Guest Blogpost from Richard Lynch: Paying the price for recession and stagnation

It is now four years since the worst global recession for over 70 years began to impact on UK jobs – and working people are still paying a high price for it and for the stagnation which has followed it. During those four years:

  • Unemployment increased by over a million, from 1.61 million to 2.67 million, and is still increasing.
  • 2.68 million people, 10% of those employed at the start of the recession, were made redundant.
  • Underemployment doubled, with the number of people in part-time jobs because they couldn’t find full-time employment rising from 670,000 to a record 1.34 million.
  • Unemployed people made 14 million claims and repeat claims for Jobseeker’s Allowance and received JSA payments which were worth a mere 10% of average full-time earnings.

But it was not just the unemployed and underemployed who lost out, as a recent report from the Chartered Institute of Personnel and Development showed:

  • Two thirds of those who returned to employment after being made redundant found that their pay, on average, was 28% lower than before, and lower still for those who couldn’t find work on the same hours as before.
  • Those who managed to keep their jobs suffered as well because the recession and unemployment resulted in lower pay increases or none at all, and left the average worker £3,000 a year worse off than if pay had increased at pre-recession levels.
  • The cost to employers of making 2.68 million people redundant varied from sector to sector but is estimated to have cost a total of £28.6 billion.
  • And the cost to the economy, in terms of lost output, is estimated to have been at least £87 billion (6% of GDP) and possibly as high as £135 billion (10% of GDP).

All of this shows that it is not just the unemployed who have been paying a high price for the recession in jobs but people in work, many employers and the economy as well. And unless action is taken to get the economy growing again, something which did not feature in the recent budget, we will continue to pay a high price for probably years to come.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

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Guest Blogpost from Richard Lynch: How has work changed in the past 60 years?

There is a lot of talk at present about how life in Britain has changed over the past 60 years – but how has work changed? The Chartered Institute of Personnel and Development (CIPD) looked at this recently and, amongst other things, found the following:

  • The working age employment rate for men has fallen from 96% to 75% and has risen from 46% to 66% for women.
  • The proportion of people working part-time has increased from 4% to 25%.
  • The number of people in manufacturing jobs has fallen from 8.7 million to 2.5 million. However, the proportion of people in managerial, professional and technical jobs has risen from 25% to 44%, while the proportion in sales and customer services has risen from 6% to 16%.
  • Trade union membership has fallen from 9.5 million (40% of workers) to 6.5 million (26%), while the number of people in personnel (HR) has risen by 2,000% from 20,000 to 400,000.

One wonders how far the last two statistics go in explaining the many problems facing people at work in Britain today.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

Guest Blog Post: Richard Lynch on why we must have change in 2012

When David Cameron was giving his New Year message twelve months ago, he said that the coalition had pulled Britain out of the danger zone and had laid firm foundations for economic growth and for cutting the deficit. Yet it is now clear that the past year has been a disastrous one for the economy, with growth worse than Gordon Brown achieved when the country was emerging from recession and most economists predicting that a return to recession is likely in the first half of 2012. And as for the deficit, that is now higher than ever and will take longer to reduce than under the Alistair Darling plan which the coalition ridiculed at the time of the general election.

Promises to bear down on unemployment have also fallen flat with 2.64 million people now out of work and 5.67 unemployed people chasing every job vacancy. These are not only higher figures than applied at the worst point of the recession but the highest since 1994 when the Conservatives were last in power. And all the predictions are that there is worse to come, with the Chartered Institute of Personnel and Development (CIPD) expecting an increase to 2.85 million by the end of 2012 and Capital Economics expecting a rise to three million. And the coalition’s own Office for Budget Responsibility, which had predicted that public sector job losses would hit 400,000 by 2016, is now predicting 710,000 such losses by 2017.

Inflation has also been a huge failure for the coalition with the Retail Prices Index rising by 5% or more on 11 occasions in the first 11 months of 2011 (something which happened on only four occasions in the 13 years of the last Labour government). The Consumer Prices Index has not been quite as bad but has averaged 4.5% during the year and is now higher than the CPI in every other EU country, not to mention China, Japan and the USA. And rail fares have just risen by 5.9% on average, giving us the highest such fares in Europe.

Pay increases failed miserably to match inflation in 2011, with the gap between increases in average regular pay and the Retail Prices Index rising from 2.5% at the beginning of the year to 3.4% on the latest figures available. And, according to a recent CIPD survey, only 45% of workers got pay increases in 2011, with 48% having had their pay frozen and 5% having had it cut – worse figures than were ever seen during the recession.

Pensions have also been hit hard, and not only in the public sector (where two million people from 30 unions struck on 30 November – more than took action during the general strike). The Association of Consulting Actuaries recently said that there has been a ‘seismic collapse’ in private sector pension provision, with nine out of 10 private sector defined benefit schemes now closed to new entrants and 25% of companies planning to dispense with such schemes entirely in the next five years. According to other reports, employee participation in occupational pension funds is now at its lowest level since 1956 and 65% of employees have no such pensions and will only have the state pension to look forward to when they retire.

Because of the above and other factors, living standards have fallen sharply in the past year, with poorer families and those with children the worst affected. And all the indications are that this trend will continue, with the Institute of Fiscal Studies predicting that half a million more children will fall into ‘absolute poverty’ by 2015-16. This is not only reversing the fall in child poverty which we saw in recent years but indicates a level of impoverishment which has no precedent in modern times. And living standards are collapsing for older people as well, according to Age UK, with 1.8 million pensioners below the poverty line and local authority care services for the elderly cut by 4.5% in 2011.

While this is happening, the poor are being fleeced by pay-day loan companies like Wonga which can charge interest rates of up to 5,000% a year and by companies running ‘rent to own’ schemes which allow the poor access to cookers, washing machines and other necessities, but at outrageous prices. Pawnbrokers have also been doing a booming business and are making record profits from those who find themselves having to use their services.

The coalition says that all this austerity is inevitable because we have been living beyond our means and that we all have to make sacrifices before we can get back to the good times. Yet Britain is still one of the richest countries in the world (seventh richest according to the most recent assessment) and is awash with millionaires, multi millionaires, billionaires and cash-rich corporations for whom the good times have never disappeared.

These include corporate executives like Mick Davis of Xstrata, who made £18.4 million last year, Bart Brecht of Reckitt Benckiser, who made £17.9 million, Michael Spencer of ICAP, who made £13.4 million and Terry Leahy of Tesco, who made £12 million.

They also include Phil Bentley, CEO of British Gas, whose remuneration package was £4 million last year and Dave Hartnett, the HMRC head who agreed to let Goldman Sachs off interest payments of £10 million, who will be retiring this year with a reported £80,000 a year pension and a cash lump sum of £160,000.  And F1 Chief Bernie Ecclestone has been so untouched by the hard times that he has been able to put £3 billion in a trust fund for his two daughters and reportedly gave £27.5 million to a banker to encourage him not to disclose information about that fund to HMRC. (His daughter Petra lives in a £54 million mansion in LA and had £12 million spent on her wedding. His daughter Tamara lives in a £45 million London mansion which has a spa and massage parlour for her dogs, as well as other features.)

It is because of people like these that income inequality is rising faster in the UK than in any other developed nation, as the OECD recently pointed out in a report called Divided we stand: why inequality keeps rising. That report said that the richest 0.1% of people in the UK own 5% of the country’s wealth, the richest 1% own 14%, and the poorest 30% of people own only 3%. Yet it is the poorest who are affected most by the coalition’s austerity programme!

In his 2012 New Year statement, David Cameron said that he ‘gets it’ when people tell him they are suffering because of job insecurity and rising prices – and it wouldn’t be a surprise if he ‘feels their pain’ as well. But what he doesn’t get is that it is his austerity programme which is destroying the economy, because people who have lost their jobs are not paying taxes to bring down the deficit and people whose living standards are being squeezed are not able to spend on the goods and services which other people are providing; consequently, economic growth is being choked off.

And what some of us are not getting is that there is an alternative to these attacks on our jobs, living standards, the welfare state and our rights at work and that we can turn them back if we stop believing the lies we are being fed and join the growing resistance to coalition and employer austerity policies at work and in our communities in 2012. Let’s do it!

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

GUEST BLOG POST FROM RICHARD LYNCH ON UNEMPLOYMENT

Unemployment goes from bad to worse

Unemployment in Britain is now at its worst for 17 years, youth unemployment is at its highest since records began and 10% of Londoners are out of work. These are just some of the unacceptable features of the October Labour Market Statistics and all the indications are that things are going to get worse rather than better over the coming period.

The statistics show that:

  • Overall unemployment increased by 114,000 to 2.57 million (8.1% of the economically active population) in the three months to end August. This is the highest unemployment Britain has seen since October 1994, when the last Tory government was in power.
  • Unemployment amongst Jobseeker’s Allowance claimants increased (for the seventh month in a row) by 17,500 to 1.6 million, giving a claimant count of 5%.
  • Unemployment amongst 16-24 year olds increased by 74,000 to 991,000, giving a youth unemployment rate of 21.3% – the highest figures since comparable records began in 1992.

Other groups who were also badly hit included workers aged 65 and over whose numbers fell by 74,000, the biggest fall in workers of that age group since records began in 1992. (This was largely due to employers pushing out older workers before the October abolition of the 65 default retirement age.) Public sector workers were also hard hit, with employment in that sector falling by 111,000 to 6.04 million. Part-time workers were hard hit as well, with the number of such workers falling by 175,000 to 7.7million.

In addition to this, the number of economically inactive people (not included in the unemployment figures) increased by 26,000 to 9.35 million, giving an inactivity rate of 23.3%. These figures, which this newsletter has not highlighted before, include 2.32 million looking after homes and families, 2.28 million students, 2.16 million long-term sick, 1.57 million retired people below the age of 65 and others who are temporarily sick or who have simply given up trying to find work.

The number of job vacancies in the economy increased by 1,000 to 462,000 but this still leaves an average of 5.56 unemployed people chasing every job.

The Chartered Institute of Personnel and Development, by no means a left-wing or anti-business organisation, described the latest figures as ‘truly horrific’ and pointed out that one in three unemployed people have now been out of work for over a year. It also pointed out the damage being done to the economy by the destruction of almost a quarter of a million public sector jobs in the coalition’s first year in office. The Institute made what was for them a remarkably radical (and sensible) call for the coalition to temporarily halt further public sector job cuts, which they described as an ‘own goal’ at a time of high and rising unemployment and economic stagnation.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.