from the lockouts and lockdowns is characterised by a combined and uneven development. On the one hand, demand for certain types of labour is hitting supply constraints, and those constraints cannot be eased, in the short-term, by the fact that thousands of other workers have no job to go back to, as furlough ends. They simply are either in the wrong place, or do not have the required skills to fill the vacant positions, and that cannot be changed quickly. In fact, it may be the case that many of those that were supposedly furloughed, long ago, disappeared to other jobs, or disappeared back to their homes in the EU, never to return. Its likely to be the case, if anyone ever checks, that firms simply kept taking the furlough payments, from the government, for these workers, who were only nominally on their books, but who, in reality, were no longer employed by them. That is probably why, with the end of furlough, there was not seen a large increase in the number of people being laid off, or signing on the dole, and, yet, why the main types of business that employed such workers – such as in entertainment and hospitality – are reporting huge numbers of vacancies, and difficulty in recruiting workers.
The UK unemployment rate has fallen from 4.5% to 4.3%, for the three months to September, and in the last week of September, it was just 3.5%, which is lower than before the lock downs and lockouts, though still more than double what it was in the early 1960's. In the last year, job vacancies have more than doubled, from 564,000 in October 2020, to 1,172,000 now. Even compared to March of this year, they have more or less doubled from 663,000, and indicating the pace of change, the figure is up by a third even from June. In the three months to August, average earnings rose by 7.2%, though this figure has been declining somewhat, in recent months, as some of the furloughed workers, who tend to be lower paid, have returned. These higher earnings numbers are what prompted the government to attempt to ditch its triple lock on pensions, thereby, hitting its core voters. It illustrates the problem going forward of these higher costs, becoming embedded in second round price rises, as workers seek and are able to get higher wages to catch up with higher prices, and that, in turn, passes through into further higher costs, including for the government, which then has to borrow more money to cover those higher costs, including the higher costs of inflation linked pensions, benefits and so on.
A similar picture can be seen in the US, where its unemployment rate has fallen from 6.7% in November 2020, to 4.6%, now. It has fallen from 6.1% in April of this year. In the last month, it increased payrolls by more than half a million, and it too is seeing labour shortages, in many sectors, and a consequent rise in wages.
As Marx describes, its not rising wages that cause inflation, but an excess of currency, which depreciates it, causing prices to rise. In some conditions, where there is a relative surplus of labour, for example, during periods of stagnation, workers are unable to increase their wages to cover these rising prices, and so wages fall below the value of labour-power, but in conditions, like those we have now, where labour is in relative short supply, workers are able to raise wages to compensate for the higher costs of living, but the effect of that is to squeeze profits, unless firms are able to, in turn, pass on the higher wage costs in higher prices. Because central banks, as part of the state, act in the interests of capital, they make available the liquidity to enable firms to raise prices, and so sets in a price-wage spiral.
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