Foreign Perspectives

Archive for the ‘Economy’ Category

Well, not us directly but the government’s £175 billion borrowing equates to for each family in the UK thanks to the incredibly optimistic UK budget announced today. Actually, it’s worse than that as the borrowing is planned to continue for around a decade and amounts to something like £30k per family over that period.

Naturally, there were the usual increases in taxes on luxury cum non-essential items and, breaking a Labour campaign promise, on higher earners too. Well, tax increases for the higher earners were announced but, as usual, they’re unlikely to be as effective as the government hope for them to be as every tax increase on higher earners results in increased thinking by accountants on ways to avoid paying it thus the claimed £7 billion to be raised won’t be.

One notable piece of generosity is the £2,000 to be paid for those scrapping a car over 10 years old and buying a new one. Unfortunately, it’s going generosity towards other countries as the UK has virtually no British owned car manufacturers. Unless, of course, the likes of Morgan have behind the scenes plans to radically raise the number of cars that they produce.

As always the growth predictions coming out of HM Treasury are something of a finger in the air job but that’s particularly the case this year with a 3.5% decline for 2009 being replaced by 1.25% growth the next year and 3.5% the year after that. Thus there’ll be a swing of 6.75% in the fortunes of the country in under two years. Somehow, I don’t think so.

Still, it could be worse. We could be in Ireland.

One of the unfortunate side-effects of the recession is that there are both more people looking for jobs and fewer jobs to go around.

Sounds obvious but that combination means that each job on offer attracts a great deal more interest. Popular jobs can attract hundreds of applicants and even more specialised ones where you’d normally expect a handful of applications can attract far more applications than the employers are equipped to adequately deal with.

That massive scaling up of applications can clearly swamp the employers who end up being forced into reducing the numbers significantly to something more manageable. How they do that can often be quite counter productive as typically they will do things like increase the level of qualifications or experience above that required and asked for. Now, you might think that having more qualified staff would be a “good thing” but if the job really needs just a few GCSEs and you end up selecting someone with a masters degree (which happens), is that person really going to be considering the job as a viable option for them long term? One likely side-effect of this strategy is that once things do pick up many of those over qualified staff that you chose will leave.

Another equally random approach is to reduce the level of advertising of job vacancies. This is better than the “over qualified” approach but is difficult to achieve these days once a job vacancy appears on any website. The other problem is that by reducing the advertising you may miss the very person who is ideal for the job although were you hit with an unrealistic number of applicants you’ll likely miss that person anyway.

In the computer field one common tactic is to ask for a whole series of specific skills. On first sight, this appears to be better than the other approaches. However, if the list of skills is too long it’s possible to end up with no applications, even in the current climate, and this approach also has similar employee retention problems as the “over qualified” approach when the economy eventually picks up.

At the moment there doesn’t appear to be any fully workable solution and things can only get worse in the months to come as the number of jobs on offer reduces and the number of applicants continues to climb. Let’s just hope that things get onto a more even keel soon.

Frankly I figured that the relabelling of “unemployment offices” in the UK some years ago as “job centres” as just a PR gimmic by the government but it would appear that there’s a little more behind it than I’d thought.

As y’all know I’m technically between jobs at the moment. However, I hadn’t really thought about myself as being unemployed until Wendy pointed out that I should probably be off claiming some sort of unemployment benefit. These days, of course, it’s called jobseekers allowance to distance it both from unemployment and benefits but ’tis still the old unemployment benefit office that you go to if you want to claim it, so off we went last week.

That relabelling brought with it a lot of other changes. For instance, in the “unemployment office” you now find two separate groups of people that deal with you. First, there’s the people who handle the benefit payments who are basically the same group as have always been there and who are interested in seeing that you’ve made the appropriate social security payments to entitle you to the benefit. Separately from them are the employment people who are there to do what they can to help you back into work and who will prod you into getting up and looking for work if needbe. Formerlly the two were quite separate and in buildings separated by several miles so there wasn’t the sense that there is now of the payment being there just to help you along whilst you’re off looking for work.

One side-effect for me is that there’s what’s almost a trick question on the form: are you currently studying? I am in that I’m doing a child development course but seeing as it’s not a full-time one that means that I’m actually available for work which is what the question is really asking.

Full marks though for that relabelling and the reorganisation that happened almost behind the scenes. Although, in theory, I have a job waiting (sort-of), it has prompted me to have a look around anyway.

This is the first really serious recession that the euro has had to deal with and there are starting to be signs appearing that it’ll be the last.

The problem arose basically because the entry requirements for going into the euro were created with the political aim of getting as many countries into the euro as possible. Net effect of that is that countries never got around to getting the basics of the operation of their economy into line and that’s why we’re now seeing a number of countries getting into more serious trouble than they would do otherwise.

Ireland is perhaps the worst case of this as it was an economy very dependent on European grant money. Go down any new road up to a few years ago and there was a panorama of “x% supported by the European Regional Development Fund”. That was courtesy of its status as a deprived region up until a few years ago. Now the situation is that not only do the roads not get that European support but the Irish are effectively paying for the roads in Poland. Combine that with the global economic crisis and you’ve a big problem.

However, it’s not just Ireland that has problems. Greece is paying its bills by borrowing short term which is a very dangerous game. Italy is in little better shape. For the worst case you need to look at the former eastern bloc countries who went into the Exchange Rate Mechanism which is a pre-euro state: going directly from one of the softest currencies in the world to using one of the hardest is, to put it mildly, a major shock to the economic system.

Will the euro survive all this, or will we see some countries dropping out soon?

Although we set off for France with the intention of spending the rest of our lives here, in practice I left on a career break which left open the chance of me returning to work at any time up to five years from my departure from work way back on February 20th 2004.

Whilst at the time we thought of it as essentially free unemployment insurance, as y’all know we’re currently in the process of returning and with the global economy being in the current mess that notional “free insurance” has turned out to be quite valuable to us now. Not only do I have a guaranteed job waiting for me, but it’s a nice safe one at that and seems a good place to be sitting to ride out the coming recession/depression for the next year or two.

Although obviously not everyone will have the opportunity to leave on a career break, it’s definitely worth taking that route just in case things don’t work out. If they do work out then there’s no downside as you don’t have to return from a career break but on t’other hand if they don’t or your plans change as ours did…