The FT reports this morning that:
Big banks in Europe and the US announced almost 100,000 new job cuts this year, and thousands more are expected from BNP Paribas and Barclays early next year, as the wave of lay-offs that began in 2007 shows no sign of abating.
The 2015 cuts – which exclude the impact of major asset sales – amount to more than 10 per cent of the total workforce across the 11 large European and US banks that announced fresh lay-offs, according to analysis by the Financial Times.
Some might think that I would not worry about the decline in a sector for which I have never wanted to work and for which I show limited affection. But let me be clear, those losing their jobs will, in large part, not work for the part of banking that causes so much stress. The people who will be going will very largely work in the part of banking that we indisputably need.
We need banks to manage transactions.
And we need functioning loan and deposit institutions.
But banks are shedding staff in these areas. Partly it is, of course, the result of automation.
Partly it is the result of online banking.
And partly it's because banks are lending less; don't want to take so many deposits for which they by and large have little use and don't want to supply personal banking services on which they make little money and which no longer guarantee that they also get the lucrative unsecured loan business from the account holder.
The net effect though is a loss of middle class security. It's a hollowing out of the economy where people once had stable, long term, pensioned employment. It was never what I wanted, but I see the appeal, and also appreciate that those in such employment did provide the stability within the economy itself. Other things came and went but these people thought they would always have a job.
And now they either don't or won't. And there are no jobs like the ones they had to go to. The economy has outsourced risk onto people who never thought they were risk takers, but are now, and the consequences are real.
People who aren't natural risk takers struggle when faced with it. They try to curt spending. They try to save. They shrink the economy as a result. And when they can't replace their security the stress that causes increases costs to society, in a great many ways.
Banks may think they're rational. And maybe in their own way they are. But as a result middle class Britain shrinks just that bit more. And with that the stability on which we all depend shrinks too. Until, that is, we get a new economic narrative that gives people purpose again.
But we're not there yet.
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You’re forecasting the Gotterdammerung of middle-class suburbia.
There’s a reason why your forecast is mistaken: it’s not, in fact, a forecast. It’s playing out – or has played out – already in the ‘Fourth Division’ towns of England. You know the ones: the football teams at the very end of the Pools announcement, names of towns you’ve never visited where the only white-collar employer is the state.
Some cities, too: I was working in Leicester when the whole of the insurance industry upped stakes and left – automated the processes, all of the administrative and managerial jobs rationalised to regional offices in Nottingham and Peterborough – leaving a handful of salesmen.
My next job: working in a DIY ‘shed’ and watching the company’s nationwide advertising campaign – the happy aspirational newlyweds spending their middle class incomes on doing up a wonderful new home – in a month when less than twenty houses changed hands within the sales radius of our store.
That’s a recession, right there.
Skilled and unskilled manufacturing had disappeared a decade before that.
Me, I took up work with an IT consultancy in Nottingham, and got a leg-up into banking just before outsourcing to India made *that* job disappear.
But this news – a hundred thousand jobs – is a significant percentage of the national white collar workforce. It’s pretty much the only private-sector middle-class work remaining outside London and a handful of service-sector boom towns; and the public sector is, by fiat, in a recession never seen in any Western economy.
I said this six years ago, when the target of a 40% reduction in the public sector payroll became policy: there are towns and cities in Britain where there are no white collar jobs except those paid directly or indirectly by the state.
I’ve seen it first-hand in a town that was ‘saved’ by a buy-to-let boom chasing the expansion in our second- and third-tier higher education; some salvation that turned out to be.
In short: the loss of banking jobs, combined with a 40% loss of public-sector jobs, puts fourth-division towns in a recession that resembles Argentina in the debt crisis, or the collapse of the Soviet Union.
I agree
Thank you, Nile, for this truly shocking contribution to the debate, which I, and I’m sure many others, had not realised was happening.
One can only ask how this will eventually play out, when the 50% or 60% chunk of the 99% that make up the middle class, finally wake up.
They’ve been encouraged, like the spectators in the Roman arena, to bay, and boo, and jeer, and demand the blood of the “skivers” and “bogus sick benefits claimants”, all fighting for survival in the brutal social arena set up by IDS and his DWP Stormtroopers, never sussing the fact that THEY were next, because the middle class 50% or 60% are not “one of us” from the 1% for whom this whole Government is geared, and in whose interests it is run.
The Mainstream Media (whose owners and top management are largely members of the 1%), will do its best to point at immigrants, or refugees, or “obese people”, or striking Trade Unionists (including junior doctors), or any other vulnerable group that can be used to distract attention from the real facts – I recall the demonization of “single mums” in the Thatcher/Major years, as though they were the cause of the several recessions of that period.
But if the middle class DO wake up to what the Government is actually doing (Al Capone in 1930’s Chicago springs to mind), then let our rulers bear in mind the adage: “He who sows the wind, reaps the whirlwind”.
I agree with Nile-this process can be traced back to the 1980’s with the foot now on the accelerator. High Street banks have had, for some years, the feel of being ‘fronts’ for gambling joints as if there was a false wall at the back that could slide to reveal a huge casino. The ‘Death of the Liberal Class’ has been charted by Chris Hedges, who sees the middle class undermining itself by buying into free-market fundamentalism.
“We have to grasp, as Marx and Adam Smith did, that corporations are not concerned with the common good. They exploit, pollute, impoverish, repress, kill, and lie to make money. They throw poor people out of homes, let the uninsured die, wage useless wars for profit, poison and pollute the ecosystem, slash social assistance programs, gut public education, trash the global economy, plunder the U.S. Treasury and crush all popular movements that seek justice for working men and women. They worship money and power.”
As one RT documentary recently put it, we are living in a system where ‘The Financial Crisis Is a Business Model.’
Regarding the destruction of the middle class, please see this regarding the US situation as revealed in the recent report by the Pew Research Centre:
http://www.wsws.org/en/articles/2015/12/12/pers-d12.html
We’re living in interesting times, aren’t we just?
I hope for a Ceausescu moment as when the Romanian dictator stood on the balcony to say his lies and receive the cheers. But then some people booed and it was taken up by the crowd. He looked amazed and must have realised that he could no longer rule them. in the same way I hope enough will see through the pretence and act. ( but I’m not in favour of shooting Cameron and the hedge fund managers. I know, I’m a softy. )
Chris Hedges – right on!
So here we have it: We know that capitalism has always carried with it the seeds of its own destruction.
Well, here we can see the seeds being sown. The mechanism here is that wealth is not being shared reasonably. It is being accrued by fewer and fewer people.
So the people of this planet may rebel – but it will have to get worse first but human beings are very resilient (how many schools talk about instilling resilience in their pupils these days?).
But also, the planet itself will begin to rebel as capitalism continues to poison it. Climate change……………
The confluence of these two factors may cause the destruction of this faulty Americanised version of capitalism that we live with today. It’s the best we can hope for at the moment. It’s not desirable but it could be necessary. The ‘perfect storm’ of human and natural upheaval. As a father of two I wish it were otherwise.
Change or be changed? Are they listening at Goldman Sachs? Citibank? Washington? Westminster? We’ll soon find out.
First they came for the skivers….
Interesting philosophical perspective from Noam Chomsky on the capitalists dilemma – as they can never get rid of poverty in a system of private property rights leading to increasing inequality, then they must get rid of any real semblance of democracy in order to survive the inevitable public backlash from the increasingly obvious results of their success.
https://www.youtube.com/watch?v=v9OeYtubaek