globalcrisis_britain1

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globalcrisis_britain1

  1. 1. From wage suppression to jobs crisis: Our alternatives Özlem Onaran
  2. 2. Crisis as of 2010 <ul><ul><li>No real recovery </li></ul></ul><ul><ul><li>Banks hoard money and speculate </li></ul></ul><ul><ul><li>Latest data: the recovery in services losing momentum </li></ul></ul><ul><ul><li>Austerity & upcoming in VAT </li></ul></ul><ul><ul><li>Recovery in manufacturing slowed down </li></ul></ul><ul><ul><li>Growth in construction weakened sharply, jobs cut </li></ul></ul><ul><ul><li>Employment, fastest in London & East Midlands (RDA) </li></ul></ul><ul><ul><li>House prices </li></ul></ul><ul><ul><li>US: slow & jobless recovery, EU slow down </li></ul></ul><ul><ul><li>Exports terrible, highest trade deficit since 17th century (13bn during May-Jul) despite depreciated £ </li></ul></ul><ul><ul><li>Output will fall in the rest of 2010 and first half of 2011 </li></ul></ul>
  3. 3. ...crisis <ul><ul><li>Low wages, chronically low demand </li></ul></ul><ul><ul><li>Income losses: debt to insolvency for both private and public </li></ul></ul><ul><ul><li>Uncertainty about the recovery ->new investments less likely </li></ul></ul><ul><ul><li>Decline in income and confidence, job losses, the pressure to pay back debt -> household consumption </li></ul></ul><ul><ul><li>Income and jobs crisis </li></ul></ul><ul><ul><li>Great recession </li></ul></ul>
  4. 4. Wages and unemployment <ul><ul><li>Real wages (excluding bonuses) falling in 2008 & 2009, continues in 2010 </li></ul></ul><ul><ul><li>As the recession persists, even nominal wages ; labour share  ↓    </li></ul></ul><ul><ul><li>Unemployment in 2009 ↑ by 2.3%-points, forecast 2010 9.3%, ↑ further </li></ul></ul><ul><ul><li>Short-time work arrangements (w/o comp), nominal wage freezes, cuts. </li></ul></ul><ul><ul><li>No direct government subsidy for short-time work like Germany </li></ul></ul><ul><ul><li>The ratio of highest paid10%/lowest paid 10% ↑ </li></ul></ul><ul><ul><li>The poorest will be hit 13 times harder by cuts than the richest </li></ul></ul><ul><ul><li>High net wealth individuals recovered </li></ul></ul><ul><ul><li>Bonuses are back </li></ul></ul>
  5. 5. Company strategy <ul><ul><li>Gender wage gap widening </li></ul></ul><ul><ul><li>Firms: a strategy of increasing productivity (work intensity, exploitation), start a new wave of firing, engage in hiring freezes, increase the working hours </li></ul></ul><ul><ul><li>Worse job chances of the unemployed and the first time job seekers. </li></ul></ul><ul><ul><li>an increase in long term unemployment & discouraged workers likely </li></ul></ul><ul><ul><li>structural problems in construction, finance; cuts in public sec jobs: </li></ul></ul><ul><ul><li>skill & regional mismatch </li></ul></ul>
  6. 6. <ul><ul><li>Their crisis not ours </li></ul></ul><ul><ul><li>Financial deregulation & Pro-capital redistribution, top managerial income↑ </li></ul></ul><ul><ul><li>To overcome a potential realization crisis </li></ul></ul><ul><ul><ul><li>Debt-led consumption, financialization, Housing buble, mortgage debt, equity withdrawals </li></ul></ul></ul><ul><ul><ul><li>Current account deficit financed by Germany, Japan, Asia </li></ul></ul></ul><ul><ul><li>fragile–crisis->gov intervention to save capitalism->repackaged their crisis as public debt crisis </li></ul></ul><ul><ul><li>public debt would not be high, if it were not for the bank rescue packages, fiscal spending to tame the crisis, and tax losses </li></ul></ul><ul><ul><li>Cuts are an excuse of the business lobbies to </li></ul></ul><ul><ul><ul><li>to avoid tax increases to finance the budget deficit, </li></ul></ul></ul><ul><ul><ul><li>make the workers pay for the crisis through cuts jobs, social services, </li></ul></ul></ul><ul><ul><ul><li>to create a situation of “national emergency” to smash the remaining power of the trade unions in the public sector. </li></ul></ul></ul><ul><ul><ul><ul><li>the deficit is one of the highest in the EU: 11.7% of GDP in 2009 </li></ul></ul></ul></ul><ul><ul><ul><ul><li>But the ratio of debt to GDP is low: 70% </li></ul></ul></ul></ul><ul><ul><ul><ul><li>But average maturity of the debt is 13.7 years </li></ul></ul></ul></ul><ul><ul><ul><ul><li>the interest rate is at historical lows </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Imf-ilo warnings, martin Wolf: gamble </li></ul></ul></ul></ul><ul><ul><li>We won‘t pay for your crisis! make the responsible pay for the costs of crisis </li></ul></ul>
  7. 7. <ul><ul><li>Financial deregulation & Pro-capital redistribution, top managerial income↑ </li></ul></ul><ul><ul><li>To overcome a potential realization crisis </li></ul></ul><ul><ul><ul><li>Debt-led consumption, financialization, Housing buble, mortgage debt, equity withdrawals </li></ul></ul></ul><ul><ul><ul><li>Current account deficit financed by Germany, Japan, Asia </li></ul></ul></ul><ul><ul><li>fragile–crisis->gov intervention to save capitalism->repackaged their crisis as public debt crisis </li></ul></ul><ul><li>public debt would not be high, if it were not for the bank rescue packages, fiscal spending to tame the crisis, and tax losses </li></ul>
  8. 8. <ul><li>Cuts are an excuse of the business lobbies  </li></ul><ul><ul><li>to avoid tax increases to finance the budget deficit, </li></ul></ul><ul><ul><li>make the workers pay for the crisis through cuts jobs, social services </li></ul></ul><ul><ul><li>to create a situation of “national emergency” to smash the remaining power of the trade unions in the public sector. </li></ul></ul><ul><ul><ul><li>the deficit is one of the highest in the EU: 11.7% of GDP in 2009 </li></ul></ul></ul><ul><ul><ul><li>But the ratio of debt to GDP is low: 70% </li></ul></ul></ul><ul><ul><ul><li>But average maturity of the debt is 13.7 years </li></ul></ul></ul><ul><ul><ul><li>the interest rate is at historical lows </li></ul></ul></ul><ul><ul><ul><li>Imf-ilo warnings, martin Wolf: gamble </li></ul></ul></ul><ul><ul><li>We won‘t pay for your crisis! make the responsible pay for the costs of crisis </li></ul></ul>
  9. 9. Transition demands against the crisis <ul><ul><li>Public finance has to be unchained via debt default </li></ul></ul><ul><ul><ul><li>coordinated at the EU level, part of a broader public policy, also possible at national level </li></ul></ul></ul><ul><ul><ul><li>reverse the origin of the crisis, i.e. pro-capital redistribution. </li></ul></ul></ul><ul><ul><ul><li>Tax the responsible </li></ul></ul></ul><ul><ul><ul><ul><li>progressive income and wealth taxes, higher corporate tax rates, inheritance tax, and tax on financial transactions </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Highest marginal income tax rate, max income : 90-95% above 80.000-100000, would only hurt 2% of full time employees? </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>100% highest marginal tax rate on wealth (including government bonds) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>if 50% above 100.000: 4.7bn </li></ul></ul></ul></ul></ul>
  10. 10. Demands <ul><ul><ul><ul><li>One off 10% tax on the wealth of the richest: 35bn </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Currently in Britain: 50% highest marginal income tax rate, only over £ 150.000 (above £37000 40%, below 20%), lowest in G7 (Germany 47.5%, France 47.8%, Japan 50%), </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Corporate tax rate: 24% by 2014, inheritance tax 40% only above £ 325000 </li></ul></ul></ul></ul><ul><ul><li>Cut waste: stop the war! Do not replace Trident (80bn)! </li></ul></ul>
  11. 11. … Transitional demands <ul><ul><li>Multiple crisis (finance, budget, jobs, ecology, energy, food): multiple targets of full employment, ecological sustainability, equality, regional convergence </li></ul></ul><ul><ul><ul><li>Sustainability & climate justice: need for low/0 growth </li></ul></ul></ul><ul><ul><ul><li>Labour intensive public services (care, health, education), infrastructure, green investments </li></ul></ul></ul><ul><ul><ul><li>substantially shorter working hours with wage compensation </li></ul></ul></ul><ul><ul><ul><li>wages to reflect the productivity gains of the past three decades; preserve median/average wage->redistribute from top 20-30 to bottom 20-30 </li></ul></ul></ul><ul><ul><li>Prevent firing: No firing in firms that can pay dividends and managerial wages </li></ul></ul><ul><ul><ul><li>If bankrupt, revitalize by workers supported by public credit </li></ul></ul></ul>
  12. 12. Transitional demands <ul><ul><li>Nationalise banks, financial regulations, capital controls, fixed exchange rate (with possibility of managed adjustment) </li></ul></ul><ul><ul><li>Debt restructuring for households – payments to national banks proportional to income </li></ul></ul><ul><ul><li>A new socio-economic paradigm </li></ul></ul><ul><ul><li>Public ownership integrated with a democratic participatory plan </li></ul></ul><ul><ul><li>Ecological sustainability </li></ul></ul><ul><ul><li>Decommodification of basic needs </li></ul></ul>

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