Are you afraid to pick up the phone?

Are you afraid to pick up the phone?.

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Would Increasing the Mininum Wage close all “loopholes” and solve all problems

3 days after Miliband announced his intentions to close a “loophole” which allow employers to employ cheap (apparantly mostly foreign) workers at the expense of the great British worker, I am still no closer to understanding what the loophole is nor how the Man with the Unelectable Forehead proposes to close it.

Presumably he refers to “Swedish Derogation”, in effect an amendment to the Agency Workers Directive. The AWR guarantees agency workers who are employed by one company for 12 weeks or more the same rights as workers in the company they are contracted to. The Swedish Derogation put simply, allows employers to offer workers pay whilst not working in exchange for a waiver of the right to equal pay. Conditions as ever apply.

For a brief but effective overview see here:http://www.bathemploymentlaw.co.uk/latest-news/temps-working-at-tesco-urged-to-opt-out-of-agency-workers-regulations.html

So we can see that this is no “loophole”, “get-out clause”, choose your cliche, but a solid, if confusing piece of EU generated employment legislation, one which strikes me as burdensome to both workers and employers, though employers have the advantage by a short head. Does Labour thinks they can indeed find a loophole in the loophole and get out of Swedish Derogation? I’d be delighted to know what they propose. Swedish Derogation has already been tested and found not wanting with regard to a significant arena for interpretation, namely whether it applied to new hires or long term temps.
In a tribunal back in January last year, a tribunal found that it DID apply to long term temps. For a surprisingly readable account the following is excellent: http://www.out-law.com/en/articles/2013/january/agency-workers-swedish-derogation-does-not-need-new-hire-to-apply-says-tribunal/

It’s worth noting that this first test case did not feature low paid immigrants in food factories, but well paid tanker drivers who had in some cases had been doing the job for years, albeit at 70p an hour less than than the permanent drivers.

This is not to say that the impact of Swedish Derogation will not most keenly be felt by those at the pointy end of the labour market, but to assert that this means employers can cut wages to indigenous British workers by employing immigrants is not merely misleading but technically incorrect. It is also a disappointingly disingenuous piece of populism.

Furthermore it seems to obvious to point out that should employers want to avoid AWR altogether then they simply have to ensure that they don’t hang onto them for longer than 12 weeks. Given the competition for jobs in the unskilled sector this shouldn’t be a problem. Anecdotal evidence locally would indicate this practice is not unknown.

Whatever the fact is that the use of temporary workers is increasing and that, as far as my crude research and intelligence-gathering can determine, most employers are quite happy to go with AWR. Also the idea that temporary work is exclusively the province of low-paid occupations can be blown apart by looking at very recent stats from the Office of National Statistics, which shows the increased use of temporary workers being used across the board. Many temporary workers are also happy to work like this.

http://www.ons.gov.uk/ons/search/index.html?newquery=temporary+workers

So  there you have it, not only is a Party leader talking carelessly but he is unlikely to be able to deliver what he promises – finding some way of re-interpreting and implementing that re-interpretation is frankly, not only impossible, but would not I believe, help with the problem of low wages. This is the core problem for not only many temporary workers but millions of others and addressing it removes the need for ineffectual tinkering with complex and burdensome legislation at a stroke.

I am not alone in thinking the solution to this is to bang the minimum wage up to a decent level. I would guess that 7.25 is about right, above the “living wage” touted elsewhere. The difference between the living wage and any increase in the minimum wage is not merely being money, but that the minimum wage is laid down in law. The effects of this could, I would suggest be immediate and significant and any potential negatives insignificant.

The most obvious and easy to predict would be an increase in consumer spending, whilst also important would be a reduction in ruinous short term borrowing and a reduction in the payment of tax credits.

The possibility that such an increase in wages could result in job losses could be discounted, indeed I think that it could result in a further reduction in the claimant count as the differential between benefits and wages was narrowed.

Whatever, if there is a living wage or beyond guaranteed, the need to beggar about with interpretations of EU legislation will be eliminated and two fundamental problems of any economy will be addressed to some degree, namely poverty and demand.

Meanwhile Miliband is merely “campaigning” and, unless I have interpreted his speech on the Living Wage incorrectly, there is no proposal should (hah!) he be elected, to increase the minimum wage. It would all be about “incentives”

http://www.labour.org.uk/ed-miliband-speech-on-the-living-wage

Shame really. As Miliband himself reports the living wage is supported by business who, like myself are hardly supporters of socialism. Making the living wage, or above it the minimum wage should be something at least the Labour party should commit to. Who knows, it might even make them electable.

Rushing to Judge the Russians – and how will 2014 see the rift between Putin and the West develop?

vladimir-putin-193783_640

Is this the face of a man concerned?

The FT weekend looks increasingly like the Guardian every time it comes out. The current edition’s coverage of the tragic events in Volgograd by Kathrin Hille began with the words “In Southern Russia it had been a difficult week for men with beards” and then goes on to cover the security forces’ reactions to, and their actions preceding,  the events. It would be stretching a point to say the article is sympathetic to the extremists but it is yet another piece of work by the Western media that is not merely resolute in being anti-Putin, but in being ultimately anti-Russian. We should  remember that however difficult it it has been for those with beards it has been more difficult for those innocent Russian citizens killed, injured, bereaved and terrified by these outrages.

But who or what exactly to blame?

If I have read Ms Hille’s words correctly she sees not only the security forces’ (and hence the Russian leadership’s) reaction to the bombings as oppressive but their actions and those of the administration in Dagestan prior to these events as directly responsible. She goes on to quote a recent report by the International Crisis Group (http://www.crisisgroup.org/) saying that hard line tactics will exacerbate the situation. For a further and excellent history of recent events the ICG’s map of the world is worthy of both an immediate view and continued monitoring.

But for an original analysis of the situation in Dagestan the following ICG article is really required reading http://www.crisisgroupblogs.org/across-eurasia/2013/08/26/sowing-rebellion-in-dagestan/  This is a disturbing piece for three reasons, one, the nature of the actions and events occurring there, two, it’s prescience which at times resembles incitement, and finally, the  way it’s ultimate purpose seems to be to prove how Putin is the bad guy QED.

Don’t misunderstand me: I’m not saying that Putin is a good guy, but his leadership style  is popular in Russia and effective internationally in a way that for example, the UK’s Prime Minister cannot begin to imagine. Meanwhile the continued portrayal of Putin in the Western media as either a joke  or a fascist is not going to do anything other than strengthen his position in Russia and possibly beyond if loosely sympathetic comment on the Internet in the UK is anything to judge by!

And the position of the man and the country is indeed already strong for beyond the support and alliances  which Putin has necessarily built and consolidated in Russia I would suggest that 2013 has demonstrated two great advantages for both the nation and the man.

First there is Russia’s great advantage in it’s resource wealth, particularly in respect of gas,  and second,  though perhaps of greater importance, is it’s improving and profitable relationship with China. Not only is trade by these two giants predicted to grow to $100 billion by next year but their political alliance is of historic significance, and their veto of action against Syria was the event of 2013 for me, perhaps the event of the 21st century so far.

So with all  this why should Russia generally or Putin particularly listen to the liberal democratic West, with it’s desire for free markets and civil liberties? Does Putin give a damn for the opinion of the “World Community” when he arrests Greenpeace protesters,  cuts  the supply of gas to a troublesome province or orders a crackdown after 34 people have been killed in a bombing?

Whatever, Putin is not in the forthcoming year going to be making any concessions to anyone apart from those which will make him look good while the liberal democratic West will continue to verbally and ideologically attack him and his country.

But where will this lead in the coming year and years?

I have no intention of speculating at length or in depth as I am not alone in believing we are entering a new era of international relations (or lack of them) for which there is no historical precedent. The situation in the Middle East will of course be key, and further, in the European theatre  we should be concerned whilst not alarmist at what could happen in the Ukraine should that country be critically destabilised: the prospect of a proper conflict between Russia and the West do not, if you’ll pardon the pun, bear thinking about.

Whatever the Western liberal democratic establishment needs to rethink its  anti Putin, anti Russian approach. And, if it the hard line approach which is the main reason for criticism, well, the West’s interventions in the Middle East have hardly been low-intensity nor led to the establishment of free markets and human rights have they?

Who Ate All the Votes? Ed Balls hands out pies at Asda oop north

There you have it a leading opposition socialist politician doling out food with the co-operatiion of a multinational corporation. Is the indication of the future direction of campaigning?

As I said on Twitter – there has to be a better way of buying votes but not a cheaper one for sure.

Having said that Balls doesn’t have a trading standards issue with his name and is one of the few frontline Labour lot who has something to say and the personality to say it.

Will Miliband be doing something similar down south with Waitrose? Image

Meanwhile anyone who wants my vote, endorsement, anything really, merely has to send the food to my home address.

 

Grey Doubt – Is there really a future for the state pension at all?

The recent proposal to raise the state pension age to 70 has met with a predictably mixed response varying from those who regard it as outrageous to those who regard it as sensible. But is it the state pension itself which is heading for retirement?

First of all let’s point out that what I refer to as the Worldwide Liberal Democratic Project has at it’s core the reduction of the role of and dependency on, the state. In the UK a key example is the “Workplace Pension” scheme. This is in it’s early days and may be regarded as a live experiment, so expect much development in the years to come.

Info on Workplace Pensions here https://www.gov.uk/workplace-pensions

Whatever happens though my guess is that this scheme will, in some form or by another name, replace the state pension as we know it, by forcing as it does, employers and workers to contribute to a scheme in which they have some choice (in terms of where they invest and when they take the benefits) rather than by taking money off everyone and then handing it out at a flat rate to those who are over a certain age regardless. This direct taxation approach creates the so-called “dependency ratio” of those who are working and paying taxes to those who have retired and are (generally) not paying taxes. Predictions are that the ratio will increase substantially over the coming decades, though the UK is not in a particularly bad position compared to other developed countries.

The state pension, being fed by taxation rather than drawing from an invested state pension fund, is thus a growing liability and it is understandable that the government should develop a scheme which transfers the risk to the individual worker and business. However this is, I would suggest, merely changing the form of dependency, not removing it and however pensions are paid, the cost will become ever greater to those who are paying it, whether through compulsory private contributions or rather more old-fashioned forms of taxation.

Indeed, when and if the Workplace Pension scheme replaces the state pension then there will still be a need to provide for those who have worked insufficiently to have amassed a worthwhile pension, but again, my guess is, such provision would be made not by direct taxation but by a levy on scheme providers. So, those who have, will still pay for those who have not, one of a civilised and prosperous society’s Great Unavoidables.

Meanwhile the state pension as we know it remains one of the two pillars of the modern British state, along with the NHS, and while successive governments claim they worship and believe in them, they steadily chip away at their base.

But speculate as one might about the future the facts about the present, and what they mean for that future make interesting reading.

First of all, the majority (77%) of pensioners have some either a personal or occupational pension. However the proportion of those currently working and accruing some kind of non-state pension is a minority (under 40%)

Check the info from the Pensions Policy Institute

https://www.pensionspolicyinstitute.org.uk/default.asp?p=82
https://www.pensionspolicyinstitute.org.uk/default.asp?p=81

Secondly the average retirement age whilst it is still way short of 70 is increasing

Here’s what the Office of National Statistics has to say

http://www.ons.gov.uk/ons/rel/mro/news-release/average-age-of-retirement-rises-as-people-work-longer/pension-trends.html

Their comments on demographic inequalities whilst a statement of the obvious are nevertheless significant, perhaps of the greatest sigificance in all of this.

Then there’s the question of future employment and wage levels. Would anybody be reckless enough to suggest where we will be in 30 years time? And what work will be available to those who are older and may suffer some decline in their working capacity? I’d like to be positive, but optimism in economics is the ultimate recklessness, and it may be worth pointing out that the author is “between jobs” at 57 and has taken over a year and substantial volumes of applications before being shortlisted this week.

Whatever, the future seems inevitably one of more people needing retirement provision. If we are to keep the state pension at it’s current level, let alone raise it to a decent level, this will mean a rise in taxation to accomodate it. This is something the Amateur Analyst don’t see any government doing or even mentioning, hence the current distraction technique of the recent age-rise proposals and the onward march of Workplace Pensions.

And don’t forget we haven’t even mentioned the other costs and problems associated with an ageing population!

You’ll excuse me finishing this post in a hurry but I have to go to the toilet…

Bang Goes The Crank Bank

The problems at every well meaning well heeled socialists favourite bank are far from solved, long in the making and the solutions proposed do not bode well for the future.

In fairness to the Co-op bank, it must be pointed out that they were the last of the banks to get into bother, their policy of acquistion was not necessarily a bad one in principle and the Verde cock-up was not entirely of their own making and might have solved some problems had it worked, though how a left wing bank thought about doing a deal with a Tory government attempting to de-facto re-privatise a rescued bank is another question.

Neither is the Co-op Bank’s much (and rather smugly for my tastes) advertised “ethical” stance at the root of it’s problems. The Amateur Analyst is not aware that ethical investing is any less risky than any other class of investment. Paradoxically, it was the Co-op Bank’s having to pay out £269m for mis-sold PPI which contributed to the capital shortfall, a situation which should never have occurred in a bank with ethics and the principle of mutualism at it’s heart.

Whatever, the problems at the Co-op Bank stem from four factors (in no particular order): 1. it’s size and lack of competitiveness  2. The Brittania,  3. Creaking IT systems and a failed attempt to sort them  4  Financial challenges at the Co-op group itself. Indeed  tThe Amateur Analyst believes that it is number 4 which is of the greatest significance for the future and may well prove the undoing of the proposed restructuring.

At the core of the plan to sort out the mess at the Co-op Bank is  the conversion of Bank bonds to Group equity. This is meant to be a good thing because the original proposal of replacing the bonds for bank equity on unfavourable terms was such a piss poor deal. Indeed the “improvement” has fooled many people who should have known better into thinking that it’s going to solve everybody’s problems. The FT reports (professional) analysts as giving the deal the thumbs-up because non-bank equity is seen as preferable to bank equity while campaigner Stephan Wilcke chirps that the bank has been “generous”. But should any organisation in financial difficulties be generous and just how good is the non-bank equity in this case?

You don’t have to look very far to find that the wider Co-op group itself is in trouble also. In the 6 months to June the group reported a pre-tax loss of £559m and will be paying out a dividend of exactly zero.

The co-op group has plans itself to restructure, and sell assets though it’s core food and pharmacy businesses may remain intact. I wish it well but if it were a listed company I would not be buying any shares.

So what of the future? One of the ground rules of this blog is that it will not make predictions, rather more honestly make speculations about the future. The speculation as regards the Co-op bank is that the proposed restructuring may well not deliver and we may see for years to come continual restructuring until a point comes when the Bank and the wider group are de-merged.  The Amateur Analyst believes this is what should be happening now, as  both pose a risk to the other.

Should such a de-merger occur then the bank will either be listed or wholly or partly acquired while the group’s core business of food and pharmacy will either suffer a similar fate or, (should key assets such as property be sold) be part of a new smaller food and pharmacy mutual business.

So much for speculation,  what is certain is that the eruption and  current deal to clear up the mess does not mark the end of the Co-op Bank’s problems, rather the end of the bank, and probably the entire “movement” (corporation?) as we know it.

 

 

 

 

Vested Interests and Interest Rates – Time to Outlaw the Payday Bandits

wonga-360

The recent quizzing of the Bandits by the politicians has resembled a bunch of weak beardy teachers trying to deal with teenage gangsters without having the balls to take them on direct. Indeed the regulatory framework of financial services could be viewed as having the same characteristics as the culture of the education system (of the entire liberal democratic state?): meddling, didactic and bureaucratic but ultimately  self-perpetuating and ineffectual. Fans of contemporary financial regulation will no doubt be aware of that guard dog minus balls and teeth “Treating Customers Fairly”.

Of course the reason for ineffectualness and its companion, cowardice, is always simple self interest. Whilst the  Bandits may be jolly naughty boys who prey on the weak, the kind of money they generate as an industry is not something that can be  apparently be done away with.  And with Big Chief McWonga having at least attempted influence in the right places, the case for cynicism is overwhelming  while  the prospect of any meaningful action against this near criminal industry seem remote

One may though  be equally cynical about some of the responses or lack of them from other sectors. First of all the Archbishop of Opportunism’s stated intention to put the Bandits out of business is as laughable as it impossible. Of course he could do as Jesus commanded and “sell all though hast and give to the poor” and at a stroke (given his personal and the Church’s wealth) end the need for anyone to do business with the Bandits. However I have yet to see any Christian organisation or individual do that so why should he break the mould? Similarly, credit unions and related “not-for-profit” lenders have not only failed to show a united front and step up to the mark, but have shown greater interest in charging the financially excluded for managing their affairs while grabbing as much funding as possible. But they are in the third sector and one could expect nothing less or more.

More bewildering is the failure of the credit card industry to do very much to counter the Bandits.  As you will see in a forthcoming analysis (or you could find out for yourself) credit card borrowing is falling whilst Bandit lending is rising,  which you would think would lead the industry to seek or retain (!) more customers rather than throwing increasingly silly 0% offers at existing customers. The Orwellian rigours of the credit reference agencies combined with the efficiencies of contemporary business processes mean its never been easier for lenders to keep borrowers under control, as the Bandits have most ably demonstrated. Yes there are one or two cards that have popped up aimed at those who can’t even get a Vanquis card, but their marketing has been half-hearted.

Of course, The Amateur Analyst is only too well aware that the customers of the Bandits are those who (whatever the Bandits may say) have no  access to even a Vanquis card, let alone an overdraft or a tasty 0% offer but as McWonga has explaned, (as if it was something to be proud of), they turn down more applicants than they accept, and those they do accept they so comprehensively nail down in terms of repayment control, surely it cannot be beyond the wit of say, SAV credit to come up with a card that would offer a passably humane interest rate whilst incorporating a repayment process that de-risked the inevitability of assault by the chronically  useless and the professional defaulter.

Meanwhile people already in so much trouble they have no other options are daily being done over by the Bandits. So with so much demand and so much profit what pray (if you’ll pardon the word) is to be done? Easy it’s like this….

Pass a law (remember them?) which limits the APR any lender can levy on borrowers and restricts any charges. This is the real problem for any Bandit victim and not the conditionality attached which allows the Bandits to clean out a victim’s bank account. We can all stop direct debits at the click of a mouse or with a phone call after all.

How about 50% APR and 2% for the service charge. Just a suggestion, but that’s high enough and more than I’d pay even if it meant starving to death.

Whatever, setting limits down in law would be relative simple, easy to understand and a piece of cake to enforce. Alright, it would require careful drafting, but in principle it could be done in a simple, swift, Private Members Bill which would be so popular not even the Lords would hold it up. And any lender that couldn’t make money at those rates? Well I’m sorry they shouldn’t be in business on good management grounds never mind any moral ones.

So how about it. Would any lefty Labour type, you know the ones that rant about equality and how the Tories don’t know the price of beans at Aldi, care to make their name and their party more electable by going for it? Would anyone?

The Amateur Analyst does not believe the ensuing rush will constitute a health and safety issue.

Lend me a tenner until the end of the week anybody?