I wrote yesterday about my fears for the UK economy, and the apparent lack of awareness there is amongst the UK political class that we are heading for unemployment of between 3.5 million (the wildly optimistic Office for Budget Responsibility estimate) and 6 million (the figure Danny Blanchflower and I both agree on, for slightly differing reasons).
This morning the FT reinforces the messages in two ways: Firstly it notes:
More than half of UK manufacturers expect to make job cuts over the next six months as large employers across automotive, aerospace and other core industries brace themselves for a sustained downturn in demand during the pandemic.
The UK will lose high value skills in what is being called a “jobs bloodbath” by manufacturing trade group Make UK, whose members reported that their redundancy plans were ramping up as the prospects for a return to normal trading faded.
And it adds, in another article, that:
UK universities are cutting the jobs of thousands of academics on short-term contracts as the sector prepares to make sweeping cuts in the wake of coronavirus.
Institutions across the country have dropped hundreds of hourly posts and left temporary contracts to expire, leaving academics facing unemployment and depleting the capacity of departments to run courses and support students.
In this second article 'hundreds' does, I think refer to each institution, and not a total.
What I strongly suspect is about to happen is the "jobs bloodbath" that Make UK predict. And the government appears to be standing aside and is watching it happen. I explored the resulting issues yesterday and won't repeat them now, except for one thing that is.
This decision to move from furlough to mass unemployment is a choice. It is not necessary. It can be avoided. As I have long argued it is the consequence of putting the desire for what are thought to be "sound government finances" above any concern for the people of this country. It is economics gone mad.
And I can't see it being accepted. The anger that this will give rise to will be long and sustained. Unless the government acts now - and there's no sign that it thinks it needs to do anything more than offer £10 off at Pizza Express - then we're going to be heading for a winter of discontent like no other we have ever seen.
Just add Brexit, a second wave of coronavirus if it happens, disruption to food and medical supplies and people unable to feed their children with their houses under threat of repossession as they realise that there is no hope of another job that can pay the mortgage and a mix more politically toxic than anything that has even remotely happened in my lifetime will be created. And apparently Dominic Cummings can't see that coming. So much for his super-forecasting.
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I think the answer is in your post about the never-ending victim-hood of the BREXIT mindset – that somewhere blame will be diverted away to another section of the population.
But I still think that they will have to pull back and prolong the furlough scheme because although I see pockets of renewed economic activity, it is precisely that – ‘pockets’ and it does not make an economic recovery – they seem to work from short horizon to horizon, rather than the long view and it is hard to call what they will do.
Are they really that stupid – to end furlough when the economy does not recover enough? Well, I suppose we are going to find out are we not?
But surely the shadow of dangerous disorder looms…………………………..
Richard how much mitigation of this looming crisis would reducing pension ages back to 65 M and 60 W for those who want to, make to unemployment levels?
Also what effects could introducing a 4 day working week have?
I too can see a crunch coming and am old enough to remember the troubles of the past very worrying.
Interesting ideas
But it will be claimed not possible because they increase government spend
I admit I have not got the numbers you ask for
Thanks for your reply Richard the back to 60 group have a judicial review this week no doubt the government will appeal if they win.
I know you are right about their claim of no money but it is very blood boiling to watch them spending large amounts pursuing dodgy PPE contracts and an unfit for purpose Track and Trace system.
Agreed
Just looked at the numbers for 2018 when 454,000 females and 742,000 males over the age of 65 were in employment which was 1.2billion people or 10.2% of the working population. Paying the basic pension to these people I estimate would cost £6.5bn but I don’t know the average cost of each furloughed worker in order to work out the cost comparisons.
Thanks Chris Kitcher for the reply although the cost appears high the 1.3m jobs “freed up” would obviously make a difference to unemployment figures plus there would be a saving on Universal Credit as even if many of these jobs are low paid they would attract a lower rate of UC to support those in work. The big plus is it has the potential to make 1.3m people happy. I acknowledge that not all would take up this “early retirement” and the job potential may be closer to half but still significant.
For the record, I have no intention of retiring at 66
David – I doubt that rolling back state pension ages would have much effect. For those in good employment at that age the ability to take state retirement pension would not be much of a factor in them giving up work. For those in sketchy employment, the additional income would be welcome, but again I think they would continue to keep in some work. As for females, aged 60, I cannot see that passing sex discrimination rules.
I would rather see major investment in jobs such as the job guarantee that Richard endorses – this would be a game changer.
Hi Richard, it sounds as though the need for some form of jobs guarantee is becoming pressing, though I wonder if the present situation is going way beyond any scenario envisaged by the originators of MMT! I have always found this the least convincing part of MMT; fine in theory but when you get down to real people doing real jobs the matching of people to places to jobs is going to be a lot more difficult than people seem to realise, especially when it comes to maintaining existing skills. I have long been a proponent of UBI, and I am thinking that now, at least in the short term, this may be a better solution to at least part of the problem. This could then begin to incorporate a jobs guarantee as the details get worked out and move towards becoming an “income guarantee”.
Having said that the first priority, of course, is to get a government that is genuinely going to try and do something for people other than their rich chums!
UBI helps
I do not, unlike some MMTers, think that the two need be incompatible
The issue is how can we do best? I’m nit into purity for its own sake
You’ve posted before about the practical issues of UBI as we don’t have a central record of everyone’s bank account.
Would there be any mileage in trying to make payments via utility companies – say to whoever is paying the electric bill. There must be existing infrastructure to trigger repayments on accounts that could be leveraged. Wouldn’t catch everyone but would reduce the numbers that needed dealt with manually.
We could build the database
It just needs time we did not have in March
Dominic Cummings probably can see it coming – isn’t creative destruction his thing? Just rather depends what he thinks “creative” means, and to what end.
You’re right, Cummings can of course see this coming. He just doesn’t give a toss. Creative destruction is an oxymoron. I think the question you were looking for is “isn’t destruction his thing?”
It’s the classic neoliberal view, which is a simplified version of Darwinism – it’s all natural selection.
Yes – I should have put creative in inverted commas. People who advocate this often follow up by telling you that the Chinese word/ written symbol for danger also means opportunity. This basically just comes back to standard risk/reward, but sounds sexier – so with real risk/danger going out to party in drag as transgressive/ disruptive/ “creative”. The hangover is going to be stupendous.
We may see a socialist government sooner rather than later with Sir Keir Starmer resigning as he has conservative leanings. The people will have to save the country with a people’s champion.
The tories are repeating the mass unemployment of the 80s to change british society for themselves.What do I mean? They got rid of old industry,even if they made money and moved to a service economy. For the tories it worked big time, of course the odd war and winning it helps. I am talking about the falklands war here. So its round two of mass shocks to make change to the economy. I remember the nightly job loses when they were announced on news at ten.
“And apparently Dominic Cummings can’t see that coming. So much for his super-forecasting.”
Dom sees this coming, of course he does. He and they are disaster capitalists in charge wanting to remake the UK in their own image. Dissent from the true path is punished by expulsion or just ignored.
Despicable people.