Unions should block sanctions against unemployed

Thousands of unemployed young people are working for supermarkets without pay for months on end, with the constant threat of losing their measly benefits if they leave, while others are on enforced “mandatory work activity” schemes.

The ConDems, building on New Labour’s regime of withholding benefits from the unemployed, have created a reserve army of young people simply to boost employers’ profits and cut public spending.

More than a million aged between 15-24 out of work. That is 20% of economically active people in that age group. Unemployment, which has been rising since 2007, is as high as in the early 1980s and now stands at 2.62m, the highest since 1994,

Of course that does not include many formerly self-employed, who wait a long time to qualify for benefits, people on disability benefits who are looking for but can’t find appropriate work, and women at home with small children prevented from finding work by soaring childcare costs. The real figure is closer to 4 million.

The unemployment figure includes 286,000 students looking for part-time work to get them through their studies. Some 80% of teachers surveyed earlier this year said they were encountering students in schools and colleges who did not get enough to eat, or to buy clothing.

Many good job and training schemes for young people have had their funding cut. So far the Coalition’s main contribution is a scheme where young people work for companies like Sainsbury, Poundland, Tesco for up to six weeks with no pay. It is meant to be voluntary, but if they even express a slight interest in the scheme, and then withdraw, they lose their miserable £53 a week job seekers allowance for up to six months.

It is suggested that some retailers are exploiting this scheme to get ready for the Christmas rush, instead of taking on temporary workers as they would normally. According to the Institute for Public Policy Research, employers are using government subsidies for apprenticeships to train people aged over 25 they would have hired anyway. Only 37,000 of 126,000 apprenticeships went to 16-24 year olds.

Under the new “mandatory work activity” scheme, young people are given no choice from the moment they sign on and can be sent to work for private firms or the voluntary sector for months on end. Lawyers say this is a modern form of slavery and are challenging it in the courts.

Brendan Barber of the Trades Union Congress says the Coalition must “stop the risk of losing a generation to unemployment and under-achievement by guaranteeing a job or high quality training to every young person out of work for six months”. Pathetic! What about: “The TUC will organise every unemployed worker into a mass movement to remove the Coalition government.” You won’t hear that any time soon!

Young people have done everything asked of them. The number without a qualification has decreased dramatically, and more and more make sacrifices to stay on at college or university. In 2004, 33% of 19-year-olds lacked a basic qualification; by 2010 that figure was down to 18%. Though almost half of young adults do not have a Level 2 qualification (such as GCSEs) at age 16, by the time they reach 21, most have remedied this and the proportion is down to one fifth.

Young people were the driving force of the movements that toppled regimes in Tunisia, Egypt and, before NATO intervention, Libya. They have everything to gain from political and social change and nothing to lose. With the economy heading for recession and more spending cuts on the way, it is clear that capitalism isn’t working and we should make it history. Offering young people the opportunity to join a people’s assemblies movement to transform society is the most important thing we can do.

In the meantime, the trade unions should instruct their Jobcentre Plus members to refuse to impose sanctions on young people looking for work, training and decent pay. Carrying out government orders which turn people into slaves is unacceptable.

Penny Cole

Spain's voters disenfranchised by markets

There can be only one winner in Sunday’s general election in Spain. And it won’t be the voters, many of whom are so disillusioned with the country’s political system that they seem set to stay at home in droves.

Even though the discredited Socialist Party (SP) looks likely to hand over the reins of state power to the right-wing People’s Party (PP), the financial markets are closing in. They know that the PP has no policies to tackle the country’s budget deficit or the growing debt crisis in the regions and is winning with anti-SP rhetoric.

So yesterday, the effective interest rate on Spanish government borrowing soared beyond 6% into what is considered the danger zone. Mariano Rajoy, the PP leader, will find himself in the firing line next Monday morning when Moody’s, Standard and Poor, Goldman Sachs and the other predatory operators in the financial markets move in.

In a mass sell-off of government bonds on Tuesday, investors’ fears spread beyond Italy and Spain to triple A-rated France, Austria, Finland and the Netherlands. Neil Williams, chief economist at UK fund manager Hermes, said “Markets are losing patience so they are going for the jugular, which is the core countries and not the periphery.”

In dealing with the crash of 2008 governments, central banks and global agencies added many trillions to the global accumulation of credit and debt, yet the growth the system needs to pay it off has not been forthcoming.

The “recovery” has now given way to a contraction. So the interest can never be paid, let alone the inflated capital, at least while forms of parliamentary democracy – however enfeebled – stand between the corporations, financial markets and living conditions of ordinary people. These must all be swept away in futile attempts to minimise the impact of the crash of 2011 on profits.

After a weekend of frenetic activity, two non-elected US trained economists have been appointed to spearhead the next round of assaults on the population of Europe. Mario Monti has been installed as replacement for the odious Berlusconi, and Lucas Papademos is the new prime minister of Greece, which includes anti-Semitic, far right LAOS – the Popular Orthodox Rally Party in its provisional government.

They’ll all be getting their instructions from the “Frankfurt group” which includes the International Monetary Fund, Germany’s Chancellor Angela Merkel, France’s President Nicolas Sarkozy, a bevy of European Union officials, with Barack Obama, USA and Hu Jintao, China’s President lurking threateningly in the background.

Every one of the now 7 billion occupants of the 200 or so states is directly and immediately affected by the unfolding of the interacting social, financial, economic, political and ecological crises of humanity and its planetary home. In Britain, youth unemployment has hit a record high of 1.016 million, as the overall jobless total rises to 2.62 million in the midst of a recession deepened by spending cuts.

The ruling classes everywhere fear any challenge to their rule, concerned that they might inspire others into revolt. Peaceful protests claiming the authority of the 99% find themselves confronting the forces of the state in its many forms. The brutal clearance of Zucotti Park won’t be the last to be seen of Occupy Wall Street. The Corporation of London has restarted legal proceedings against Occupy LSX, and its maturing programme of discussions on the economy, democracy and the state.

Amongst the most recent, but shortest-lived of the occupations, Cardiff, delivered one of the clearest objectives so far: “The monetary market system itself must be replaced with a resource-based economic model where everyone’s needs are provided for free.”

The collapse of the eurozone, the appearance of mass unemployment, the attacks on pensions, services and welfare, demands the alternative called for in Cardiff. On November 30, millions will strike in Britain against the government’s attack on public sector pension rights. To maintain the momentum, trade unionists should seize the initiative and create people’s assemblies in every community to carry the struggle forward towards a new political and economic democracy.

Gerry Gold

Economics editor

As dole queues grow, so does case for regime change

As the exam period ends in the UK, young people surging through the gates of schools and colleges will be looking for jobs. But with jobs disappearing and unemployment predicted to surge for months to come as a result of the crisis of capitalism, they’ll mostly be disappointed.

The number of people in work fell by 271,000 over the three months to April to 29.11 million, the biggest quarterly drop since comparable records began in 1971. Unemployment rose to 2.261 million in the same period, the highest since November 1996. A third of a million jobs are forecast to go in the public sector in the next period as mass unemployment becomes a reality.

Those still with jobs are just beginning to discover the real meaning of the global economic meltdown following decades of credit-led growth. For capitalist society, the inescapable elimination of productive capacity means millions of people become surplus to requirements and those in work must face an unprecedented ratcheting-up in the levels of exploitation. Wages must fall, working hours must increase, and benefits must be slashed.

Having announced a £401 million loss for 2008, British Airways this week intensified its assault on its employees. As well as eliminating 6,500 jobs since last summer, last month it invited staff to shift to part-time working or take up to a year’s unpaid leave. Now it wants them to volunteer to work without pay for up to a month as their contribution to the airline’s survival. The deadline for volunteering ends next Wednesday. No doubt BA has a plan for something more brutal if too few line up to cut their own throats.

It was just this kind of brutality – and far worse is to come - that was implied when the Bank of England, trying to slow the economic disintegration, was forced to resort to the occult art of “quantitative easing” at the beginning of March. It reached behind the ear of a mesmerised audience and found not just one golden egg – but £125 billion of new money which it poured into the already troubled economy, lending much of it to the government in the form of new debt. In the US, the Federal Reserve has similarly increased the amount of money in circulation by a huge 16.5% in the last year.

But debt, and its opposite credit of all kinds – of which currency is just one – comes with a heavy cost. All credit is a promise to pay, and the value needed to make the payments comes from only one place – people with jobs. When central banks around the world turned to quantitative easing, apparently detaching money from its role as a measure of value, they set off a chain reaction. In reality it meant that the state took on the responsibility of ensuring that the repayment of the debt and its interest will be forcibly extracted from the remnants of the working population for decades to come as the cost of rescuing the system from collapse.

If the capitalist system is to survive, it means that rights to object will also have to be eliminated. And it is these objective forces that destabilise the political process, strip away the democratic mask of parliamentary government, push the BNP forward, encourage racist attacks on Romanians in Belfast, and bring the threat of nuclear exchanges back on to the agenda.

In Iran, a new generation without jobs have led the spectacular upsurge against a reactionary regime. We need to mobilise young jobless in Britain to inspire a revolutionary transformation of a regime led by New Labour that throws people on to the scrapheap straight from school and replace it with a society that puts people’s needs ahead of profits.

Gerry Gold
Economics editor

Thinking the unthinkable

Despite Gordon Brown’s notions of saving the world – let alone Britain – the pound is now falling to its lowest-ever levels against the Euro. It is currently trading at 1.04 euros to the pound at some bureaux de change. Things are so bad that insiders are thinking the unthinkable – jettisoning Sterling and adopting the Euro!

The dollar too is falling at the rate of 6.6 per cent a year as new data revealed serious declines in household worth and mortgage borrowing. The dollar slid to its lowest in 13 years against the yen this morning as the Senate rejected a £14 billion bailout for General Motors, Chrysler and Ford. Unprecedented interest rate cuts, gigantic taxpayer-funded bank rescue packages and promises of government infrastructure spending – including the biggest in the US in half a century – have done nothing to stop the financial and economic meltdown in Britain or the US.

Production in the US is forecast to shrink by 4.1% this quarter and by another 3.4% and 0.8% in the first and second quarters of next year. "The news from the economy is bad. The recession that we had previously hoped to avoid is now with us in full gale force," says one report. By late 2009, the US unemployment rate is predicted to reach 8.5%, compared with 6.7% in November, as employers shed an additional two million jobs over the next year. In the UK, the CBI reported a five-year-low in export orders despite the advantages offered by the decline of the pound.

The worldwide collapse in demand has turned the economy upside down – from commodity speculation producing inflationary price increases in food and energy, to prices falling across the world. This side of the pond, current forecasts are suggesting that unemployment across Europe may rise from 17 to 21 million next year. In a debate organised by the Financial Times Friends of Europe group, Poul Nyrup Rasmussen, president of the Party of European Socialists, said he feared that there would be “a further dramatic increase to the other side of 25 million”.

The crisis is so deep and UK trade union leaders so short-sighted that they are offering to cut their members wages by 10% in the remnants of the UK steel industry – adding to the downward deflationary spiral. Former TUC leader John Monks, now head of the European Trade Union confederation, and steel union leaders instead of standing up for workers’ rights, are prostrate before the employers. The three steel unions have offered pay cuts of 10% on behalf of their members. What a curious state of affairs when the employers’ spokespeople are less gung-ho about wage cutting than the union leaders!

The Daily Telegraph – not known as a campaigner for workers’ rights – warns against widespread pay cuts: “Should [pay cuts] become widespread, they could contribute to a deflationary spiral as employer after employer cuts their workers’ pay. A 3% pay cut, if extended across the entire population, may not necessarily mean lower real incomes, but it does mean a higher debt burden. Debt, after all, retains its nominal value, regardless of our ability to pay. Given that the mountain of borrowing is precisely at the heart of the current crisis, such an outcome would be truly terrifying,” it comments.

Even the bosses’ very own newspaper, the Financial Times, argues caution: “No one should pretend that a pay cut is a panacea”, its leader says today.

Meanwhile, with interest rates approaching zero, the authorities, doing whatever it takes to save the system, are obliged to open up the next Pandora’s box. In case anyone is paying attention, they call it ’quantitative easing’, to throw you off the scent. It means increasing the money supply. Printing money. It’s been tried before. Many times. It doesn’t make things any better. Look at Zimbabwe. Or Germany in the 1930s.

Gerry Gold
Economics editor