Pay freezes hinder growth of UK economy and contribute to a tough 2012

During the past years many UK workers have had their salaries frozen and have not, as such, seen any increase in income. The situation has been daunting for many as living costs have continued to increase and numerous workers find financial concerns to be an all-too-present concern.

The status quo of income levels has wide implications, which reach beyond individuals struggling with mortgage payments and household bills. On a national level, financial growth will remain slow as many can’t afford much more than the bare necessities.

Working parents carry cost of Government’s cuts

According to a report carried out by the Institute for Fiscal Studies, commissioned by the Family and Parenting Institute, families with children will find the coming years financially straining as the Government’s tax and benefit reforms are implemented. Even working parents will be hit hard as they will lose a significant part of their income.

Coupled with the Government’s employment law reforms, employees are likely to not only struggle with increased job insecurity but also with benefit cuts. According to the report, a family with two children will, annually, be £1,000 worse off.

Certain family structures will suffer more than others according to the report. Amongst the worst affected will be families with children under the age of five, families with more than two children, and unemployed single parents.

However, out of all the groups single unemployed parents will take the hardest hit as they will lose £2,000 of their annual income. The report highlighted that this reality, encountered by many single parents, is a "very real concern" as they will struggle with finding jobs that can cover their childcare costs and offer flexible working times.

According to a Government spokesman, MPs are doing what they can to help families whilst getting the UK economy back on track. “The Prime Minister acknowledged that families are facing difficult times so the Government has taken practical steps to help them - cutting fuel duty, freezing council tax and cutting income tax for millions. The Chancellor also confirmed working-age benefits will go up by 5.2% in April and increased the child element of the child tax credit in line with inflation.”

Katherine Rake, Chief Executive of the FPI, said, “These figures reveal the full extent to which families with children are shouldering the burden of austerity. Having children has always been expensive. But now many families with children face an extra penalty of more than £1,000.

“It is particularly surprising to see that some of the most vulnerable groups – such as families with new babies and lone parents out of work– are bearing the brunt of the tax and benefit reforms.”

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Unusually long work hours for UK workers

New data published by the Office for National Statistics (ONS) shows that workers in the UK are working more hours per week than workers in most other European countries. On average, the time worked weekly by UK workers is 42.7 hours, this compares to the significantly lower EU average of 37.4 hours per week.

The data showed that there were only two EU countries, Greece and Austria, in which workers worked longer hours than those in the UK.

Expected rise in equal pay claims following court of appeal judgment

Jobs with women as the prominent workforce have traditionally seen less generous salaries than male-dominated professions. In several recent judicial judgments the courts have actively sought to fill such a gap.

Last week the court of appeal ruled that claims relating to equal pay cannot only be heard in employment tribunals, but that the high court also has jurisdiction over such claims.

It is envisioned that, as a consequence of the judgment, there will be a sharp increase in the number of claims relating to equal pay. The expected rise in claims is envisioned as the high court does not operate under the same strict time limit as employment tribunals. For a case to be heard in an employment tribunal it must be brought within six months of the challenged event, whilst the time limit for bringing a case to the high court is six years.

The case in question involved former female employees of Birmingham City Council who were in traditionally female employment positions and received a lower salary than men in the same pay band.

The court of appeal, upholding the judgment of the lower instance, found that the high court was authorised to hear matters concerning equal pay, even if the employment had ended more than six months ago.

The Council intends to appeal the decision. Chris Benson, the solicitor representing the former workers, said that not accepting equal pay was an outdated notion. "It is disappointing for our clients, and no doubt of concern to the taxpayers of Birmingham, that they have decided to appeal again to the supreme court and we would urge them to reconsider. In some councils these inequalities have only recently been phased out and in other cases the inequalities amazingly still exist."

More on this story:

http://www.guardian.co.uk/uk/2011/nov/29/women-win-appeal-decision-equal-pay
http://www.guardian.co.uk/society/2011/nov/29/workers-equal-pay-claims-court

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Government hopes liberalisation of employment laws will boost employment

The Government is looking to liberalise employment laws in order to get more people into employment. However, many employees and trade unions are concerned that the proposed measures will have a disproportionately negative impact on workers’ rights.

Disputing such fears, the Business Secretary, Vince Cable, insists that the new policies will create a more balanced working climate. As such, he said that fears over the reforms creating a “hiring and firing” climate were unwarranted.

The Government is convinced that the reforms will support the employment sector by reducing bureaucracy and enabling employers to be more honest with their employees without fear of legal repercussions.

One of the most controversial changes relates to the period that an employee must have been with their employer before they can claim for unfair dismissal, which is to be raised from one year to two years of continuous employment.

After the so-called Beecroft report leaked, speculation arose of the Government possibly scrapping the right of employees to claim for unfair dismissal completely.

The un-commissioned report’s proposal was criticised heavily by the Deputy Prime Minster, Nick Clegg. However, Cable is now intending to ease the running of small businesses, which have fewer than ten employees.

As part of this, the Coalition Government is expected to announce a different unfair dismissal framework for small businesses.

"Essentially, we don't want to create an environment in which there is insecurity and people fear for their jobs. That would not be helpful at all. But we do want to help small companies feel confident enough to take on staff, so there is an issue about balance here."

Trade unions are disappointed with the proposals. Brendan Barber, the TUC general secretary, said: "Reducing protection for people at work will not save or create a single job. It's not employment laws holding firms back, it's the tough economic climate and the problems many companies are having getting the banks to lend to them that's to blame."

The Government is also considering cutting the consultation period on redundancies, from 90 to 30 days. However, Cable said that any decisions will only be taken if evidence gathered supports such a move.

“The whole basis of which we are making policy judgments is evidence. You make decisions based on evidence, and that is the way we are approaching it. We do not want to create the situation in which people feel greater insecurity at work, particularly at times of economic difficulty.

"We also want to create an environment in which entrepreneurs want to start businesses, expand, take on staff and feel confident they can do that. We have to get the balance right but we don't want to create an environment in which people feel insecure at work … That is not what we need."

More on this story:

http://www.huffingtonpost.co.uk/2011/11/23/government-unveil-plans-employment-law_n_1109282.html?ref=uk

http://www.bbc.co.uk/news/uk-politics-15844614

http://www.independent.co.uk/news/uk/politics/camerons-war-on-employment-rights-6266355.html

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Job losses and job insecurity to last until 2013

On Monday, a report from the Chartered Institute of Personnel and Development warned that the job market is going to experience a "slow, painful contraction". Today, this prediction proved to be accurate as the Bank of England lowered its forecast for UK growth and inflation.

Although opinions vary on when the UK economy will fully recover, the bank’s monetary policy committee did not predict this to happen before 2013. The bank said that "Implementation of a credible and effective policy response in the euro area would help to reduce uncertainty and so support UK growth, but its absence poses the single biggest risk to the domestic recovery".

Although the Government sees the main cause of the current financial climate to be the instability of the eurozone, the opposition says that the high level of unemployment is a consequence of the austerity measures. The Shadow Chancellor, Ed Balls, said, "The British economic recovery was choked off well before the instability in the last few months in the eurozone.

"The government is cutting too far and too fast and it's pushing borrowing and unemployment up at the same time."

The Bank of England said that the unstable climate will remain until the eurozone makes a full recovery. Until then, exports will remain low, which has a negative impact on the UK job market.

Moreover, the Office for National Statistics published new numbers on unemployment. These indicated that youth unemployment has risen to above one million, and that the total people out of employment in the country numbers a staggering 2.62 million.

Many young people are finding it difficult to find employment. Even if they succeed in doing so, they often remain anxious because of the low level of job security. The Government has imposed significant cuts to schemes that encourage students to enter the job market. Additionally, funding to companies employing young workers, youth clubs and charities have been poorly affected by the austerity measures.

Paul Brown, Director at the Prince's Trust, said, "I think it's a wake-up call to the country... We can't afford to wake up in three years time when the economy grows and find that there are a group of young people who have been left behind.

"Unemployment isn't just a financial problem. It can very badly affect the rest of people's lives."

More on this story:

http://www.bbc.co.uk/news/business-15755835
http://www.bbc.co.uk/news/business-15747103
http://www.independent.co.uk/news/uk/home-news/jobs-market-faces-slow-painful-contraction-6262034.html
http://www.huffingtonpost.co.uk/2011/11/16/female-unemployment-record-high_n_1096772.html?ref=uk
http://www.huffingtonpost.co.uk/2011/11/15/youth-unemployment-record-levels_n_1095188.html?ref=uk
http://www.huffingtonpost.co.uk/2011/11/15/youth-unemployment-record_n_1096516.html?ref=uk

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Is export industry growth a false dawn?

The Office for National Statistics has published new numbers indicating that the manufacturing sector grew slightly in September. However, the overall index of production, which includes mining, oil and gas industries, remains flat. As such, concern remains over the stability of the UK’s production industry.

The ONS numbers showed that manufacturing output increased by 0.2% between August and September. This compares to the previous month, when a 0.3% decline was recorded, and is the first modest growth that the sector has experienced since May.

Positive industry developments have been long awaited as it previously played a central role in the recovery of the UK’s financial state of affairs. Concomitantly with the recession, the pound fell in value. This currency fall was positive for the export industry, as it meant that British goods were cheap to buy for many countries. Hence, British companies could sell their goods and maintain their workforce, which strengthened employees’ feeling of security.

In light of this, the government, in trying to get the economy back on track, is focusing heavily on boosting UK exports.

The British Chambers of Commerce (BCC) optimistically received the new numbers. Its Chief Economist, David Kern, said: "Seeing the sector remain in positive territory despite difficulties in the eurozone and tough austerity measures in the UK is reassuring.

"Although pessimism about the health of manufacturing is unnecessary, the sector does face difficult challenges and we must reinforce the modest recovery that we are seeing."

However, Chris Williamson, chief economist at the financial information services company Markit, doubted that the numbers indicated a turn in the financial climate.

"This is a disappointing rate of growth for a sector that was hoped to lead the UK's economic recovery, and growth looks set to weaken further in the final quarter of the year." Furthermore, Williamson said that the slow economic growth meant that there remained "a clear risk" of the sector going back into recession, unless it experienced significant growth in the near future.

However, any considerable growth seems to be far off in light of recent industry surveys. These have indicated that the sector is struggling significantly, and that it has experienced a drastic fall in orders.

This is inconsistent with the ONS numbers. Effectively, the findings of the industry surveys point to a deterioration in the sector’s performance. This can be due to the fact that manufacturing has been seriously affected by the decrease in consumer spending and the eurozone debt crisis.

Williamson said that any numbers must be interpreted in the context of the global financial climate. "While there are signs that UK producers are raising their productivity, facing up to the need to adapt and compete aggressively in today's markets, the simple truth is that the current weakness of economic growth at home and abroad means that producers face a challenging time ahead."

This challenging time is likely to make many workers concerned about the security of their jobs. Seeing that Britain relies heavily on Europe as a trading partner, many UK jobs are dependent on the eurozone crisis being solved.

More on this story:

http://online.wsj.com/article/SB10001424052970204554204577025461293920088.html?mod=googlenews_wsj
http://www.bbc.co.uk/news/business-15636143
http://www.independent.co.uk/news/business/news/manufacturing-returns-to-growth-6258844.html

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