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Saturday, 1 November 2014

Graphs at a glance: Oxford University study predicts nearly half of jobs will be replaced by computers in the next 10-20 years.

We Britons are an optimistic bunch. The graph below by Glassdoor, a recruitment company, shows we  consistently believe our work colleagues are much more likely to get fired than we are.

Graph by Glassdoor
Is it this native optimism that encourages politicians to cut public services and rip up safety nets for the unemployed and the disabled? Because we are so confident we ourselves won't need them?

If so, our confidence is sorely misplaced. Office for National Statistics figures show how the UK manufacturing industry collapsed between 1979 and 2013, with 60% of all manufacturing jobs disappearing:

If you are heaving a sigh of relief that you aren't employed in manufacturing, hold that sigh!

Thursday, 30 October 2014

Rip-off News round-up. Our pick of the last week's media (Thu 30th October)

Does Osborne realise? Probably! Ipsos Mori poll shows 1 in 8 will cash in pension pot under reforms 
More than 200,000 people will cash their entire pension pot when the government reforms take effect next year, with one in five planning to use their savings to fund a holiday, a study has found. From April, workers over 55 will be able to use their pensions like bank accounts and withdraw thousands of pounds to save, invest or spend as they wish. The change builds on the pension reforms Mr Osborne announced in his Budget, under which he scrapped rules that force most Britons to use their pension savings to buy an annuity. At the time, ministers emphasised that pensioners would be able to draw down the entirety of their pension pots to save, invest in property or even buy a Lamborghini. But Tom McPhail, head of pension research at Ipsos Mori, said that the poll showed people were underestimating the amount of tax they would have to pay despite the reforms, as only 25 per cent of each lump is tax free and the rest is taxed at a marginal rate. The withdrawals could land the taxman with a £1.6billion windfall. The poll found that those wanting to cash in their savings were most likely spend the money on holidays, with one in five saying that is how they would use the cash. Another 12 per cent said they would use it for DIY projects, 14 per cent to help their children and eight said they would spend some on new cars. One in four said they would save a portion of the money, whilst 13 per cent would use some of it to pay off existing debts. Investment in property would be the main reason to cash in their savings for 16 per cent, the survey found. Critics have questioned whether people could end up struggling financially if they spend all their money after retiring. TELEGRAPH

“Outrageous conduct”: City facing more than ‘a few bad apples’, says Bank of England deputy governor
Minouche Shafik, the deputy governor for markets and banking, said the industry urgently needed to come forward with its own proposals to reform a system recently tarnished by allegations of the rigging of foreign exchange trading. She warned that bad practices in markets may be re-emerging as memories of prior scandals fade. She said much had been done to strengthen the financial system, but some of the benefits were “offset by a long tail of outrageous conduct cases. These are like salt rubbed into the wounds to public confidence in financial markets.” Ms Shafik is overseeing the UK Fair and Effective Markets Review, launched by chancellor George Osborne over the summer after allegations that traders had rigged interest-rate and currency benchmarks. The scandals have damaged Britain’s reputation as a key global financial capital. A consultation paper by the Bank, Treasury and Financial Conduct Authority, launched on Monday, raises the prospect of tougher penalties on staff who breach internal guidelines, more intrusive electronic surveillance of trading floors and more established procedures for protecting whistleblowers. But it also considers harsher regulation including imposing higher capital charges on firms that fall foul of rules. It also floats the idea of extending the UK’s bonus clawback rules from banks to non-banks such as asset managers and trading firms. The review said regulators should have the power to police seven key financial benchmarks, including those governing oil, precious metals and foreign exchange. In the paper, the review asked whether there was a need to strengthen criminal sanctions in fixed interest, currency and commodity (FICC) markets, as well as to introduce punishments such as temporarily suspending firms’ or individuals’ permissions to trade in certain markets. FINANCIAL TIMES

Sports Direct forced to spell out zero-hours workers' rights in their job adverts
Zahera Gabriel-Abraham launched the case after taking a zero-hours contract with Sports Direct which she says did not make clear that she might not be offered work with the business. She also claimed that she was told she would not receive holiday pay. She resigned saying her health was suffering because the threat of not being given any work some weeks was making her ill. Mike Ashley’s Sports Direct high street chain has now reached a settlement with Ms Gabriel-Abraham. About 20,000 of Sports Direct’s 23,000 staff are employed on zero-hours contracts and reaching a settlement with such a large business means it will resonate around the industry. Unusually for a settlement, the claimant did not agree to be gagged from speaking out about it as a condition of striking a deal. “Zahera wanted to make a difference and in order to do that she would not agree that it would be secret,” said Elizabeth George, a barrister at Leigh Day which represented Ms Gabriel-Abraham. “This is a significant step in the right direction. It will be interesting if other companies are more upfront about the contracts as a result.” Ms George added: “The new adverts have to state three things: hours are not guaranteed, they may vary and there may be weeks when no work is offered. “They are not going to be the most attractive job adverts: ‘Come work for us and there’s no guarantee you will get any work.’” TELEGRAPH

Asda faces mass legal action over equal pay for women
Asda, the UK's second largest retailer, is facing a mass legal action by women who work in their stores. The women claim they are not paid the same as male workers in the distribution warehouses - despite their jobs being of "equivalent value". One Asda store worker said that the work was the same whether you were in the shop or in the warehouse - packing and unpacking pallets of clothes and food and putting stock on shelves, often through the night. The legal firm managing the case, Leigh Day, says it has already received 19,000 enquiries from current or former Asda staff in relation to the group legal action. The case will test how retailers decide what they pay their staff in different parts of their business. And if the women are successful it could have serious ramifications for the whole sector. Lauren Loughheed, the solicitor with Leigh Day who is leading the case, said that the pay difference between shop and warehouse workers could be as much as £4 an hour. That's a big difference when you are earning £7 an hour. And, if the cases are successful, women workers could be compensated for six years of back pay. The legal action, believed to be the largest of its kind in the private sector, could lead to some very high payouts. In the public sector, the issue has led to major battles between councils and their workers. Women who worked as cleaners and school catering staff have taken hundreds of class actions to close pay differentials with men who had jobs such as refuse collector or street cleaner. One council, Birmingham, has agreed to pay over £1bn to settle the claims of tens of thousands of women which go back over many years. Ms Lougheed said that the private sector had been slower to act and that this test case could prove a watershed. Asda has signalled it will fight the claims vigorously and says it does not discriminate. BBC NEWS

Saturday, 25 October 2014

The most fearsome beast in the political jungle is you, the voter. Now is the time to wake up and roar!

    A long game is being played on the British public by the political classes. It is a game aimed at reducing our personal expectations from life in Britain. It started with the Tories in 1979, and continued through Labour and Coalition governments since then. 

    The game was played quite subtly until the banker induced crash in 2008, but since then all the delicacy has been dropped. Not because the banker crash created a crisis, but because it created a cover.

    In recent years we have seen wage freezes, benefits cuts, and the erosion of our pensions. Our access to legal aid has been sliced. Employment protections and the right to strike are being attacked. Services from libraries and public parks to police officers and defence are being scrapped. We now get unqualified teachers in “free schools”; unqualified translators and under-qualified barristers in the legal aid system; paramedics doing what doctors used to do; reservists doing what the professional army used to do. 

    Thursday, 23 October 2014

    Rip-off News round-up. Our pick of the last week's media (Thu 23rd October)

    Chair of the US Federal Reserve Janet Yellen says income inequality is un-American
    Yellen suggested that such a trend, unaddressed, was contrary to the founding principles of the United States. “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity,” she said. She also cited the “Great Gatsby curve,” – “the finding that, among advanced economies, greater income inequality is associated with diminished intergenerational mobility”. Yellen’s comments dovetail with concerns about inequality among other global central bankers. Yves Mersch, the governor of the central bank of Luxembourg, took a stand this morning against massive stimulus measures from the Federal Reserve and the European Central Bank, on the reasoning that they widen the gap between the rich and poor. Separately, Treasury Secretary Jack Lew recently encouraged the World Bank to address inequality in developing economies. The strong tone of Yellen’s speech adds to the increasing discussion around economic inequality that was first popularized by the Occupy movement and then crystallized in the blockbuster success of Thomas Piketty’s Capital in the 21st Century, which posited in part that invested and inherited wealth will always accumulate faster than general economic growth. Yellen cited Piketty’s book and his other work with his frequent research partner, Emmanuel Saez. GUARDIAN

    Institute of Directors backs TUC claim for higher wages
    Christian May, head of campaigns at the IoD, said: “We have sympathy with the TUC’s argument because it remains the case that too many people are still feeling the effects of the recession more keenly than the benefits of the recovery.” “When the TUC protests about the pay gap between bosses and workers, remember they are not talking about business in general, but about a tiny number of people who run the world’s biggest firms. The boards of these companies can no longer be deaf to public opinion,” said May. He said pay rises were “on the cards” for employees of small- and medium-sized businesses. The IoD said that the majority of the lobby group’s members earned £100,000 a year. While this was a “significant amount” it was “nothing like the astronomical sums paid to some of the very top bosses”, said May. The average annual pay of a FTSE 100 chief executive, according to a recent study by Incomes Data Services, is now £3m. GUARDIAN

    Pay protests bring tens of thousands onto UK city streets
    Leaders of some of the UK's biggest trade unions criticised the government, saying pay had fallen despite the economic upturn. The TUC says average wages have fallen by £50 a week in real terms since 2008. Dave Prentis, general secretary of the Unison union, said "Our members didn't cause this recession, our members didn't cause the failures of the banks." Len McCluskey, general secretary of the Unite union, said Labour should support workers by offering a "clear socialist alternative" to the Conservatives at the next election. "I say to Labour - stop being scared of your own shadow. Don't shrink what you offer the British people," he said. Public sector workers including teachers, nurses, civil servants and hospital workers were among those taking part in the protests, alongside rail and postal workers and others from private firms. The marches come after industrial action by health workers on Monday - the first strike over pay in the NHS since the 1980s and the first time midwives had ever taken action. The government says pay restraint has safeguarded jobs and services. BBC NEWS

    We'll sue if you flout crackdown on bankers’ bonuses, EU tells Bank of England
    The European Banking Authority’s most senior executive, Adam Farkas, raised the prospect of court action after the Deputy Governor of the Bank of England described the European Union’s bonus cap as ‘the wrong policy’. All of Britain’s leading banks have attempted to sidestep the European rules by offering senior staff extra payments, called either allowances or ‘role-based’ payments. Now the decision of the EBA on Wednesday has effectively ruled that these are bonuses under another name. The European Union passed a directive earlier this year requiring banks to cap bonuses at 100 per cent of a banker’s salary or 200 per cent if they can get prior approval from shareholders. Chancellor George Osborne opposed the directive from the start and is challenging the law in the European Courts. All the major UK banks are now paying their staff allowances. HSBC boss Stuart Gulliver gets £1.7 million a year in shares quarterly, on top of his pay and annual bonus. Barclays calls its allowances ‘role-based pay’ and is handing £950,000 in this form to boss Antony Jenkins this year. Barclays executives get this quarterly in shares. More junior staff receive cash sums monthly. Lloyds boss Antonio Horta-Osorio was awarded a fixed allowance of £900,000 for 2014, which he will receive in share awards over the next five years. RBS’s chief executive Ross McEwan is the only major bank boss to not receive an allowance this year – but his bank will still pay other executives and dozens of other senior bankers in the new format. The British Bankers’ Association estimates that 35,000 of Europe’s bankers will be affected by the bonus cap, two-thirds of them in the UK. DAILY MAIL

    Saturday, 18 October 2014

    Graphs at a glance: Why is it that unemployment is falling, but wages and income tax revenues aren't growing?

    In October 2014 the BBC reported that FTSE100 company directors earned 120 times the average wage. An earnings figure that has shot up sixfold from just 20 times the average wage in the year 2000. 

    The BBC also reported that inspite of bumper top wage growth and generally falling unemployment, income tax revenues were going to fall below expectations. Why is this?

    The following may provide some explanation:

    1) The Bank of England's May 2014 Inflation Report shows that the number of "full time employees" (the dark green lines in the graph below) had not recovered since the 2008 banker induced crash. The 'jobs recovery' is made up mainly of part-time and self-employed jobs.

    Thursday, 16 October 2014

    Rip-off News round-up. Our pick of the last week's media (Thu 16th October)

    MPs seek inquiry into £1m bonus of disability firm boss
    MPs have called for an inquiry into why a charitable scheme providing cars for the disabled paid its chief executive more than £1million in bonuses and benefits last year. Mike Betts, head of not-for-profit company Motability Operations, took home bonuses totalling £911,915 in the year to September 2013, as well as a £125,000 payment in lieu of pension. This was on top of his basic salary of £501,900. Contracted by the Motability charity, the company provides 630,000 vehicles for disabled people, including those injured while serving in Iraq and Afghanistan, with customers using their disability benefit payments to pay for the scheme. John Mann, the Labour MP for Bassetlaw, who has examined the scheme’s finances, branded the situation as “scandalous”. He said there was no reason for Mr Betts, 52, to receive such bonuses because the company had no captive market and no competition. The revelation comes as the government implements reforms meaning tens of thousands of disabled people will lose their entitlement to Motability vehicles. Under new, stricter criteria for eligibility, anybody who can walk more than 20 metres, even if this is with the aid of a prosthetic, crutches or walking stalk, will no longer be entitled to a vehicle. TELEGRAPH

    British oil giant BG in pay row as new boss Helge Lund lands 'excessive' £29m
    After a run of disappointing candidates, the company insisted it had to pay top whack to get a man suitable to lead the company. It has poached Helge Lund from Norwegian rival Statoil with a package that has been criticised as ‘excessive’. He will be paid £1.5million a year, as well as bonuses worth up to £3million and another share incentive scheme that could pay out up to £9million if he hits performance targets. Additionally, he could get another £12million in shares over the next five years if the pay committee decides he is doing a good job. This particular measure is so controversial that the company shareholders are being asked to vote for it at a special meeting. BG will also generously compensate Lund for the potential share awards he is leaving behind at Statoil to the tune of £3million. He is also being given £480,000 to move his family to Britain, and will have £450,000 a year put into his pension pot. Andrew Gould, BG’s executive chairman, defended the pay deal, saying: ‘The company needs a proven leader from the oil and gas industry to deliver the exceptional opportunities available to it.’ BG shares fell 10p to 1015p. DAILY MAIL

    Ireland to close notorious ‘double Irish’ tax loophole
    Apple and other multinationals based in Ireland are to be given a four-year window before the phasing out of a scheme that cuts their tax bills. Amid mounting international criticism of the arrangements, which save foreign companies billions of euros, Ireland’s finance minister, Michael Noonan, is expected to announce the end of the “double Irish” scheme when he delivers his budget on Tuesday. The European commission is investigating “sweetheart” tax deals between the Irish state and Apple, and last month Brussels provisionally found that the iPhone maker’s tax arrangements in Ireland were so generous as to amount to state aid. Noonan’s move may pre-empt measures hinted at by the UK chancellor last month, when he announced a crackdown on technology firms’ tax strategies at the Conservative party conference. George Osborne said: “Some of the biggest technology companies in the world … go to extraordinary lengths to pay little or no tax here … We will put a stop to it.” Party officials briefed that he had companies using the double Irish scheme in his sights. On the international stage, the G20 group of powerful economies has commissioned the Organisation for Economic Cooperation and Development to produce a package of tax reforms to rein in multinationals. This work is expected to be completed by summer 2015. GUARDIAN

    About time? 2014 Nobel Prize for Economics awarded for “analysis of market power and regulation"
    Jean Tirole has been named as 2014's winner of the Economics Nobel prize, for his work on the regulation of large companies. The French professor’s research has been central to the study of regulation in economics, since he began work in the area in the early 1980s. He has helped economists and policymakers to understand how best to regulate large firms, especially where regulators face “asymmetric information” - where they do not have access to the same knowledge as the firms they seek to regulate. Before Mr Tirole’s work, policymakers often favoured blunt tools, such as price caps, while Mr Tirole has advocated more sector specific and tailored approaches - smarter approaches to writing rules. Pierre Moscovici, France’s former finance minister, said that Mr Tirole’s work “informs the paths we need to follow to get out of the crisis”. TELEGRAPH