Sunday Thoughts: where next?

Sunday, January 25th, 2009 - economics, Employment, sunday thoughts

If this was a blog about employment, we would talk about employment.

Except at present, employment is not the issue – the problem is unemployment. It is not only rising fast, it is also being implemented in a biased manner. Stories have already emerged that women are bearing the brunt of redundancy ahead of men.

The economists this week are now convinced that we are in for a U shaped with long dip in the middle recession, over a V shaped recession originally preferred and predicted by Brown and Darling. Accepting this, and having seen the sharp initial stroke of the V, workers are flocking to what are considered “safe” jobs in a recession – teaching, government, etc

However, only so many “safe” jobs exist, and inevitably the dole cues will rise in number – around 3million is now the prediction by end 2010/middle 2011. Lengthening dole cues bring other problems – not only direct in that people need training, but also indirect with rises in crime.

The other problem will be the rise in unemployment of graduates, which will mean more will go abroad. I would like to see statistics in 12months time on the number of young people who don’t come back from a post-graduate round the world tour, having accepted a generous offer from Australia. This is bad in that it will mean an even quicker rebalancing of the proportion of OAP’s to earners in a decade or two as the baby boom generation reaches retirement.

So, what could be done? I think the time is here to start thinking radically and forward, over the result of the 2010 election which seems to dominate and hence flaw the new-Labour thinking of Downing Street. Yes, potentially we should look at old Labour solutions.

Recruitment is an expensive business, but then so is unemployment – so why not mix the two? Inevitably the skills where workers have been made unemployed will need to be recreated, which will take time – so why not retain them?

The problem with laying out any plan is that Gordon Brown has laid out no vision of what he sees post-recession UK plc doing. Unlike Obama who has sketched out a green America, Brown is still trying to sell us the story of why its a global recession. He seems stuck in a George Bush like stupor to cement his legacy.

So as we can’t think long term at present, let’s think tactically. The best employers, with Honda being the prime example, have placed their redundant workers in stasis, and given them maintenance and community work. rather than filling dole cues and crime sheets, why don’t the Government give incentives or tax credits to employers to retain rather than make redundant their existing workers?

As was pointed out by some commentators this week, some business models are bust – Woolworth’s being an excellent example, and there are far too many estate agents. Again without a long term vision we are stymied as to which industries should be supported, but could not the cost of dole money be given to employers as an incentive to retain key workers?

Am I talking about a 3day week proposal here? It could be argued as so, but I think it inevitable that Britain implements more EU work legislation and becomes more intellectually productive post recession, over trying to compete in manufacturing against the Chinese and Asians: they have scale, low cost wages and few health and safety laws.

However, a day 3week like proposal won’t solve the dole cue problem. We need a long term vision, and for that I conclude we don’t have the right team in Downing Street. I am wholly unsure about any of the other contenders either, with their levels  of “success” merely by the existing incumbents popularity measured by the length of the same dole cues and newspaper headlines.

This recession will need more government spending to be resolved. That will leave a long term debt. The scale of the problem of that debt pile will be assessed by the strategic positioning of UKplc when the green shoots do appear – and that requires vision.

Just as when in the last half of 2008 Britain needed a tactical Chancellor at the helm, between now and mid-2009 it will need a leader. And at present, I don’t think its got one – either in place, or in waiting. Who will stand up and tell us where next? Never has Britain needed America and its fresh new leader more than now – from both a political, economic, and employment view point. Until we find our own Barack Obama, is it any wonder that sterling falls further towards parity with the dollar?

Good Luck!

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