Guest Blogpost: Richard Lynch – End This Depression Now!

Paul Krugman, winner of the Nobel Prize in economics, is one of the world’s strongest opponents of the austerity policies which have taken a grip in most western economies since the beginning of the 2007 global recession. He believes that these policies have made recession worse and is an advocate of government spending to jump-start affected economies and secure a rapid, powerful recovery. He says that in the Great Depression (of the 1930s) leaders had an excuse: nobody really understood what was happening or how to fix it.

Today’s leaders don’t have that excuse. We have both the knowledge and the tools to end this suffering. Krugman makes his case in the book End this Depression Now! It costs around £14.99 from good bookshops and you are urged to get a copy now.

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 Blogpost: Richard Lynch – No medal-winning performance from the coalition

During the past month, Britain’s sporting heroes in Team GB have taken on the world at the Olympic Games and, with performances which exceeded expectations, have delivered our biggest haul of medals for over 100 years. What a contrast with the other Team GB, the Conservative/LibDem coalition, which also promised success but has delivered a shrinking economy, increased unemployment and debt, poorer social provision and the biggest squeeze on the living standards of ordinary people in living memory!

When the coalition took office two years ago, it inherited an economy which had been hit hard by the worst global recession since the 1930s but was recovering and had been growing for five quarters. Instead of consolidating and encouraging that growth, however, it embarked on an unnecessary and unnecessarily savage austerity programme which choked off recovery, led to growth contracting over five of the following seven quarters and resulted in a return to recession.

Yet, when announcing his first budget after taking office, George Osborne said that if he didn’t introduce a harsh programme of tax increases and spending cuts, Britain would face:

‘Higher interest rates, more business failures, sharper rises in unemployment, and potentially even a catastrophic loss of confidence and the end of the recovery. We cannot let that happen. This budget is needed to deal with our country’s debts. This budget is needed to give confidence to the economy. This is an unavoidable budget.’

George Osborne at Conservative Spring Forum 20...
George Osborne at Conservative Spring Forum 2006 in Manchester. (Photo credit: Wikipedia)

Bold words but what has been the outcome? Interest rates have remained low but, as Nobel prizewinning economist Paul Krugman has pointed out, they have remained low in the USA and Japan as well, countries with higher debt levels which didn’t rush into austerity.

On the downside, however, business failures have continued, with almost 4,000 companies going under in the last quarter and retail insolvencies rising by 10.3%. Unemployment remains well above the level Osborne inherited in May 2010, over a million young people are out of work and underemployment has become a major problem with a record 1.42 million people working part time because they can’t find full-time employment. Business and consumer confidence has collapsed to levels not seen since the worst point of the original recession, we have the highest trade deficit in 15 years, national debt is rising and the economy has contracted in the last three quarters, driving us into a double dip recession for only the second time since the Second World War.

And there’s no good news on the horizon either: The Bank of England is predicting a 0.2% contraction in growth this year and probably five further years of economic pain. The National Institute of Economic and Social Research is prediction a 0.5% contraction and the IMF has stated that Britain’s economic outlook is now deteriorating faster than that of any other major economy.

When Britain was facing big economic problems in the 1970s, Dennis Healy said that the first thing to do when you found yourself in a hole was to stop digging. Another smart bloke (either Albert Einstein or Roy Keane, I can’t remember which) said that the definition of insanity was doing the same thing over and over again and expecting different results. But Osborne remains adamant that he will not change course and that there is no Plan B for the economy. Such arrogance from a chancellor and cabinet which have clearly lost the plot is now coming under increasing attack, not only from unions and political opponents but from coalition politicians (one of whom called Osborne a ‘work experience chancellor’), from business organisations and leaders and from the general public. The majority of economists who backed the austerity programme during the 2010 general election are now calling on Osborne to change course. And the IMF, which also previously backed austerity, is now urging the chancellor to think again about cutting back and to focus on growth and on ‘boosting the bargaining power of labour’ to get more demand into the economy.

It’s not as if there is a shortage of good ideas about rebuilding confidence and demand and getting the economy back on its feet again.  For example, stopping or slowing down the public sector and benefit cutbacks (even if only temporarily) would help lower the rate of unemployment, keep people paying taxes and maintain demand in the economy. Borrowing, at our famously low interest rates, to rebuild our creaking infrastructure and to build houses for people to live in, would boost employment in construction and related industries and get people spending again. Putting money back in the hands of ordinary people by cutting VAT (even if only temporarily), ending the freeze on public sector pay and even introducing quantitative easing for people, by creating money to put in the hands of the most needy rather than in the coffers of the banks, would all boost demand and encourage spending.

Indeed PPI refunds by the banks, which totalled £4.8 billion up to May, have already done more to boost the economy than the coalition, because people who have had money refunded have gone out and spent it!

The Olympics showed us that we don’t have to accept mediocrity or assume that we cannot reach new heights. We may have the fight of our lives on our hands but, as the TUC’s Frances O’Grady said, if we keep people together, build confidence and give a sense of hope and vision that things don’t have to be like this, we can build a better world. We can help win that better world by defending our rights in our workplaces and communities. But we can also help win it by mobilising now for the TUC’s national demonstration for a future that works on 20 October. It’s time to stop agonising and start organising!

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 Blogpost from Richard Lynch: “Do you understand pension auto-enrolment?”

Less than a third of the UK workforce are members of an occupational pension scheme but this will begin to change when the last Labour government’s auto-enrolment scheme  starts to be introduced later  this year. The scheme is being phased in and employers with 120,000 employees or more will be required to begin auto-enrolling workers, aged 22 and above and earning at least £8,105 a year, into a qualifying pension scheme from 1 October 2012.  Smaller employers will have to start auto-enrolling workers in stages between then and June 2015, when employers with fewer than 50 workers will finish the process. Contributions to the pension scheme will come from employers, employees and tax relief, and will start at a very low level (one percent for employers and employees). This will increase gradually until October 2018 when contributions from employers, employees and tax relief will reach a minimum of 8% of earnings.

This is a complex scheme with pitfalls as well as advantages and it is vital that union reps understand it. It is also vital that there is hands-on union involvement in deciding arrangements in companies and organisations, and that reps are able to respond quickly to any attempts to worsen existing pension arrangements or to drive down pay to fund the new scheme.

Labour Research Department’s booklet Workplace pension reform – a practical guide to auto-enrolment can help in this respect. It costs £6.30 and can be obtained from LRD, 78 Blackfriars Road, London SE1 8HF (020 7928 3649) or on-line from Get a copy now.

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 Blogpost from Richard Lynch: Employment rights’ roundup

Unfair dismissal – Employees currently have to be with an employer for one year before they can make a claim for unfair dismissal to an employment tribunal, but this qualifying period is increasing to two years with effect from 6 April 2012. However it is important to note that there are transitional arrangements which mean that anybody whose period of continuous employment began before the above date will still be able to make a claim after one year’s service. Employees who begin work on or after 6 April 2012 will have to work for two years before they can submit a claim.

Employment law consultations are taking place on a number of proposed legislative changes at present, including on further changes to unfair dismissal legislation, redundancy consultation periods and TUPE. George Osborne, Minister for Misery, has been urging employers to support proposals which will allow small businesses to get rid of staff under a compensated no-fault dismissal law, without the risk of being taken to an employment tribunal. If enacted, this will allow unscrupulous employers to fire staff almost at will and will significantly reduce the rights of the 13.8 million people who work in Britain’s 4.5 million small businesses. There are also consultations under way on reducing the 90-day consultation period which applies when it is proposed to make 100 or more employees redundant. And there are proposals to reduce transfer of engagement rights by making it easier for employers to cut pay and conditions after a TUPE transfer has taken place. The TUC fears that this proposal, if enacted, will lead to even more outsourcing and will erode the terms and conditions of already low-paid service sector staff, including in cleaning and catering.

Accident reporting is to be made easier for employers from 6 April 2012 when changes are made to RIDDOR (the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations). Incidents currently have to be reported to the Health & Safety Executive when a worker is unfit for normal work for over three days following an accident. That period is now being increased to over seven days, which safety’ campaigners fear is sending the wrong message to employers about the importance of the incidents/injuries in question.

Criminal records – Changes are being proposed to the Rehabilitation of Offenders Act which will mean that fewer ex-offenders will have to report spent convictions to employers when applying for work. The new proposals mean that community service orders will be considered spent after one year (rather than four at present). Custody sentences of up to six months will be considered spent two and a half years after leaving prison (rather than seven), custody sentences of six months to two and a half years will be spent six and a half years after leaving (rather than 10) and sentences of between two and a half and four years will be spent after 11 years (rather than never, as applies now).  Custody sentences of over four years will still always have to be declared, as will convictions for people who want to work with children.

Bullies beware – A scientist has won an employment tribunal award of almost £30,000, for constructive and unfair dismissal, after he faced a ‘barrage of shouting’ and unpleasant and derogatory treatment from a professor in Manchester University. This is yet another reminder to those in authority that they must treat people at work with dignity and respect.

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 Blogpost from Richard Lynch: Employment rights’ roundup

Statutory redundancy pay, for most people, is calculated on the basis of a week’s pay per year served. However those under age 22 only get a half week’s pay per year and those aged 41 and over get one and  half weeks’ per year. Only 20 years’ service can be taken into account and there is a cap on what can be claimed for each week. That cap has been £400 a week for the past year but it was increased to £430 a week from 1 February 2012. The absolute maximum anybody can get in statutory redundancy is now £12,900 (20 years X 1.5 weeks’ a year X £430).

Unfair dismissal compensation paid by Employment Tribunals involves a basic award which is calculated in the same way as statutory redundancy and has the same cap on what you can claim for a week’s pay. A compensatory award may also be made, to compensate you for what you have lost since being dismissed. The maximum compensatory award had been £68,400 but this has been increased to £72,300 from 1 February 2012.

The qualifying period for unfair dismissal protection is currently one year, which means that you can only make a claim for unfair dismissal if you have been employed for 12 months or more. However, the qualifying period will increase to two years from 6 April 2012 and anybody dismissed over the coming period will have to be careful not to fall foul of this change.

Statutory maternity pay, paternity pay and adoption pay will be increased from £128.73 a week to £135.45 a week with effect from 1 April 2012. Statutory sick pay will be increased from £81.60 to £85.85 a week from 6 April 2012.

Protective awards can be made by Employment Tribunals in cases where employers planning redundancies do not consult properly with unions or with employee representatives elected for consultation purposes. Up to 90 days pay can be awarded to redundant workers, both as compensation for denial of their consultation rights and as a punishment for the employer who has not consulted properly. Readers will have been delighted by the recent USDAW announcement that thousands of redundant Woolworths’ workers are to share in a £67.8 million protective award following a complaint to a Tribunal. It is to be regretted, however, that some from small stores will not receive any award because collective rights do not apply in workplaces with fewer than 20 workers.

An award of £933,115 has been made to Unite member Elliot Brown after an Employment Tribunal found that he had been unfairly dismissed and subjected to systematic discrimination, bullying and harassment by an NHS Trust in Manchester. This is one of the largest ET awards yet and it should serve as a warning to employers that discrimination, bullying and harassment have no place in the workplace.

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 Blogpost from Richard Lynch: “So much for cracking down on executive pay!”

English: Me Reading the Financial Times

The way Britain’s top executives have been awarding themselves grossly excessive pay increases, at a time when the rest of us are having to contend with falling living standards, has caused such public outrage that the coalition had to promise action on the issue. But when it arrived, by way of a package of proposals from Business Secretary Vince Cable, it proved to be so weak that its biggest supporters included the top executives themselves!

In what the Financial Times described as “the most far-reaching attempt in a decade to rein in soaring executive pay” Cable proposed:

  • Greater pay transparency, with a single figure and full explanation for each  senior executive’s increase to be given, together with a “distribution statement” showing how spending on executive pay compares with spending on dividends, tax and employee costs.
  • A binding vote at AGMs on executive pay policy and payouts to departing executives.
  • Increased diversity on boards, with two places to be reserved for people who have not been directors before and companies to consider banning executives of one company from sitting on the remuneration committees of other companies.
  • Increased employee engagement, with employees encouraged to ask to be consulted on executive pay and companies having to explain how they have responded.

Calls for companies to put an employee representative on remuneration committees were rejected. Calls for them to publish the ratios between executive pay and employee earnings (currently 102–1 for CEOs in FTSE 100 companies) were also rejected. And the simple expedient of putting a cap on executive pay and bonuses was rejected as well, even though the coalition sees no difficulty in capping pay for public sector workers.

Greater transparency, putting a few new faces on boards and encouraging companies to consult their employees on executive pay are all very well but they will be totally ineffective in moderating such pay. And allowing binding votes at AGMs is unlikely to achieve much either because individual shareholders, who are most likely to oppose executive excess, hold only about 10% of shares. They can easily be outvoted by pension funds (which hold over 12% of shares), insurance companies (13%) and foreign owners (41%) for example. And the executives who control big blocks of shares are unlikely to vote down executive pay deals in case it encourages others to vote down their own pay deals.

So a coalition cabinet made up mainly of multi-millionaires is doing next to nothing to crack down on grossly excessive pay increases for other multi-millionaires. The only surprising thing about this is why anybody should be surprised!

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 UK inflation – now the highest in Europe

The most recent statistics have shown inflation falling slightly but most UK prices are still rising fast and our inflation is now the highest in Europe. The figures for the year to end October 2011 (with end September figures in brackets) show the following:

Retail Prices Index (RPI)-5.4% (5.6%)

RPI excluding mortgage interest (RPIX)-5.6% (5.7%)

Consumer Prices Index (CPI)-5.0% (5.2%)

The modest fall in all indices came largely from falls in the cost of food (due to “significant and widespread discounting by supermarkets” and good harvests for certain produce), air fares and petrol. However, there were also significant upward pressures from increases in the price of clothing, electricity and gas.

Amongst the factors keeping the CPI annual figure high were increases in the prices of fuels and lubricants (15.4%), gas (24.1%), electricity (14.9%) and bread/cereals (6.2%). Factors affecting the RPI included increases in the prices of fuel and light (20.2%), tobacco (13.4%) and motoring (7.7%).

All of this helped the UK continue its climb up the European inflation league and, after passing out Estonia, our CPI has now become the highest in the entire European Union.  Our 5% rate is head and shoulders above the EU average (3.4%) and the Eurozone average (3%). We are also well ahead of competitors like Italy (3.8%), Spain (3%), Germany (2.9%) and France (2.5%). We also have higher inflation than China (4.2%), the USA (3.5%), Japan (-0.2%) and Switzerland (-0.5%).

Who says the coalition is not capable of world-beating performances!

Update: November’s inflation figures have been published since the above article was written. They show the RPI down slightly at 5.2% and the CPI down to 4.8%.

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.


More messing with employment rights

The coalition is proposing to charge workers up to £1,250 to take claims to employment tribunals and to prevent workers with less than two years’ service from making claims for unfair dismissal. In addition, a leaked report, commissioned by David Cameron, is proposing to make it easier for employers to dismiss workers without having to worry about tribunals at all.

In this report, venture capitalist Adrian Beechcroft makes the ridiculous claim that unfair dismissal rules are making it too difficult for employers to dismiss under-performing workers and that making it easier would encourage economic growth and “increase employment”.

His proposal is to introduce a new system where dismissal would “not be unfair if no particular reason is specified” provided the dismissed employee was given notice pay and compensation equivalent to statutory redundancy (one week’s pay per year’s service for most people). He calls this ‘quick fire’ system “compensated no fault dismissal” and any worker dispatched in this way would have no right to take a claim for unfair dismissal to tribunal.

He admits that the downside of this proposal is that “some people would be dismissed simply because their employer doesn’t like them” but he believes this would be “a price worth paying”.  He also points out that, as there is no EU legislation behind UK unfair dismissal law, it would be comparatively easy to make the necessary legislative changes.

It is not known whether the coalition will pick up this daft proposal but it is known that a large number of other proposals to weaken workers’ rights are also under consideration at the moment. These include proposals to reduce health and safety regulations (the Lofstedt Review), to reduce rights of workers in sickness absence situations, to reduce the redundancy consultation period and to ‘simplify’ the National Minimum Wage.

Another measure, which is not a proposal but established coalition policy and written into law, is a system for allowing employers to get out of giving equal pay to temporary/agency workers under the new Agency Workers Regulations. This system is called the Swedish Derogation Model and it is now being adopted by a range of major employers, including Tesco, Carlsberg and DHL. This little-known rule allows employers to reach agreement with employment agencies which result in the agency workers being taken on as employees by the agencies, thus making them ineligible for equal pay after 12 weeks in the company where they are working.

Employees and agencies have to comply with certain conditions before they can adopt this model but these conditions are hardly onerous:

  • the contract of employment with the agency must be in place before the agency worker’s first assignment with the company where they will be working,
  • the agency must agree to pay the workers with these employment contracts a ‘minimum amount’ when they are between assignments and
  • the agency must take reasonable steps to seek suitable further employment for the agency worker when their assignment ends and make sure it is offered to them.

However, the minimum amount that has to be paid is 50% of the worker’s average basic pay for the previous 12 weeks on assignment, provided that figure is at least of National Minimum Wage level. This differential is worse than the differential which currently exists between agency workers’ pay and pay in the companies where they are working (generally considered as around 30%). In addition, the agency can decide how many hours the agency worker is contracted for, provided it is greater than one hour a week! The ‘wage between assignments’ which is offered is therefore virtually meaningless.

Although agency workers who complete 12 weeks in  a particular role cannot be denied certain rights under the regulations (equal holidays with permanent employees etc), this model must be one of the most blatant mechanisms for undermining a piece of legislation improving workers’ rights that have ever been seen.

A Unite motion to this year’s TUC called for the model to be challenged in law but it must also be challenged in the workplace and union reps are encouraged to ensure that it is. Don’t let agency workers be done over in this way in your workplace.

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.


Pay is still not catching up with inflation

Pay settlements have been improving in some parts of the private sector of late but pay freezes abound in the public sector and the gap between pay and prices is getting wider. The latest median pay settlement figures from the main research organisations, for the three months to end September 2011 (with end August figures in brackets), are as follows:

Income Data Services (IDS) – 2.4% (2.5%)

Labour Research Department (LRD) – 2.5% (2.5%)

XpertHR (previously IRS) – 2.0% (2.0%)

The latest Office for National Statistics figures, for the three months to end August (with end July figures in brackets), show:

Average total pay (including bonuses) – 2.8% (2.8%)

Average regular pay (excluding bonuses) – 1.8% (2.1%)

According to the ONS, average total pay in August was £463 a week and average regular pay was £435 a week. According to LRD, average full-time pay was £618 a week in September.

All of the research organisations are suggesting that pay is beginning to look up in parts of the private sector, with IDS reporting that median settlements in manufacturing are now 3%. However, there is also general agreement that that settlements in retail and services are disappointing, with IDS putting them at 2.4% and LRD at 2.2%. There is general agreement as well on the fact that there is virtually no pay movement in the public sector and that the gap between pay increases and inflation increases is now wider than ever.

The pay settlement figures quoted above average out at 2.3% and RPI inflation is 5.6%, giving a gap of 3.3%. And even if the 5.2% figure for the CPI (the cut pay index) is used, the gap is still 2.9%. That’s the extent by which real pay is falling today, while pay for the directors of major companies is rising by 49% a year. Time for a change, I think!

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.


Just how bad is UK inflation?

UK inflation is now at its highest level for over 20 years and prices are rising faster here than in almost all of our European neighbours and global competitors. The figures for the year to end September 2011 (with August figures in brackets) show the following increases, together with some frightening underlying increases:

Retail Prices Index (RPI) – 5.6% (5.2%)

RPI excluding mortgage interest (RPIX) – 5.7% (5.3%)

Consumer Prices Index (CPI) – 5.2% (4.5%)

The main reason for the rise in the RPI was an 18.8% increase in the cost of fuel and light, which included a 28.2% increase in the cost of domestic oil and other fuels, a 22.4% increase in the cost of gas and a 12.9% increase in the cost of electricity. Other reasons for the higher RPI included increases in the cost of tobacco (13.1%), clothing and footwear (11.1%), motoring expenditure (8.7%), fares (8.5%) and food (6.9%). Leisure costs, however, had a negative effect on the figures and cost of leisure goods actually fell by 2.4%.

The main reason for the rise in the CPI included increases in the cost of gas (13%), alcohol and tobacco (10%), transport (8.9%), electricity (7.5%) and food (6.4%).

The RPI is now at its highest point since June 1991, when John Major was Prime Minister, and it has been at or above 5% on ten occasions in the year and a half since the coalition took office. By way of comparison, it only reached or exceeded 5% on four occasions during the 13 years of the previous Labour government. The CPI is also abnormally high and its current level of 5.2% has never been exceeded since the index came into existence.

This CPI figure is also higher than comparable figures in Ireland (1.3%), France (2.4%), Germany (2.9%), Greece (2.9%), Spain (3%), the EU as a whole (3.3%) and Italy (3.9%). In fact only one EU country has higher CPI inflation than the UK – Estonia at 5.4%. The difference is even more extreme when we look at non-EU competitors, including Japan, which has zero inflation and the US, which has 0.3% inflation – 17 times lower than our figure!

And what we thought was the one bit of slightly good news, namely that state pensions and benefits would be going up by 5.2% (the September CPI figure) next April, is being questioned. George Osborne, the Minister for Misery, has now announced a review of the link with the September inflation figure and is considering a freeze or sub-inflation increases in these benefits instead!

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.