Unemployment, we've had enough!

14 Nov 2011

The ConDem "growth review", due to be published on 29 November, is meant to provide an agenda for economic expansion. We are told that it will reverse the past 4 years of recession, factory closures and job cuts. But will it?

Because, on the basis of what has been leaked so far, this package just looks like another exercise in helping the bosses with "profit growth"!

Remember how Osborne boasted that private job creation would make up for his hundreds of thousands of public sector job cuts? It didn't happen, did it? Yet the promise of new jobs in his "growth review" is once again based on the same assumption.

More handouts to the capitalists

Two main elements have been announced so far in this package.

The first one is "credit easing", similar to the "quantitative easing" used to pump cash into the financial system. Except that, this time, instead of the banks exchanging the government bonds they have in their coffers against fresh cash, they would be offloading corporate bonds (i.e. loans they have made to companies).

This would be a double handout for the capitalist class. On the one hand, the banks would get rid of a growing pile of company loans which are already, or threatening to become, unrecoverable, due to the recession. On the other, it would allow a number of heavily-indebted businesses to be treated more leniently when it comes to their repayments, than they would be by the banks.

However, just like "quantitative easing", this "credit easing" would have a major drawback: it would create yet more inflation, since it would be funded by new money printed by the Bank of England. And those at the receiving end of this inflation would be, once again, workers who have no income other than wages and benefits!

The second element in Osborne's "growth review" is the creation of an "infrastructure fund", in which pension funds and insurance companies would be "encouraged" to invest up to £50bn, to build or take over large infrastructure projects, such as roads, big shopping centres, railway lines, etc.., which they would then be invited to manage.

In other words, it would be another version of the Private Finance Initiatives which were used by past Labour governments to build hospitals and refurbish ageing council estates - only, this time, on a gigantic scale. But the result would be the same: the "partners" would repay themselves by milking profits out of these facilities for decades to come. And as a Commons committee recently showed, the cost of these infrastructure projects would be considerably higher than what it would have been, had the state taken direct responsibility for them.

A job for all!!

Will this package actually create jobs? It is very unlikely.

The "credit easing" would put a lot of cash into the coffers of the banks, while cutting companies' costs. But would companies invest in new jobs and would banks lend to consumers at an affordable rate? They certainly haven't so far. And yet it wasn't because they couldn't, given the huge pile of cash on which companies sit and given what the banks got out of the various state bailouts!

Likewise for Osborne's "super-PFI" plan. As an example of what it aims to achieve, the government uses the case of a Canadian pension fund which has taken over the management of the Channel tunnel rail link. But this did not create one single job, since the link already existed.

Of course, a few new infrastructure projects may be built as a result. But they will use the services of construction companies, which will just add a few casuals to their existing workforce, before sacking them as soon as the project is completed.

This is obviously no way of ending unemployment, which would require the provision of permanent jobs, not only for the 2.5 million who are officially unemployed, but also for the 2m+ "inactive" workers who would like to find work.

As last summer's riots showed, we are facing an employment emergency. No society can leave millions out of work, without risking catastrophic deterioration of its social fabric.

There is only one way to deal with this: by making all redundancies illegal and by ensuring that the available work is shared between all available hands, without loss of pay for anyone. This would dent the profits of the capitalist class, of course, but since they caused the crisis, it would only be fair and just! And since the capitalists and their politicians won't do it willingly, this will have to be one of the aims for the struggles to come.