Britain - NOT A JOB, NOT A PENNY, for the profiteers and their crisis!

Nov/Dec 2008

The papers may well talk about the present recession as a sudden "bust" following what has been a long period of "boom" for profits. But for workers it has, on the contrary, been a period of near permanent "bust"! After all, where did the super-profits come from in the first place, except out of cutting costs on workers' backs and in general turning the screw on the working class?

Since the beginning of the credit crunch, living standards have been falling steadily, not least thanks to the huge food and fuel price hikes, and increases in all other household bills, plus fares for public transport. What is more, pay has been going down compared to inflation for at least 12-18 months - a situation which the bosses have consciously contributed to with their 0% real pay rises, or in many cases de facto pay cuts.

No wonder therefore, that an indicator like child poverty shows an increase, even though the government is meant to be giving this its special attention. So today as many as 4 million (one in three) children are living in poverty - and this is according to the Department of Work and Pensions itself! The latest figures from the Child Poverty Action Group show that in 26% of constituencies, 50% of all children are in poverty, but that in Birmingham's Ladywood, this figure is as high as 80%!

Today things threaten to get far worse. Because as soon as the capitalists' profits come under threat, their first move is to present the bill to working people, which is precisely what is now happening. And it is not necessarily just those companies whose profits are threatened, which are announcing job cuts, wage cuts and cuts in working hours. Some are doing this just in anticipation of a fall in profits to come.

The roof goes through the roof

The first effect of the crisis has been on housing. While the speculative bubble was still inflating over the past several years until it popped last year, the cost of homes - both to buy and to rent was pushed way out of reach for many ordinary people. But, because of the on-going housing shortage, thanks to the private sector's strategy to keep prices up and the government's abandonment of social housing new builds and refurbishment, many households have had no choice but to take on unaffordable mortgages.

As a result, there is a large and growing number of families who are more and more vulnerable to repossession, especially when other factors push living costs and interest rates up - and obviously even more so, if jobs are under threat, as they are.

At the end of this October, the Financial Services Authority reported that 120 people per day lost their homes between April and June this year. Repossessions have already jumped by 70% in the past year. According to the FSA, 11,054 homes were repossessed in the second quarter of 2008, compared with 6,500 in the same period in 2007. Indeed, the number of repossessions continues to rise. In addition, 312,000 families were behind in their mortgage payments - up 16% compared to 2007.

It is therefore not too surprising that there should be as many as 63,200 families who are officially homeless (the June figure, which includes only those families whom councils have a statutory obligation to rehouse). Counting all family members, however, this means around 250,000 people - the size of a small town!

The Local Government Association estimates that by 2010, 5m people could be on local council's waiting lists. This is probably even an underestimation, given the rate of repossessions, even if the prices of houses falls a lot further than the 15% drop since last year and despite the cut in interest rates, since lenders simply do not pass these on to mortgagees.

Cutting and running - with workers' livelihoods

For the bosses, jobs are the first targets. Even if it has taken a while, job cuts in construction have finally filtered through to the government's official statistics. They are now telling us that this last 3 months, the official unemployment rate rose at its fastest rate for 17 years - that is since 1991! The figure now stands at 1.79m (5.7%). Out of this number, only 939,000 are allowed to claim Jobseekers' Allowance, since this can only be claimed for the first six months of unemployment. Still, this is an increase of 104,900 since September last year.

For the three months to August, the Office for National Statistics reported that the redundancy level was 147,000 - an increase of 28,000 over the year. But worse, it said that there were only 2.87m manufacturing employee jobs - down by 46,000 over the year - the lowest number since comparable records began in 1978.

Every pundit is now predicting, and the TUC has echoed this, that there will be 2m out of work by December. But one has to wonder what they mean by "out of work"? Because there are already almost four times this number of people, of working age, who are presently not in work! The ONS gives a figure of 7.89m for its category of "economically inactive people" among whom are single parents and the 2.7m people who receive disability benefit. That makes 20.9% or one in five of the working age population!

So, no, by December, and after, if the bosses get away with their latest round of job cuts and the ones which they are planning in order to maintain (or increase) their profits, real unemployment could well hit 1 in 3 of the working age population!

The Financial Times quoted a survey of more than 700 employers in the private, public and voluntary sectors, which found that 26% had "contingency plans to make new or further redundancies" over the next 12 months, meaning that "a torrent of bad news" was to be expected. Only the prospect of statutory redundancy payments had stopped many bosses from doing so until now.

On 5 November, the front-page of the same Financial Times carried an article entitled "Demand surges for advice on cutting staff." It explained that the Engineering Employers' Federation which has 6,000 members - mostly small and medium companies - had been receiving a growing number of enquiries from bosses wanting to know how to make workers redundant "legally" and at minimal cost and/or put their remaining workers on short-time. The law director at the EEF's Birmingham office was quoted saying: "the bottom has just fallen out suddenly... it's an immediate wallop and not a gradual one, and they have to act".

Bankruptcy figures point in the same direction: 4,001 companies went into liquidation in the third quarter alone, a 26.3% increase over the same period last year.

Of course the most directly affected sector by the banking crisis are bank and finance employees. Anyone calling on Brown to save jobs should take note of an estimate produced by the banking union, Accord, saying that 14,000 to 40,000 job could disappear in the 3 banks now under government control! Meanwhile, Accenture, a multinational which provides technology services to big banks said that "in the wake of the downturn in the financial services sector" it was going to cut 3-400 workers in Britain. Another multinational, Hewlett Packard, which bought EDS (Electronic Data Systems) in August (for around £6.5bn), announced it would be slashing 3,378 EDS jobs over the next 2 years. Yet EDS has contracts with a government departments like the Ministry of Defence, but more importantly, the Department of Work and Pensions!

In the retail industry, around 30 companies have gone bust this year, with an estimated 100,000 high street jobs to be lost by the end of 2009. The list includes Dolcis (shoes), MFI (furniture) and ScS Upholstery, not to mention Savile Row tailor (and dressmaker to the queen) and Hardie Amies!

Other companies which have withstood crises for hundreds of years, like Royal Worcester, the fine bone china and porcelain maker have gone into administration, threatening the jobs of its 388 workers. In the caravan industry, in Yorkshire, 700 jobs were cut in October, all blamed on the "credit crunch".

However, it is not always possible to connect the current job-slashing spree of the bosses to the crisis. GKN, for instance, which makes parts for aerospace and the car industry and also has contracts with the MOD, announced 2,000 job cuts and has already imposed short-time working, yet its profits were up 10% in the last 3 months! Then there is the doubly outrageous announcement by BP, after the huge hikes in the oil price, that it intends to cut substantially more than 5,000 jobs across all its operations, by April next year. This comes just after BP announced record £5.6bn profits just for the third quarter, and double the level for 2007! BP said the job cuts were in anticipation of "a period of softness" in the oil price as a result of the "global economic downturn". Far be from the likes of BP to be caught paying its share!

Outrageously, the "million pounds a minute" giant BT issued a profit warning at the end of October, claiming it was affected by the sudden plummeting of its shares. It then added that thousands of jobs would be put into question! This from a company which has paid many billions to its shareholders over the past umteen years!

Short contracts, short time and short wages

The car manufacturers and the component industry have also been anticipating the fall in car sales (sales were still up last quarter, although they fell in October). Workers have already had their working hours cut and/or shifts have been suspended. Most of the car companies, including Ford, have claimed they are not making any workers redundant, but merely taking temporary measures while waiting for the inevitable upturn.

However, what Ford does not say - and this applies to other companies as well, like BMW in Oxford - is that it is getting rid of its temporary workforce! For instance over half of the 250 temps in the Dagenham Diesel Centre have already been sacked and the remaining ones have had contracts extended only until the end of November. Permanent workers are on 3 or 4-day weeks (meaning a pay cut of £50 to £100 a week), some shifts have been cut and some workers have been told they will have an extra week's holiday over Xmas. It is worth mentioning that, although this took place in the middle of biannual wage negotiations for the whole of the Ford-Britain workforce, union negotiators did not even make an issue of what amounts to 250 compulsory redundancies, since these 250 temps had been promised a permanent contract after 12 months.

Then there are the other ex-"Ford" factories, Land Rover and Jaguar which employ 15,000 workers at sites in Halewood in Liverpool and Castle Bromwich and Solihull in the Midlands. These plants announced at the end of October that they are closing down (temporarily) for over a month, from 8 December to 5 January due to low demand.

BMW has now announced (5 November) that its workers will be having a 4-week shutdown over Xmas/New Year, rather than a 3-week holiday. Of course, paid at basic rate. What BMW does not say either, is that the one third of its workforce made up by agency temps is being cut - and that temps who would normally have expected to be given permanent contracts after blemish-free service for 1-3 years are not being taken on.

Toyota in Derby and Honda in Swindon have cut vehicle production and although for the time being are not threatening job cuts, they are, just like the other car manufacturers, making savings on wages thanks to the cuts in premium-rate hours of work.

Ironically, Nissan has just added another shift at its Sunderland plant, because it anticipated not being able to keep up with demand for its new Qashqai crossover sports utility vehicle! It remains to be seen if it sustains this.

The government steps in to help... the rich

On exactly the same day as he admitted that unemployment was rising, Brown chose to allow the cuts in employment benefits to go ahead. And not just any benefits, but those for the very most vulnerable group of unemployed out there - the 2.7m disabled and long-term sick! And to add irony to hypocrisy, this was also the day that Brown and Darling announced that they would be increasing public expenditure, to help the economy out of recession!

The introduction of the new Employment and Support Allowance (or ESA) heralds a benefit cut for over a million unemployed, who will be targeted initially for a stringent test for the new benefit, as will all new claimants. That it had been so long in coming changes nothing to the fact that it is a scandal! Having covered the bankers with gold, all the government could think of doing next, was to hit the poorest!

While applicants for the new ESA are put to the test, they will receive only £60.50/week for the first 13 weeks during which they will be expected to look for work. If, at the end of it, they can prove (!) that they cannot do a job due to their disability then - and only then - will the benefit be increased to £102.10 per week. How can anyone, but especially the disabled, live on such a pittance?

Of course, it is patently absurd to impose on the disabled that they should find work, or else, when workers who are perfectly able cannot find work at the moment, and thousands more are being chucked out of their jobs every day! Where are the jobs?

But that is not even the end of Brown's intentions. The Green Paper "No one written off; reforming welfare to reward responsibility" includes plans to make people work for their benefits. And far from seeing this as an inappropriate measure for these trying times, Brown's new employment minister, Tony McNulty said "A downturn in employment is absolutely the last time we should be looking to curtail welfare reform."

This makes parallels with the 1930s hard to avoid. It was a time when workers looked to Labour to alleviate the hardship and worklessness of the 1920s, and had put it into power in the 1929 election to do just this. All the more so, because the Tories of the time threatened to introduce the "means test" and "actively seeking work" conditions for receiving benefits. But when unemployment suddenly shot up, and continued climbing, MacDonald's Labour government announced it would introduce these tests anyway. At the time there was considerable opposition in the party ranks, and also in the Cabinet - which split over this issue. It led finally to the resignation of MacDonald's government in 1931 and the election of a series of "national governments", afterwards, which enforced the austerity that McDonald had championed until 1940.

There is, however, at least one difference between then and now: today, Labour MPs who previously voted against the attacks on disability benefit are too worried about their own careers to oppose the government or foment any split.

Public pays, not "public works"

Of course, the name of the game is to make the working class pay for the government's largesse towards the bankers through cuts in government expenditure. So there is even more to come.

Far be it from Brown to organise and pay for a programme of public works, as many of the posturing utopians on the left rump of the party call for, citing the "New Deal" ad nauseam. No, Brown is actually cutting public works which were already planned. Like a transport project such as the electrification of the rail network, which was meant to be completed by 2012. Network Rail has a £2.6bn funding gap which will not be filled, which also means that it will have to shelve a number of engineering plans and actually cut jobs. What effect this will have on the safety of the network is probably something the travelling public and the workforce will find out to its own detriment in the future.

The government has also thrown Transport for London to the wolves - so funding has been refused for the completion of the London Tube refurbishment (also safety critical) and other projects are to be shelved completely - like a new bridge across the Thames, a cross-river tram line and an extension of the Docklands Light Railway to Dagenham, all of which would have been an enormous boost to a totally neglected and derelict part of east London.

All of this has not prevented Brown from being dubbed the "new JM Keynes", however. Even if what he advocates in terms of public expenditure has very little to do with the policy advocated by the 1920s government economist. Keynes advocated a policy of state spending to stimulate demand and has (mistakenly) been regarded as having been partly responsible for encouraging the "New Deal" programme of public works, which was instigated by FD Roosevelt during the Great Depression. [This is discussed elsewhere in this journal].

Brown's idea, following his £450 billion life-line to the banks has been to announce tax cuts for business and probably more to come in the way of subsidies to the capitalist class to help them through the crisis. His policy is easily summed up: no public works; the "working public" will have to rescue the capitalists from the crisis of their making.

Unions' non-response

At such a time as this, one would have expected at least some sort of reaction from the unions. True, union leaders have not been completely quiet. Brendon Barber has released one or two press statements and even written an article for the bosses' paper, the Financial Times.

Barber's intention, however, was only to provide some good advice to the government: "Urgent action should start with a cut in interest rates by the Bank to below three per cent. The newly unemployed should be given more help by reversing cuts in Job Centre Plus staff, increasing statutory redundancy pay and lifting the amount of redundancy pay that can be taken tax-free."

And that is all Brendan had to say about the bosses' and government's plans to make the working class pay for this recession! It is OK to cut the jobs - but not in the Job Centres - just increase the redundancy pay! In fact he is far more concerned that "the government should plan for a green industrial revolution to make the UK the most advanced and vibrant low carbon economy in the world. This would create jobs and help rebalance the economy away from its over-emphasis on financial services." This nationalist-tinged utopianism may be typical of union bureaucrats who have not had to struggle for their daily bread in the real world for decades, if ever, thanks to the union subscriptions of millions of working class people. But that does not make it any less outrageous, in the context of what is happening in the economy - world-wide!

Barber did at least did say that: "The government must show the same determination to be on the side of ordinary people as it has the banks." No doubt he felt obliged to remind Brown and Darling that their huge handouts to the banks have not gone down at all well with the working population - except that they could not care less.

It would at least be something if the TUC were prepared to organise workers to take to the streets, to force the state to create real jobs, by investing as much money in public works as it has invested in the banks. But they are just too terrified to rock Brown's yacht!

The case of JCB

The case of JCB, the giant construction and moving equipment manufacturing firm, received wide coverage in the media because here, the workforce, instructed by the unions, voted for a pay cut, in order to "save jobs". At least this was how the story was reported. In fact workers were told to choose between accepting job cuts or accepting wage cuts. That the unions colluded with this blackmail by not even proposing a third choice may not be surprising, but it is an outrage, nevertheless.

JCB is a multinational company, with a near-monopoly in forklift trucks and big earth-moving excavators - such that people speak of "a JCB" rather than calling it a "digger". It is the world's third largest maker of construction equipment and employs 8,000 people in its 10 plants in Britain.

Despite the slump in the construction industry which predated the banking crisis by at least 12 months, JCB managed to make pre-tax profits of £187m to April 2008. But in July this year it claimed that due to falling demand it would have to make cost cuts.

The GMB union which represents around 2,500 workers at 7 JCB plants around the country negotiated a deal whereby workers would work a 34-hour week, rather than a 39-hour week, for the next 13 weeks to help the company weather the economic downturn. However the company said this would still mean only 2/3 of the 500 jobs under threat would be saved. Why not all of them? That is a question one perhaps needs to ask the union official quoted below.

Indeed, this GMB officer said "I am delighted that we have been able to save 350 jobs. The short-time is part of a worsening recession and these GMB members expect the government and the Bank of England to take the necessary steps to begin large scale public works to at least slow the recession down and prevent it getting too deep."

The JCB workers now stand to lose around £50 a week which is around the same amount many other manufacturing workers on short-time will be losing. One full-time GMB officer admitted that it was "not a clever situation but our view was let's keep people working even if it is on reduced hours when the alternative would have been compulsory redundancies." He is right, that this is not a clever situation. Not when the union officials allowed themselves to fall for such blackmail! There should never have been any question of job cuts, let alone wage cuts. The principle should be that if there is less work, then the whole workforce, should share out the work, doing reduced hours, as the union official says, but not for less money! JCB did not share out its profits between the workers in the past, so why should workers share its losses now?

Once in a lifetime fight needed

This crisis has been described as a once-in-a-lifetime event. It may well turn out to be worse than anything workers in this country have seen before. This is why the working class needs a fighting programme of objectives to stop the bosses from making it foot the bill for the crisis.

So to begin with, our aim should be to prevent bosses from getting rid of workers, by insisting that if there is less work to do, that the work that there still is, should be shared between everyone. This would also be an opportunity to iron out the differentials between workers, so that everyone is paid a decent wage without having to work crazy hours for this.

This time, the bosses may well be able to claim that they are making little or no profits. Maybe, but in that case, let them show workers their accounts, show where their previous profits went and let the workers then decide whether they can be recouped or not, or whether their assets can be used to pay to workforce - without cutting jobs!

Once workers are overseeing a company's accounts they can also ensure that wages increase properly in line with inflation - the so-called sliding scale of wages with prices.

As for job creation, government funds should be set up to be used to build the houses and transport infrastructure needed, not by hiring "PFI" parasites, but by employing workers directly.

Is this possible? There is every reason for workers to be optimistic, provided that we do not lose sight of our ultimate aim - and that is to get rid of a system which can only produce more crises like the present one. It is the case that struggles tend to throw up their own leaders and this is certainly what is required - new struggles and new leaders! That is the only way that we will be able to take the necessary next steps.