Monday 6 June 2011

TUC 'Livelihoods' report; A lesson in ignorance and ideological nihilism

When I saw the TUC had done a report on changes in incomes over the last 30 years, I thought it would make in interesting read. Some of the obvious themes such as the switch to a more services based economy have no doubt changed the world of work substantially over this time.

However, sad to report, the whole thing is a pure political diatribe against capitalism and the current Government. No real insight is given apart from the usual hand-wringing about the loss of manufacturing jobs in the North. The solution offered is a return to the pre-1979 world of big unions and the promotion of no for profit organisations (umm..the Coalition are very keen on mutuals and they seem to ignore this). Thre pre-Thatcherite UK is seen as a bastion, not the broken country that had ended up cap in hand at the IMF.

Anyway, the problems are real, but with no true attempt to analyse the causes, but only the effects, the report becomes pretty useless in trying to tell us anything useful about what we should do. A typical piece of the report that covers the latest economic trend says that all services jobs created in the 2000's boom were wiped out in the recession. What is totally missed is that almost all of these jobs were filled by immigrants or foreign workers.

The presence in the last 20 years of increasing amounts of foreign workers has indeed put huge pressure on the lowest paid in society. You don't need many skills to work on a farm or drive a forklift truck or be a baker. You certainly don;t need to be able to even speak English.

On the other hand, jobs that have proved fruitful are those that required a high level of skills (although I note Doctors are top and there are lots of foreign doctors too) and indeed, in the case of the Law, a knowledge of purely English systems. A key set of issues are therefore, education and immigration - neither really mentioned in the report.

There is though a nice long section on the transformation of the 1980's - looked at back to front. All these state owned business that were costing the taxpayer a fortune - they were privatised, floated with benefits to the Government and then became profitable. In the eyes of the TUC this is all wrong as it led to job cuts, sigh, as if supporting failing companies is a way forward (note the NHS is going to face this same crunch in the next decade) for the Government's budget.

There is one section that is good, albeit short, in the rise in indebtedness, the report does not really try to address why this is, perhaps thinking it is obviously to do with falling wages; when the reality here is that excessive lending and poor regulation have led many of the UK population up a debt cul-de-sace. Amazing for such strong Capitalist bashers to have missed one of the points they could win on!

Anyway, it is a shame a report such as this cannot be better written or balanced, the facts at its heart are most likely correct - but the interpretation and use of it for political means renders it a futile exercise.


Anonymous said...

“It is difficult to get a man to understand something when his job depends on not understanding it.” Upton Sinclair.

Bill Quango MP said...

Always the same with the TUC. Everything is political.
And you could write the conclusions yourself without ever reading the reports.

Much more state investment in industry/manufacturing/anything that union members are involved with.
Higher wages, shorter hours and better benefits for workers.

Semper said...

I am beginning to wonder whether national indebtedness is not a bigger factor than the private/public sector mix.

In the 1970's we were still saddled with a large war debt with a significant part of production being paid to American Banks. North Sea oil came to our rescue in the 80's and 90's but most Governments could not resist cheap money and spending policies which have dropped us straight back in the debtors' stocks.

The Dirigiste French and bureaucratic capitalist German systems seem to work about as well as our "free market". Chinese/East Asian state capitalism has scored a few goals too.

The whole thatcher vs unions thing seems like a bit of a sideshow these days.

Budgie said...

Twice as much manufacturing was lost under Labour's disastrous 13 years, than in the Tories previous 18 years. I don't remember the TUC being bothered about that, under Labour.

The reality is that making things is difficult, but perfectly possible in the UK, witness Honda, Toyota etc. Unfortunately British management tend to like buying trainers at £2-00 from Vietnam and selling them for £70. And the British unions are worse with their greed, intransigence and their determination to leave no golden goose alive in the pursuit of statist dictatorship.

DJK said...

So why has immigration driven down wages for butchers, bakers and candlstick-makers, but wages in the financial industries have rocketed, despite the presence in the City of London of many foreign owned banks and foreign born bankers, and despite the insolvency of RBS, HBOS, etc?

CityUnslicker said...

DJK - becuase the bankers are competing for salaries with NY, Shanghai and Hong Kong; the bakers with Poznan, Bratislava and Ho Chi Minh City?

If there is one lesson that I will pass on to my kids it is that some professions just pay a lot more than others. If you end up in a manual job or in HR you are likley to have a difficult career finance wise. If you beomce a banker, laywer, doctor etc you are much more likely to do well - advice that this report proves is for all the ages.

DJK said...

CityUnslicker: Thanks for the non-sequitur!

Nobody doubts that some professions pay more than others, but that fact that in the last 30 years or so an increase in the supply of bankers has led to higher bankers' salaries suggests a market failure to me.

That we are unlikely to see the last central banker hung with the entrails of the last hedge fund manager, owes more to the good nature of the lowly, tax-paying masses, than to the purity of financiers' motives.

Just because a report is published by the TUC doesn't mean it's all wrong.

CityUnslicker said...

DJK - where is this increase in bankers - it is specialisation in the City of London. Frankfurt is smaller as is Paris than it used to be - more global markets have been moved to London - and these are high wage jobs, getting techinally harder and harder.
it is nto straightforward to run a hedge fund, set up an etf or do a securisation.

On the other hand, baking bread is not different now bar some small technology changes; neither driving a forklift truck. uinfortunately, there are pleny of people qualified to do this who want to do it in the UK - so leaing to wage deflation in these sectors whilst others see big wage inflation.

One person really worth reading on this subject is economist Ricardo.

Dick the Prick said...

Dear Mr CU

Hope Croydon's treating you well and the number of murders has flatlined! I didn't realise the Archbish of Cantebury lived there - just saw the Nestle building and loads of concrete.

Anywho - the TUC have bought Ed so i'm not sure this document should be taken as serious but more of a debating mechanism. The unions problems are internal - staff don't want to strike. Staff enjoy the responsibilities they have so the TUC has to sell itself because it bought a shit product - they're on damage limitation; Ed isn't winning arguments. Maybe.

Start of the silly season. Glad to hear it rained down south - good.


andrew said...


There are a number of professions where some people are paid enormous amounts of money - musicians, footballers and bankers.

Why this is so is a matter of discussion.

There are many good footballers and the gap between the very good and the premiership is very small.
The small difference is worth a very large amount of money.
Most footballers (and musicians) are not rich.

The same is true in banking.

this person provides an unceasingly interesting series of insights into the reasons why some people get paid more than others - most recently, the difference between being good looking and ugly has been shown to be more valuable than a university degree (in germany).

Laban said...

"the pre-1979 world of big unions ... I note Doctors are top and there are lots of foreign doctors too"

But unions don't come bigger or tougher than the BMA, who by virtue of also being the regulator operate a closed shop Hugh Scanlon would have envied. They wrote the book on "regulatory capture".

Nonetheless, and with all the doubtless many valid criticisms of pre-Thatcher Britain, in 1978, on a very low wage (3K), I bought a little cottage on the edge of the Cotswolds for £9.5K. If my children should have similar relative incomes, they will be renting all their lives.

James Higham said...

Did you expect anything else from a leftist organization?

Nick Drew said...

Dick - Croydon isn't him, its me

yes, we have two former Archbishops' palaces here ! the Old Palace, and Addington Palace. Both still standing

Budgie said...

"Nonetheless, and with all the doubtless many valid criticisms of pre-Thatcher Britain, in 1978, on a very low wage (3K), I bought a little cottage on the edge of the Cotswolds for £9.5K. If my children should have similar relative incomes, they will be renting all their lives."

Very true, Laban.

If there had not been 3 million immigrants there would be a lot more houses at reasonable prices, and a lot more jobs. Nearly 4 million unemployed? - well I never.

Electro-Kevin said...

How well a profession pays is not so much down to education but how well protected it is.

Lawyers are in abundance. My phone book is packed with them. Surely market forces should dictate that they are inexpensive.

They are not.

The reason being that we must pay fees reflective of their full 7 year training even if we only want to use a fraction of that expertise.

I'm sure that the training could be reduced markedly. There is no shortage of bright young pupils queueing for internships and a crack of the whip at run of the mill lawyering. It doesn't appear to me to be a lack of talent which is keeping rates up. More likely exclusivity and protectionism.

Similarly doctors. Here we need an expensively trained doctor to perform simple operations such as cataract removals. In the third world this work is delegated to nurses who are put on short courses to learn how to do it.

If we can have a baker's three year apprenticeship undermined to the point that he would be better off on the dole might we not apply similar economies to others so that we can have better value for money ?

The reason that the professions have done so well (and I don't begrudge those truly worth their salt) is through plain old protectionism to a degree that puts the '70s trades unions in the shade.

Electro-Kevin said...
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Electro-Kevin said...
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CityUnslicker said...

EK - there is some turth to that, as noted the Doctors have anice Union and Regulator bound into one.

However, you still can't get your legal needs from Poland or China as you can with t-shirts.

Not included in the report was domestic services like hairdressing and gardening - it would be interesting to know how they have done relatively to other professions.

Dick the Prick said...

@ND - whoops. How's the immigration? I went to watch the rugby world cup in Dublin, not news in itself, but woke up early and went for a wander and the queues round the immo office were 5 deep all round the block at about 8.30 on a Saturday morning - highly fucking freaky.

I'm sure we've all seen that Tesco report that claims UK population is already about 80 million.

I kinda like unions but they have been spoilt under Labour. Guido's got a thing going about their rep's time paid by the taxpayer - good sport!

Electro-Kevin said...

CU - The counterpoint to "being unable to outsource legal work" is that those legal professionals are not in demand abroad - unlike doctors and engineers etc.

Because of this it is even more of a wonder why legal fees are so high.

In fact it is scandalous that the Justice Minister would consider cutting prison sentences, because court costs are so higher, rather than challenging the hourly rate charged by lawyers in a totally non-productive area of the economy.