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Barclays is said to be already recovering from the credit crunch whilst most of its clients, and the population at large, still are not even seeing a sliver of the light that could indicate the end of the tunnel is in sight. Small businesses still face cuts in their existing overdraft and credit facilities despite of the fact that their businesses are structurally sound. People with consumer debt still face increased interest rates. Personal insolvencies, as a result of redundancies, are at an all time high (link to insolvency services). Mortgage holders see their interest rates rising. Banks reposess houses more quickly than ever, and debt collectors are also becoming more aggressive.
So what does this increase in banking profits actually mean? Are we seeing a rehabilitation of our broken financial system? Or are we simply on the way to returning to business as usual, with the toxic loans written off?
The simple answer is – no-one knows for sure. There was certainly a gradual return of confidence, meaning that people will want to invest again. But there remains also a certain amount of question marks. As Robert Peston from the BBC argues, banks are reducing the amount of money they lend, so that they simply have more on their books.
In addition, however, the way that banks post their profits can change quickly as they can use different methods of valuing their assets. Asset valuation is not an exact science, and there are various ways of doing so.
Be that as it may, everyone is sighing a breath of relief that at least two banks don’t appear to go the way of Northern Rock (although there are interesting ideas around to breathe new life into it. That relief could be (and in certain quarters, is) giving way to complacency and a return to BAUBAB: Business As Usual and Bonuses Are Back. Despite Barclay’s assurances that bonus payments are reformed, an average of bonus £100,000 for staff at Barclay’s Capital still makes me think that this is more cosmetic.
We probably will have to repeat this until we’re blue in the face – but banking reform has not gone anywhere near enough to create a stable financial system in which systemic crises such as the current one are less likely to happen. And anyone who thinks that the crisis is over forgets that for the millions of unemployed, and those steeped into debt, it’s only the beginning.
There’s a lot of Green New Deal news this week, so I’ll take it in stages. Today, the fall-out from the confirmation that Heathrow Airport will get a third runway. Tomorrow, I’ll say something about this afternoon’s inauguration of President Barack Obama.
Just before the announcement on Heathrow, the newspaper comment pages were overflowing with the pros and cons of expansion. The prospect of new jobs at the airport was enough for TUC leader Brendan Barber to support the new runway. Simon Jenkins was less convinced, pointing out that there are plenty of ways to create jobs – such as by improving healthcare infrastructure – which don’t involve flattening villages. Indeed, as Greenpeace’s Joss Garman points out, we need to get our jobs from a Green New Deal, not from more airports. He asks:
Should Britain be building a sustainable economy with a green fiscal package centred on creating millions of green-collar jobs? Or do we plough on with the industries of the past irrespective of their impact on disadvantaged people all around the world?
GND author and Green Party leader Caroline Lucas had a letter in the Times on the day after the decision came, arguing that, despite the double-talk of Brown and Hoon, there is simply ‘no such thing as a “green” airport‘. Like Garman, she attacked those who used economic arguments to justify the expansion:
It’s simply laughable to say that “the jobs outweigh the climate danger”. First, climate change will wreak havoc on the world’s economy. Second, the greening of our economy will require us to create huge numbers of jobs across many sectors, not least transport. Hence the need for a Green New Deal. It really is time to ditch the false ideology of environment versus economics.
The trouble is that what passes for ‘economics’ under this government is a mixture of vain hope and voodoo. As nef‘s Policy Director Andrew Simms explained to the Guardian,
You are talking about a highly carbon-intensive piece of infrastructure that might be finished at exactly the moment when global oil production is collapsing and its price is rocketing. The government’s case is based on fantasy economics.
We need to wake up to the fact that the expansion isn’t about jobs for ordinary people. It’s about big business getting it’s way, regardless of how the rest of us are affected. And, yes, I realise that any argument about corporate influence over politicians sounds trite to the point of being a cliché, but the reason it’s repeated so often is because it’s largely true. The news that there is a ‘revolving door’ between Downing Street, Whitehall and airport operator BAA, is shocking, infuriating, but hardly surprising.
What is surprising is the silver lining to this sordid collusion between BAA and New Labour: the Conservatives are green again! With impeccable timing, the Tories announced their plans for a green revolution just as our Heathrow rage had reached its zenith. Their plans? A £1 billion “super-grid” of high voltage direct current power cables, which will save enormous amounts of energy compared with today’s alternating current cables. They’re also promising grants of £6,500 per household to help people invest in insulation and energy efficiency measures. Good old George Monbiot, who first suggested many of these ideas in his book Heat: How to Stop the Planet Burning, can hardly believe that they are finally being taken seriously, let alone by the Conservatives. And as Brown and Darling continue to mess around with more taxpayer-funded bank bail-outs, it is Cameron who seems more clued up about how a Green New Deal might actually work:
The stuff in [our proposal paper] will help employ people and bring jobs. We have got to do things that are both good for us now and good for the future.
If Cameron can convince us that he will make good on these promises, then he might catch a rising wave of enthusiasm for green economic recovery. Witness the following articles, all of which mention nef or the Green New Deal:
- Please, No 10, can we have a green policy? – Lord Chris Smith of the Environment Agency pleads Downing Street for a Green New Deal in the Sunday Times.
- Overnight, the US is going green – but we’re stuck in a different age – Geoffrey Lean wonders where our Green New Deal is in the Independent on Sunday.
- How can Labour still fear to act for a fairer, greener land? – Jenni Russell laments New Labour’s failure on economic policy in yesterday’s Guardian.
- Green light for a boom in jobs – a nice piece in the Sunday Times, featuring nef‘s Policy Director, Andrew Simms.
The government announced today that single parents on benefits with children over one year are expected to find work or else face sanctions.
This is a move that beggars belief, for several reasons.
Firstly, couples on benefits with children are not expected to find work until their children are seven. This smacks of discrimination against lone parents – are we still making a moral judgment based on the marital status of a parent?
Secondly, this move makes rather blatant assumptions about the availability of good-quality childcare in every part of the UK, something that is clearly not the case. Where are parents supposed to leave their children?
Thirdly, starting to work costs money upfront. Not only for childcare when the parent is working, but also for childcare when going to interviews. For suitable clothing. For transport to and from work. For lunches that need to be bought when at work. Who covers the cost for that?
Fourthly – and most importantly – the minimum wage does not provide a living wage, especially not when seeking good childcare. Already, millions of people on low incomes or benefits take out revolving loans with doorstep lenders at interest rates of up to 186% to cover basic costs of living. Forcing lone parents into work without ensuring that their wages can cover increased costs of good quality child care will only add to their debt load.
We finally need to start a discussion on living wages and living benefits, and of stable jobs worth doing for a living. Furthermore, it needs to be acknowledged that many low-skill jobs are very unstable, and many companies operate a hire- and fire policy. In a current recession, this will only become more common place. Full employment is now more unattainable than ever. Building skills and confidence as the Government proposes to do is a good thing, but it is not the only prerequisite of securing a stable job – the availability of jobs is a rather more important factor.
The Government needs to provide far more carrots than a vague promise that only those who will not take steps to return to work will be sanctioned. I can’t imagine that the level of trust in the Government is very high among benefit recipients, and applying the stick is certainly not going to change this.