UK trapped in 'vicious spiral' of falling wages and depressed investment

[ttosca]

ILO report warns of a very real threat of rising child poverty in Britain if measures to combat unemployment are not introduced

Britain must do more to get companies investing and banks lending if it wants to turn around a stagnant labour market that has seen long-term unemployment double since the financial crisis began.

That is the warning from the International Labour Organisation (ILO), which said in its annual World of Work report that the UK is trapped in the "vicious spiral" of falling real wages and depressed investment and faces a very real threat of rising child poverty.

At 7.8%, the UK unemployment rate is relatively low in comparison to other EU economies, but the ILO notes that it has failed to come down for almost a year. Unemployment is also well above the pre-crisis level of 5.2% at the end of 2007. Any growth in employment has only been enough to accommodate a growing labour force, and has not made up for jobs lost when the economy faltered.

The author of the ILO report, Raymond Torres, said the UK faced serious long-term threats if it fails to give more help to vulnerable groups, such as single parents, to get back into work.

"In the UK there is a risk of poverty among children that we may not see much now but that could have serious long-term effects," said Torres, the director of the ILO's International Institute for Labour Studies.

The ILO's recommendations for the UK echo its concerns for all advanced economies where it believes a recovery in corporate profitability and stock markets does not appear to be resulting in strong jobs growth. Instead unspent cash is piling up in the accounts of large enterprises while executive pay is also rising.

It calls on the UK to implement measures to encourage job-friendly investment, particularly at "job-rich" small and medium-sized businesses, with schemes such as credit guarantees and tax incentives. It also says executive pay packages should no longer reward short-term goals that can encourage harmful management practices.

Banks are also seen as key and need to act as "an enabler of the real economy", the ILO says. Its comments coincided with official figures that showed lending to businesses has continued to contract, even though the Bank of England has handed out £16.5bn to lenders since July under its flagship funding for lending scheme.

Looking behind the relatively low unemployment rate for the UK, the report notes that more than 60% of jobs created since the third quarter of 2009 have been either part-time or temporary. It also notes a sharp rise since the start of the financial crisis in the number of people saying they could not find full-time work.

Long-term joblessness is also a growing problem, the ILO report finds. The number of people looking for work for over a year has more than doubled since 2007, up from 391,000 to more than 902,000. As a share of total unemployment in the first quarter of 2013, more than a third of all unemployed people were in search of employment for more than a year.

Torres also highlights the problem of inequality in the UK. Chief executive pay remains close to where it was before the financial crisis, while the vast majority of workers have seen their wages fall in real terms. In 2011, the chief executives of the 15 largest firms in the UK earned on average 238 times the annual earnings of the average UK worker, the report notes.

Against a backdrop of low wage growth and depressed investment, the UK is caught in a "vicious spiral", Torres warned. "Stagnating wages are adversely affecting demand, which in turn is dampening real investment, leading to poor job creation ? reinforcing weak demand and so on."

www.guardian.co.uk/business/2013/jun/03/ilo-uk-falling-wages-investment

Its not the puppets that don't want any form of nationalised banks/industries, its the string pullers.

"either invest in mechanisation, cut wages or cut quality to make a profit. I guess they cut the quality !"

Mini, it is not just like that. The other alternative is to increase sales by creating innovative products that people want and which are a result of an educated, growing, prosperous workforce. That is what most hardworking business entrepreneurs try to achieve. Not everyone in business is an exploiter.

Whenever we contract Private sector people in our more menial tasks at work they are an utter failure. Cleaning, waste disposal, heating and lighting, etc, they just feck up. Every time. Don't do it properly. Don't turn up. Leave a mess. We look round after a 'visit' and wonder WTF. THIS is the way forward? Ha.

'Its not the puppets that don't want any form of nationalised banks/industries, its the string pullers.'

Yes, of course, you are right. The puppets do their bidding and claim to represent the people - the hardworking middle classes and working classes.

"And let's face it, being paid for failure is a massive feature of the private sector. If it wasn't, just about every senior manager post war would be sacked for failing in terms of industrial relations failure, investment failure, developing new markets failure, branding failure, re-training of staff failure"

No, many of our businesses that provided employment for millions have gone to the wall in the private sector and that was due to incompetent management. Those managers won't get hired again in any private business, but you will probably find them in a quango, a think tank, a charity, a tax-empt foundation or an NGO, paid for out of the public purse.

A boxing match is a competition and there will only be one winner. but it is a fair competition played by the rules with a regulator known as a referee

I don't believe we will ever see one winner (super imperialism) the workers will have woken up before that happens

Where are we going to get referees and were these not politicians in times past? Is this what you think?

I'm not so certain though Claig. I know plenty of fairly ordinary people do get onto the back benches, doctors or solicitors, dentists or whatever but politics is really just about providing window dressing so that the workers don't catch on.

America and the West in general have done a marvellous job convincing people that capitalism and democracy are the same thing. I would argue that it is impossible to have democracy under capitalism, actually for all the same arguments you put forward claig about lobbying and corruption.

Mini, it is not just like that. The other alternative is to increase sales by creating innovative........... I was joking about your keyboard

"Whenever we contract Private sector people in our more menial tasks at work they are an utter failure. Cleaning, waste disposal, heating and lighting, etc, they just feck up. Every time. Don't do it properly. Don't turn up. Leave a mess. We look round after a 'visit' and wonder WTF. THIS is the way forward? Ha."

And who is to blame for that? It's not the workers, it's the useless managers who aren't managing and aren't ensuring quality and standards and are doing "light touch regulation". We pay for these managers out of the public purse and too often they are not accountable for their failure.

I think the problem with contracting out to the private sector is that very often you end up with a huge main contractor skimming off a huge profit long before any work is actually completed.

Then you have main contractor, sub contractor, subbie and a man in a van on piece rate who rushes the job. You have so many layers of accountability and management that no one takes any responsibility and no one supervises the actual job. They just take smaller and smaller percentages. I have a feeling that if I costed a job to fill one pot hole in Sussex, it's probably five times the actual cost.

"Where are we going to get referees and were these not politicians in times past? Is this what you think?"

We will get them through democracy, when people demand change because they are sick of reading about 100 year old patients dying of dehydration in our publicly paid for hospitals because no one bothered to attach them to a drip for 10 days.

The UKIP vote was the start of the change. The public want change. UKIP are no Oxbridige PPE think tank metropolitan elite, they are ordinary people and some of them are plonkers, but at least they won't screw the "squeezed middle" and they will possibly stop people dying of dehydration on the wards that they will one day be on too.

"I know plenty of fairly ordinary people do get onto the back benches, doctors or solicitors, dentists or whatever but politics is really just about providing window dressing so that the workers don't catch on."

Yes, but we read how it works. They have whips who bully and shout and swear at them and tell them how to vote and threaten them that they will not get promotion if they don't do what they are told. There has got to be a better way to represent the will of the people.

'that no one takes any responsibility and no one supervises the actual job'

The people at the top should carry the can - the ones on the expenses and £200,000 salaries, and there should be corporate and directorial liability and prosecutions if people die in their thousands unnecessarily in our hospitals. It will soon change if that happens.

It's the useless managers who pay peanuts, provide no training, and probably provide the wrong equipment/time slots that are just too short. In social care, you have agencies that are ordering carers who go into the homes of vulnerable people to keep their visits to 15 minutes, FFS. How can you cook a meal, feed an elderly person, give them a bath, help them use the loo and get them into bed in 15 minutes? Social services are allowing this to happen.

UK business focuses on finance and cost-cutting - certain kinds of costs that don't matter to executives but do matter to the customer or service user. While wasting vast amounts of money on ever-inflating executive pay which bears no relation to any measure of success at all.

It doesn't have to be like this. It isn't in Germany, for example, or many other countries, where traditionally companies focus on the actual business, on innovation, on working with their staff and customers.

Yes, edam, but in the public sector which we all pay for, the focus must be on the qulaity of public service not on cost, and if people are dying intheir thousands unnecessarily, then anyone who implemented a cost saving programme which led to such a shocking lack of qulaity public service should be held criminally liable.

Journalist are being jailed for paying money in thousands for information to get stories, and no one is jailed for deaths by the thousand in public service.

There has got to be a better way to represent the will of the people

agreed. We think we have democracy, we don't. But how are we going to demand change. The system is not fit for purpose. The act of voting is not democracy. Therefore voting in UKIP won't make any difference. Also the media (you know the ones who also attend meetings in Watford but fail to report on what is discussed) are not going to stir public opinion towards any kind of revolutionary party, left or right. If UKIP looks as though it will tow the line with the capitalist class, the uber wealthy shareholders and oligarchs then fine they will get media support. Should they deviate from upholding the class power of the string pullers the media will make mince meat of them.

'But how are we going to demand change. The system is not fit for purpose.'

It comes slowly, step by step. First we need proportional representation to break the stranglehold of Tweedledee and Tweedledum, then we need more transparency and openness and registers and declarations of lobbyists etc. We need freedom of information with all expenses published on the internet and minutes of most meetings made public.

Change will come. UKIP was the start. The deterioration and decline will eventually end. People have wised up, they know they are being shafted and many voted UKIP because their own party elite held them in contempt.

'Also the media (you know the ones who also attend meetings in Watford but fail to report on what is discussed) are not going to stir public opinion'

Eventually they will have to, because they are being discredited and many people believe they are just propaganda mouthpieces and people are turning to alternative media made by ordinary people who didn't go to Oxbridge.

Millions of people are trying to work out names in an affair that the Daily Mail alone made public, and yet the TV news programmes don't even mention that millions of people are trying to work out what this story was about.

I agree with what Edam has said especially in regards to Home Care services for adults. I left 12 years ago because my job changed. We use to assess people based on need by the time I left I was making assessments based on budget constraints and checking agency contracts and invoices for fraud.

However under neo-liberalism with falling tax receipts, rising unemployment, rising welfare need and rising costs because of privatisation I can't see how peoples needs can come first. Money doesn't grow on trees. Are we too far along this trajectory to turn back? We need to but to do so would mean nationalising the banks and halting the privatisation of public services and starting to bring it back in. We also need to look at the money supply itself. If a government needs money, it needs to be in charge of its creation, not the banks. No government will do this, for two reasons, the string pullers won't have it and uncle sam would go ballistic.

Mini, you are right. There will always be string pullers. But the clever ones go with the flow and don't go against the grain, they don't hold the ordinary people in contempt. They read the tea leaves and give the people what they want in order to achieve what they themselves want.

News just doesnt seem "new" any more.
"News" is several hours or days out of date sometimes.

I wonder if Rothermere is staying in Watford. That tax dodger back in the Uk for a little stay in a hotel with his chum Scameron. What do you think?

Are you referring to the proprietor of the Daily Mail? If so, I refuse to believe that he is a tax dodger.

He is but he isn't on the current list of guests at watford.

The 'quality' of public serivices ISN'T going to be best served by privatisation. The M of Justice now wish to 'privatise' the provision of the probation service - so some of the really risky, damaged and damaging people on our streets and in prisons could be managed by G4S - a company stratospherically inept. But..in the short term cheaper than having really well performing public servants.

This at a time when offenders reconviction rates are at an all time low. There isn't a 'quality' argument. It's purely ideological. The Offender Rehabilitation Bill, currently going through Parliament, is the means by which unqualified and unprepared and cheap staff will be over-seeing v high risk people. But the main thing is that they are cheap.