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Timesizing News, November 2009 - from 11/30 back to 11/01
[Commentary] ©2004-09 Phil Hyde, Timesizing.com, Box 117, Harvard Sq PO, Cambridge MA 02238 USA 617-623-8080
11/29-30/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- The jobs imperative - What to do about unemployment, op ed by Paul Krugman, 11/30 NYT, A29.
If you’re looking for a job right now, your prospects are terrible. There are six times as many Americans seeking work as there are job openings, and the average duration of unemployment — the time the average job-seeker has spent looking for work — is more than six months, the highest level since the 1930s.
You might think, then, that doing something about the employment situation would be a top policy priority. But now that total financial collapse has been averted, all the urgency seems to have vanished from policy discussion, replaced by a strange passivity. There’s a pervasive sense in Washington that nothing more can or should be done, that we should just wait for the economic recovery to trickle down to workers.
This is wrong and unacceptable.
Yes, the recession is probably over in a technical sense, but that doesn’t mean that full employment is just around the corner. Historically, financial crises have typically been followed not just by severe recessions but by anemic recoveries; it’s usually years before unemployment declines to anything like normal levels. And all indications are that the aftermath of the latest financial crisis is following the usual script. The Federal Reserve, for example, expects unemployment, currently 10.2 percent, to stay above 8 percent — a number that would have been considered disastrous not long ago — until sometime in 2012.
And the damage from sustained high unemployment will last much longer. The long-term unemployed can lose their skills, and even when the economy recovers they tend to have difficulty finding a job, because they’re regarded as poor risks by potential employers. Meanwhile, students who graduate into a poor labor market start their careers at a huge disadvantage — and pay a price in lower earnings for their whole working lives. Failure to act on unemployment isn’t just cruel, it’s short-sighted.
So it’s time for an emergency jobs program.
How is a jobs program different from a second stimulus? It’s a matter of priorities. The 2009 Obama stimulus bill was focused on restoring economic growth. It was, in effect, based on the belief that if you build G.D.P., the jobs will come. That strategy might have worked if the stimulus had been big enough — but it wasn’t. And as a matter of political reality, it’s hard to see how the administration could pass a second stimulus big enough to make up for the original shortfall.
So our best hope now is for a somewhat cheaper program that generates more jobs for the buck. Such a program should shy away from measures, like general tax cuts, that at best lead only indirectly to job creation, with many possible disconnects along the way. Instead, it should consist of measures that more or less directly save or add jobs.
One such measure would be another round of aid to beleaguered state and local governments, which have seen their tax receipts plunge and which, unlike the federal government, can’t borrow to cover a temporary shortfall. More aid would help avoid both a drastic worsening of public services (especially education) and the elimination of hundreds of thousands of jobs.
Meanwhile, the federal government could provide jobs by ... providing jobs. It’s time for at least a small-scale version of the New Deal’s Works Progress Administration, one that would offer relatively low-paying (but much better than nothing) public-service employment. There would be accusations that the government was creating make-work jobs, but the W.P.A. left many solid achievements in its wake. And the key point is that direct public employment can create a lot of jobs at relatively low cost. In a proposal to be released today, the Economic Policy Institute, a progressive think tank, argues that spending $40 billion a year for three years on public-service employment would create a million jobs, which sounds about right.
Finally, we can offer businesses direct incentives for employment. It’s probably too late for a job-conserving program, like the highly successful subsidy Germany offered to employers who maintained their work forces.
[It's never too late to get started on the only general line of solution that works and can be easily modified into a sustainable design.]
But employers could be encouraged to add workers as the economy expands.
[It's not going to expand if the federal government is "providing jobs" directly with a small-scale version of the New Deal's WPA, as Krugman suggests, while the private sector is still downsizing on a larger scale. What is Krugman thinking?!]
The Economic Policy Institute proposes a tax credit for employers who increase their payrolls, which is certainly worth trying.
All of this would cost money, probably several hundred billion dollars, and raise the budget deficit in the short run. But this has to be weighed against the high cost of inaction in the face of a social and economic emergency.
Later this week, President Obama will hold a “jobs summit.” Most of the people I talk to are cynical about the event, and expect the administration to offer no more than symbolic gestures. But it doesn’t have to be that way. Yes, we can create more jobs — and yes, we should.
- The Jobs Summit: Opportunity to Forge a New Social Contract, by management Professor Thomas Kochan of MIT's Sloan School, 11/29 HuffingtonPost.com (blog)
This week, President Obama will convene a Jobs Summit to build support for new initiatives aimed at ensuring workers are not left out of the economic recovery. This could be a historic event, but only if it is more than a one-time meeting and serves as the starting point for getting business, labor, and government leaders to work together to create well paying jobs.
Current data on jobs and wages show why workers rightly feel they are being left out of the economic recovery. Unemployment is at a quarter century high and the Congressional Budget Office predicts that unless stronger actions are taken, unemployment will remain above 10% in 2010, 9% in 2011, and 7% in 2012. This means that between 15 to 20% of the nation's human capital will remain unemployed, underemployed, or out of the labor force for the next three years -- clearly an unacceptable outcome that will further delay and weaken economic recovery. The wage data are equally unacceptable. Average worker incomes have been flat or fell during the recession. Nor did they grow over the seven years of the past economic recovery. Indeed, workers have been getting a declining share of the productivity they helped create (most of it went to those in the top one percent of the income distribution) for the past three decades. Unless more direct action is taken, the earning power of existing and new jobs will remain stuck at the same levels they have been at for many years. Given that consumption accounts for 70% of the economy, a wage-less recovery translates to a weak and unsustainable recovery.
A number of ideas for job creation have been proposed. Among them are a work sharing proposal that would provide unemployment benefits for reduced hours of work, an employer tax credit for creating new jobs, use of TARP funds to provide credit for small business, additional stimulus funds for local and state governments, and expanded investments in infrastructure and construction. All these proposals are worth considering. No one solution alone is a silver bullet. The mix of options chosen will have to produce nearly 8 million jobs just to make up for those lost since the beginning of the recession.
Getting wages moving again will require a new social contract between labor and business to replace the one that has been broken since the 1980s. The president should call on workers and their unions and associations to work in partnership with employers receiving taxpayer funds to build the high performance workplaces and work processes needed to generate high productivity and high service quality. Evidence from manufacturing, health care, and other industries shows that major financial and/or technological investments only pay off in high productivity when matched with state of the art workplace practices and cooperative labor management relationships. In return, employers receiving funds should be expected to follow compensation principles that share equitably the gains generated from productivity and economic growth.
Implementing this new social contract will require business and labor to work together in ways they have been unwilling to do for many years. The sad reality is that they have been locked in an ideological stalemate over the legitimacy of unions and over how to fix and modernize a failed and outdated labor law. The president needs to use this historic opportunity to break this impasse and launch an era of productive and innovative labor management relations needed to foster and sustain the new pact.
To do so, the president should announce his intention to work for speedy passage of a reframed and expanded Employee Free Choice Act, a labor law reform bill currently stalled in Congress. The reframing would state the objectives of the Act are both to restore workers' ability to join a union and gain access to collective bargaining and to transform labor management relations in ways that get wages once again growing in tandem with productivity and economic growth. Provisions should be added to the bill to create an on-going national labor management advisory council to oversee implementation of the new law and provide advice on how to promote and diffuse productive, innovative, and cooperative labor management relations.
This national body should be supplemented by industry-specific councils where taxpayer dollars are being invested such as health care, infrastructure, aviation, and renewable energy. Industry management and labor experts should be held accountable for making sure the right mix of high performance and compensation practices get implemented.
Likewise, local level labor, business, community, and government leaders need to work together to translate stimulus funds for infrastructure repair, weatherization, and green jobs into projects that are completed on time, on budget, safely and that generate new job and career building opportunities for women and underrepresented minorities. There is much talk about creating broad-based green jobs coalitions at the local level but to date they have been slow in materializing and, as a result, job creation has been equally slow. Active facilitation of multi-stakeholder negotiations will be needed to accelerate the pace of job creation.
If it is a first step rather than a one-time event, the Jobs Summit will be recorded as a historic achievement -- the day a new social contract was put in place for workers and families to share in the economic recovery they help produce and the day the foundation was laid for creating good sustainable jobs and 21st century labor management relationships.
- Georg Fischer Says Demand May Not Show Recovery Before 2011, by Antonio Ligi, 11/30 Bloomberg.com
SWITZERLAND -- Georg Fischer Holding AG, the supplier of door frames to Aston Martin sports cars, won’t see the start of a recovery in demand before 2011, which may hurt its ability to pay dividends.
“Overall, our scenario only sees a stepwise recovery in our markets as of 2011 and therefore no major top line increase in 2010,” Chief Executive Officer Yves Serra said in an interview. “It’s difficult to imagine we can distribute a lot of dividend.” The board will decide on the payout, he said.
Georg Fischer, which gets almost half of sales from the auto industry, may report a “slight” net loss next year and will break even at the operating level, Serra said. The company this year aims to complete about 80 percent of a 2,300 job-cut program, to help save 350 million francs ($349 million) by 2012.
Demand has ceased dropping across the company’s piping, automotive and machine-tools divisions over the past three to four months, Serra said. The number of employees working shorter hours has fallen to 2,000 to 3,000 from 4,000 at the end of June, he said.
Car manufacturers are no longer de-stocking, with cash-for- clunker incentives and demand in China helping support the industry. Truckmakers are still running down their inventories, Serra said in the Nov. 25 interview at the company’s headquarters in Schaffhausen, Switzerland.
Analysts in a Bloomberg survey predict a loss of 58 million francs for next year. Operating profit is estimated at 2 million francs, according to the five-analyst survey.
The Swiss manufacturer reported a first-half loss of 141 million francs on a 39 percent revenue decline to 1.45 billion francs. Piping and machine tools each account for about one- quarter, with piping responsible for 85 percent of operating profit last year.
Factories supplying the auto industry are currently operating on average at 70 percent to 75 percent capacity, while the rate at machine tools stands at about 70 percent, after closing two of four plants in Switzerland, Serra said.
The machine tools division, GF AgieCharmilles, is seeing an increase in spare-part sales and an improvement in Asia, particularly in China. There is no major improvement in Europe and the U.S., according to the chief executive.
Piping systems, which supplies Wal-Mart Stores Inc. in the U.S. with insulated plastic pipes, will be a growth area. The company plans to open a 10th plant and start building a further one in China next year and aims to generate 35 percent to 40 percent of total sales in the mid-term with the unit, according to Serra.
The supplier to Daimler AG’s Mercedes and Volkswagen AG has in two years lost 71 percent of its market value, which now stands at 1.08 billion francs. This year, the stock has recovered 13 percent.
The CEO reiterated the company’s goal to reach earnings before interest and taxes margin of 8 percent by 2012 and to reduce net debt to below 400 million francs by 2012 from net debt of 702 million francs as of June 30.
To contact the reporter responsible for this story: Antonio Ligi in Zurich at firstname.lastname@example.org
Last Updated: November 30, 2009 06:08 EST
- Book: Czech women's conditions improving, (11/27 CTK via) 11/30 Prague Daily Monitor via praguemonitor.com
PRAGUE, Czech Republic - The conditions of Czech women are still worse than men's 20 years after the Velvet Revolution, but society is more accommodating towards their needs every year, according to the book "Gender and Democracy: 1989-2009" that the Gender Studies society has just issued.
"I assess positively the change in public opinion," Gender Studies director Linda Sokacova told CTK.
"People who still five years ago were rejecting themes such as discrimination and equal opportunities now start to comprehend them and see how they affect their lives," she said.
Sokacova said the anti-discrimination law that the Czech Republic passed this year has markedly contributed to the improvement of women's position in society.
However, many women's organisations say it will have to be amended to be really effective, Sokacova said.
She said Czech society is more accommodating to women than in some neighbouring countries in spite of the strong conservative stream that supports established stereotypes defining Czech men and women's roles.
"Compared with Poland or Slovakia we are a less sexist and less patriarchal country," Sokacova said.
Gender Studies society says, however, that particularly women with small children have a much more difficult access to the labour market than men.
Employers are not ready to employ them for shorter hours as is common in more advanced countries, Sokacova said.
[There it is - shorter hours is identified as "more advanced" in middle-advanced economies.]
Women's organisations also point to the low portion of women in politics and important public posts.
"Society has changed a lot over the past 20 years," sociologist Jirina Siklova told CTK.
Siklova founded Gender Studies in the early 1990s.
"Themes that we did not know at all have emerged. The gender idea alone, that is the interpretation of problems in society from the point of view of men and women's different positions, is one of them," Siklova said.
Women themselves did not tap all opportunities the newly gained freedom offered them 20 years ago, Siklova said.
"They, for instance, did not suppose that they could also do business," Siklova said.
11/28/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- County asked to hire back chief counsel - Attorney plans to retire from post in December, by Rick Armon, Akron Beacon Journal via Ohio.com
[Here's a story that indicates how far behind the USA has slid in the Age of Robotics - a 35-hour workweek is still regarded as "part time."]
SUMMIT COUNTY, Ohio - Summit County Council will consider a proposal on Monday to rehire the chief counsel for the prosecutor's office after she retires in December.
Attorney Mary Ann Kovach is chief counsel for Prosecutor Sherri Bevan Walsh. Kovach, 61, plans to retire and Walsh wants to rehire her part time for $53.16 an hour beginning March 29.
She would work about 35 hours a week and earn a maximum of $63,260 next year, Assistant Prosecutor Brad Gessner said.
[Life is rough.]
He appeared before County Council this week to make the request.
Kovach also would be able to collect a county paycheck and her government pension at the same time — a controversial, yet common, practice referred to as double dipping.
Gessner told council members that Kovach's institutional memory — she has about 35 years of experience — is invaluable to the office.
He also said the move would save money, considering Kovach would not receive benefits. Her base salary is now $110,572 and she is the second-highest paid employee behind Walsh, according to payroll records.
But several council members questioned the move, wondering why there isn't anyone in the office who could take over for Kovach and why Walsh hasn't trained anyone to replace her.
Councilwoman Gloria Rodgers said workers constantly step into positions and learn the job. ''I have a problem with bringing her back,'' she said.
Asked after the meeting whether it was an indictment of the prosecutor's staff, Councilman Tim Crawford replied: ''You're damn straight it is. Why haven't they been grooming somebody?''
If the county rehires workers, they should make the minimum pay for the position, he said. The minimum for Kovach's position would be about $46 an hour.
Rick Armon can be reached at 330-996-3569 or firstname.lastname@example.org.
- Merkel warns banks over tight lending habits, TheLocal.de
Chancellor Angela Merkel stepped up her warning on Saturday of a further credit crunch in Germany as she called on banks to meet their “responsibility” to lend money and help the nation’s fragile economic recovery.
“We have to realise here, that we are in a very critical situation,” she said in her weekly video address. “Therefore we say very clearly that we also call on financial institutions to fulfil this responsibility,” she said.
While stressing banks had to lend responsibly, they also had a duty to all of society as the source of vital capital for the economy, she said.
In October, nearly 42 percent of German companies questioned by the economic research institute Ifo said credit conditions were still restrictive in Germany, Europe's biggest economy.
Another poll by the chambers of commerce and industry found that 26 percent of German firms felt it had got harder to obtain credit from banks, the main source of financing for eurozone companies.
For this reason, the government would propose a “credit mediator” at a scheduled economic discussion on Wednesday, Merkel said. Such an independent mediator would help businesses to get credit at reasonable rates.
Representatives of business, unions, banks and academia would take part in Wednesday's summit, she said.
Stressing the economic crisis was not over for Germany, she said further pain would be felt in the next few months in the job market. The cost of rising unemployment and the Kurzarbeit scheme, whereby the government subsidises employees on shorter working hours rather than letting their firms lay them off, would be met by the nation as a whole, not just the workers and firms affected, she said.
Her call for more lending follows similar demands from her cabinet colleagues, who are ramping up pressure on the banks. Recently, Economy Minister Rainer Brüderle said German banks had a responsibility to the nation because of the hundreds of billions of euros that had been spent on bailing them out in the past two years.
DDP/The Local (email@example.com)
11/27/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Bellingham libraries to cut hours, reduce senior services, by KIE RELYEA, BellinghamHerald.com
BELLINGHAM, Wash. - Beginning in January, the Bellingham Public Library will cut hours at its Barkley and Fairhaven branches as well as monthly Outreach Services to 210 senior citizens because of another expected $75,000 reduction in its budget for next year.
The latest cutbacks are part of a total of $546,385 that have been cut from the library system's 2009 and 2010 budgets, which are paid for through the city of Bellingham's general fund.
The city's draft 2010 budget is 13 percent below this year's $216.1 million figure because of sharply lower revenue from sales taxes, business and occupation taxes, real estate taxes and investment interest income.
With fewer dollars, library officials said they have cut nine staff positions, 28 hours at library branches and the materials budget by 29 percent.
The materials budget pays for things such as books and DVDs.
"Everybody will feel the pinch," said Christine Perkins, assistant director for Bellingham Public Library.
"We're just asking for some patience and for some understanding," she added. "We just don't have the resources to keep up."
That comes at a time when demand for services is high, with a record 1.6 million items expected to be checked out this year, according to Library Director Pamela Kiesner.
The latest reductions affected an employee in the Outreach Services program, who was laid off from that position. She was able to shift into an entry-level library page position with a cut in pay, according to Perkins.
Library users also can expect to wait longer for items they've put on hold, with Perkins saying employees will no longer pull materials on Mondays - partly to give pages time to shelve thousands of items returned over the weekend.
Each morning nearly 1,000 items show up on the library system's Requests Pull list, which takes eight hours a day to complete.
The cut that Perkins said has been "particularly heartbreaking" was the one made to Outreach Services. Under the program, library materials are brought to Bellingham seniors who can't get to the library because of age, long-term disability or illness.
The program used to serve seniors in 30 care facilities such as nursing homes or assisted living communities. The number of facilities has been scaled back again, with 12 facilities notified that December will mark the last month of service under the program.
That leaves 14 facilities in the program.
BELLINGHAM LIBRARY CUTBACKS
The latest round of budget cuts for the Bellingham Public Library system will translate into fewer service hours at the Barkley and Fairhaven branches and fewer services for seniors, among other impacts.
New hours go into effect Jan. 5, which is also the day the Fairhaven library will re-open after being closed seven months for renovations:
Barkley - Open 10 a.m. to 2 p.m. Tuesdays, Wednesdays, Thursdays and Saturdays.
Fairhaven - Open 2 to 6 p.m. Tuesdays through Saturdays...
Reach KIE RELYEA at email@example.com or call 715-2234.
- Bombardier lays off 715 - Union hopes to work out a deal. Weak orders for regional jets cited, by FRANCOIS SHALOM, MontrealGazette.com
MONTREAL, Québec - A collapse in regional-jet orders continues to plague Bombardier Inc. which again cut its RJ production rate yesterday, resulting in 715 more layoffs in Montreal.
Job cuts this year alone now total 5,075 at Bombardier's worldwide aerospace group, and several aviation observers said more job losses are expected, probably next year.
As company president Pierre Beaudoin signalled this month would happen, Bombardier cut about 500 workers from its commercial-plane assembly line and more than 200 from administration. About 40 of the 715 jobs eliminated will be at Bombardier's water-bomber unit.
Yvon Paiement, president of Local 712 of the International Association of Machinists and Aerospace Workers, which represents 4,800 Bombardier workers in Quebec, said that the repeated rounds of cuts over the last few years have had such an impact on the company's aerospace operations that "for the first time ever, I sense a certain spirit of openness from (Bombardier) about work-sharing arrangements that we've proposed for years."
Such a deal would minimize job losses, but Paiement said he had "no idea" how many of the 715 jobs could be saved.
Junior hires departed long ago, and current rounds of cuts are now affecting employees with significant seniority and high levels of skills and experience.
"Our (work-sharing) proposals have always been met with 'no, no, no' from management," Paiement said. "But I'm detecting a receptiveness recently, a desire to find a solution."
He said he has high hopes that a meeting today in Mirabel with management will produce an alternate plan to reduce job losses. But even that would have to be ratified by union members, and Paiement agreed that those with the most seniority might balk at the proposal.
The 4,300 workers of Local 712 left after yesterday's cuts would represent less than half of the 8,800 the section employed in 2001, Paiement said.
But Karl Moore, associate director of the advanced leadership program at McGill University's Desautels Faculty of Management said Bombardier is likely to eliminate more jobs next year, "likely in the hundreds." A recovery for airlines is not expected until 2011, he estimated.
Others, including analyst Chris Sears of Montreal's MacDougall, MacDougall & MacTier called the cuts "pretty aggressive," and in line with Bombardier's production rate, at least for the near term.
"There are not enough projected CRJ aircraft sales to maintain the current production plans," said Bombardier Aerospace president Guy Hachey in a statement.
Richard Aboulafia, a consultant with the Washington-based Teal Group, called the cuts "overdue" given the lack of orders from airlines for regional aircraft.
Despite the layoffs, Bombardier said it's still hiring about 500 people to work on its CSeries and CRJ1000 airliners as well as the Learjet 85.
Quebec Economic Development Minister Clément Gignac said the province is disappointed by the layoffs but added he is confident for the future of the aerospace sector in Quebec.
"Our priority is to help the workers who lost their jobs today. But I'm encouraged by the fact Bombardier reiterated this morning that the CSeries will continue. In fact they project to hire up 500 people for this," Gignac told reporters in Quebec City.
"That's what companies have to do: look at the future and continue to invest," he added.
11/26/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Manager who cut hours is top boss, (11/24) The Press Association via google.com/hostednews/ukpress
WORCESTERSHIRE, U.K. - A hospital manager who cut her own hours to improve her work-life balance and support staff wanting more flexible arrangements has won a best boss competition.
Debbie Hinton, who works for Worcestershire Acute Hospitals NHS Trust, was nominated by several of her 48-strong team for the award, run by Working Families and supported by BT.
Few of her team worked standard hours, making it easier for them to look after elderly relatives or children.
Ms Hinton..said: "I have recently reduced my own hours and can now support my son and daughter in their chosen careers, visit my parents more frequently and get to ride my horse in daylight in the winter."
- German workers more upbeat than West Midlanders, (11/27) The Birmingham Post via BirminghamPost.net
WEST MIDLAND, U.K. - As Birmingham’s Frankfurt Christmas Market spreads its festive cheer, Anna Blackaby looks at why Germany’s manufacturing workers are in a more upbeat mood than their West Midland counterparts.
The recession has prompted many curious incidents, none more so than a singular sight witnessed back in May by 7,000 marchers on the streets of Birmingham.
Two seemingly opposed forces came into rare alignment when former CBI director general Digby Jones marched alongside his old foe, Unite joint leader Tony Woodley, to call on the Government to act to preserve employment in the UK’s manufacturing sector.
One of the main measures the pair wanted to see introduced was a wage subsidy scheme for short-time working whereby the Government tops up the salaries of employees going part-time in a bid to avoid compulsory redundancies and retain qualified staff.
Their calls fell on deaf ears in the UK. Germany, on the other hand, introduced the measures when the recession took hold.
As a result, the German government is convinced unemployment in the country would be significantly higher than it is today and has just extended the scheme by another 18 months.
But experts over here are not persuaded short-time working will prove successful in the long-run and have raised concerns that the introduction of the scheme for recession-hit industries just “delays the inevitable” by keeping factories alive long after the needs of the economy have changed.
An initial glance at the unemployment trends of the two countries gives credence to Germany’s claims that it has kept unemployment under control.
Both the West Midlands and the German economies have a lot of similarities given their traditional strength in the manufacturing sector, particularly their automotive heritage.
Although inherited problems from the east of the country means the German unemployment rate nationally is hovering around the same mark as the UK, the rate at which joblessness grew during the year to September in the West Midlands compared to Germany presents a stark contrast.
Germany as a whole saw a relatively modest nine per cent increase in unemployment in the year to September, whereas the West Midlands experienced a 54 per cent surge during that time.
The German Federal Labour Agency said the increase would have been “much more drastic” in Germany had it not been for the introduction of short-time working and other labour market policy instruments.
The German ambassador to the UK Georg Boomgaarden believes the scheme has been a resounding success in not only keeping unemployment down but boosting domestic consumption levels.
“As far as jobs are concerned it was very important that we had the short-time labour scheme,” he said.
“It means that you work less hours and you get less in wages but you are not lost and the company doesn’t lose your competencies and qualifications.
“And it means you don’t lose your qualifications and you don’t have to work as a taxi driver when you were an engineer and four years later you will have forgotten everything and won’t have a job any more.”
Mr Boomgaarden compared Germany’s experience in this recession to the last economic downturn caused by the dot-com crisis when there was no short-time working scheme in place.
“When the dot-com crisis came some years ago it was used much less and many companies later were desperate to find qualified personnel when the boom came again,” he said.
“This time they learned from this and said ‘we don’t want to lose our qualified personnel, we will try to keep them under the scheme’.
“At the moment exports are picking up again and we are better in our competitiveness – it’s really working.”
As well as helping thousands of workers avoid the dole queue, short-time working has had the secondary effect of keeping consumption buoyant in Germany, the ambassador said.
Mood among consumers remains more upbeat and people are more willing to commit to bigger purchases if they don’t feel anxious about losing their job, a situation which many in the country believe helped far more than the UK’s VAT-based approach.
Mr Boomgaarden said: “There is one very important thing that consumption in this crisis didn’t really fall.
“Job security is a factor which drives consumption much more than any VAT or tax reduction.
“If you have job security, even if it’s because of short-time working which means the company will employ you full-time again as soon as they have better sales, you will have better consumption.”
But Bernard Casey, principal research fellow and specialist in the German labour market at Warwick Institute for Employment Research, said there were concerns both inside Germany and abroad that short time working was just “putting off the inevitable” and shying away from addressing the real long-term problems in the labour market.
“A lot of people tend to find the grass is greener on other sides of hills,” he said.
“Is there really a temporary short-term problem here or is there actually something rather fundamental? If there is, then we have to confront what is fundamental.
[It's fundamental, and you need to redefine the "full-time" on a fluctuatingly shorter level more appropriate to the age of robotics. Freezing the workweek at a pretechnology level while introducing waves of productivity enhancement is insane.]
“It puts off the inevitable. You can see this particularly in the motor industry where there is vast over-capacity. You can argue that keeping plant A, B or C alive doesn’t overcome the problem of vast over-capacity and at some stage these plants are going to have to close.
“We are pretending that they are not by pumping money into them. I think that’s a very big problem.”
11/25/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- What About Work-Sharing? by Alan Doster, ProgressIllinois.com (blog)
With unemployment jumping over 10 percent nationally last month and the midterm elections just a year away, Democrats are scrambling to find new ways to buoy the economy. In the past few weeks, a cadre of high-ranking lawmakers have coalesced around a "job creation" package, which Illinois' own Sen. Dick Durbin has been quietly writing. In a conference call earlier today, House Speaker Nancy Pelosi said her party has generated "a lot of good ideas" to stimulate the job market. Now, lawmakers who are wary of increasing the federal deficit in the near-term just need to be pushed to act. Ryan Grim has more:
The deficit debate in Washington misses the fundamental point, said House Speaker Nancy Pelosi (D-Calif.) on Tuesday, arguing that the primary objective for policy makers should be job creation -- without which, the deficit will explode as tax revenues collapse.
"The debate between deficit reduction and job creation is not a real choice, because we'll never have deficit reduction unless we have job creation. Of course we have to be sensitive to how this is paid for, but that doesn't mean we don't do it."
We've already discussed some of the most humane and stimulative ways in which the federal government could pump up the economy. One innovative approach we haven't covered is work-sharing. Pushed by economist Dean Baker, the idea is that instead of further extending unemployment benefits to provide relief to an ever-growing list of eligible individuals, the government would provide a tax credit to employers to shorten their current workers' hours (while leaving their pay unchanged) and hire additional workers to fill the resulting gaps. Baker, along with The Nation's John Nichols, recently discussed the proposal on GritTV (the relevant clip begins, 6:23 mins long - click on arrow in center of photo in *center of story):
The benefits of such a proposal are pretty self-evident. More people could keep doing the jobs they've always done. Those same workers would not see a drop in their income, so consumer demand should be left unchanged, as well. That means employers would have to hire more employees to keep their outputs up. And workers would have more paid leave, which many of them desperately need.
There are some potential downsides, including the possibility that employers could hire contract workers, allowing them to take a tax credit without actually increasing employment. However, 17 states have already implemented some form of work-sharing; the Labor Department estimates those programs have saved more than 146,000 jobs this year. Not a bad track record.
- Germany extends short working hours scheme, Irish Television Network via RTE.ie
Germany's cabinet today approved a 12-month extension of a popular scheme allowing firms to cut working hours which has helped keep a lid on unemployment in Europe's biggest economy.
The scheme, known as 'Kurzarbeit' - 'short-time working' - allows firms hit by the recession to cut costs by keeping employees at home or shortening their working hours but without making them redundant. The state then pays up to 67% of a worker's salary for a period of up to two years.
The latest data from September showed around one million workers were covered by the scheme.
The programme had been due to expire on December 31, 2009 and is now set to be extended by a year, although for firms applying next year the state will only pay out for a period of 18 months instead of 24 months.
Although Germany has suffered this year its worst postwar recession, the downturn has not been mirrored by a sharp rise in the number of people out of work.
Germany's raw unemployment rate fell to 7.7% from 8% in September, official data showed, as the country, which accounts for one-third of euro zone output, showed signs of recovery.
- Tough times ahead, warns Finance MEC, by Patrick Cull, (11/27) WeekendPost.co.za
CAPETOWN, Republic of South Africa (RSA) = Zuid Afrikas Republik - THE economic recession has resulted in the Eastern Cape seeing employment incomes hit by company closures, retrenchments and short-time working in all sectors, specifically manufacturing, and there is “the very real possibility of the complete disappearance” of some manufacturing industry, Finance MEC Mcebisi Jonas said yesterday.
Introducing the adjustments budget, Jonas said that as a result of the recession the social needs to be met by public spending were increasing, while the resources to meet them were contracting.
He said the weak recovery “will further expose the inherent vulnerabilities of our economy, in terms of the exacerbation of de-industrialisation, poverty, inequality and uneven development of the private sector”.
“These negative consequences are brought into sharp relief in the Eastern Cape and require decisive government action if they are to be mitigated.”
Jonas said Bhisho had developed a mechanism for engaging with both industry and organised labour “to jointly develop innovative solutions to the crisis, and to ensure we are able to leverage national support measures”.
To achieve enhanced service delivery in a “tightening fiscal environment” would, the MEC said, require “greater focus on the outcomes of provincial government spending and value for money; the critical interrogation of existing service delivery models and generally improved public sector management”.
Looking forward, he said, it appeared unlikely that economic conditions “will suddenly become much more favourable next year, particularly if the IMF is correct about a sluggish global recovery, and the fact that the South African economy lags behind the global economy”.
In addition employment growth lagged behind growth in GDP.
11/24/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- A way to avoid layoffs, by Mary Claypool, Monterey County Herald via MontereyHerald.com
In October, the unemployment rates rose in 29 states. In Monterey County, the unemployment rate went from 9.9 percent in September to 10.6 percent.
The good news is that more than half of the states added jobs in October. More than likely, the majority of the jobs were temporary, but it is still a positive sign because employers usually take the cautious road and initially hire temporary workers before they take the plunge and bring back full-time employees. This gives hope that 2010 will be brighter than 2009.
The number of people filing initial claims for state unemployment benefits was flat for the week ending Nov. 14, at 505,000, the lowest level since early January. Claims have hovered above 500,000 for 53 straight weeks.
If you are one of the many businesses faced with decreasing the hours of your workers, you may want to take a look at the Work Sharing Unemployment Insurance Program. The program allows for the payment of Work Sharing Unemployment Insurance benefits to individuals whose wages and hours have been reduced.
The program is considered a temporary and practical alternative to layoffs. Any employer who has a reduction in production, services or other conditions that cause the employer to seek an alternative to layoffs may participate in the Work Sharing program.
To qualify, a minimum of two employees, comprising at least 10 percent of your regular work force or a unit of the work force, must be affected by a reduction in wages and hours worked. The reduction in wages and hours worked also must be at least 10 percent.
Employees approved to participate in the program must meet regular unemployment insurance claim filing requirements. Benefits are paid weekly proportionate to the percentage of reduction in hours and wages.
For example, an employee normally works a five-day workweek and is paid $500. If the employee's workweek is reduced to four days, the employee's weekly wages would be $400. This is a 20 percent reduction in wages and hours.
The Work Sharing benefits for the employee are 20 percent of the unemployment insurance benefits the employee would receive if the employee were totally unemployed. If the employee's weekly unemployment insurance benefit amount is $300, the employee would qualify for $60 in Work Sharing benefits. This results in a reduction in gross wages of only $40 for that week.
The benefits of the program are that employees are retained during a temporary slowdown, and employers can quickly gear up when business conditions improve. Employers are spared the expense of recruiting, hiring and training new employees. Employees are spared the hardship of total unemployment.
For employers who need to reduce their work force permanently, Work Sharing can be used as a phased transition to layoff. Affected employees can continue to work at reduced levels with an opportunity to find other employment before an expected layoff. The program can be used in almost all types of business or industries.
Employers are charged for Work Sharing Unemployment Insurance benefits in the same manner as for regular unemployment insurance benefits. You can get answers to questions regarding employer charges at 916-653-7795.
For information or to participate in the program, call 916-464-3343 or write to DD Special Claims Office, P.O. Box 419076, Rancho Cordova, CA 95741-9076 to get a Work Sharing Plan Application. To download the application, see *www.edd.ca.gov/uirep/de8686.pdf. All Work Sharing claims are filed by mail.
Mary Claypool, executive director of the Monterey County Business Council, has 37 years of experience in economic, redevelopment and community development with Seaside and Monterey County. Send questions relating to small business to email@example.com or write to "Mind Your Business, P. O. Box 2746, Monterey 93940.
- Secondary Sources..., Wall Street Journal via blogs.wsj.com
... Creating Jobs:
On the Peterson Institute’s Real Time Economic Issues Watch, Jacob Funk Kirkegaard looks at labor lessons the Obama administration can draw from Europe. “What conclusions should the Obama administration draw from Europe’s success with work-sharing measures? With the US unemployment rate at 10.2 percent, it may be too late to expand “work sharing programs” from the current 17 state-level programs.
[It's never too late to move into the only general policy that can sustainably reverse downsizing.]
Government-supported “work sharing programs” similar to those in core Europe work to preserve existing employment rather than to create new jobs.
[Well, that would be Step One, wouldn't it, for an economy that is still not preserving existing employment on a huge scale. What planet does 'Funk' Kirkegaard live on? Does he seriously want to skip Step One, keep losing existing good jobs and have an even huger problem with Step Two? And who does he think is going to "create new jobs" - and in what skill areas now that virtually no sector, no industry, no skill area, no employee contract is safe?]
Hence such programs disproportionately benefit skilled workers, whom companies will prefer to “hoard,” as they are more likely to find employment elsewhere if laid off.
[Skilled-worker jobs are exactly the kind of good jobs we want to preserve. Is 'Funk' seriously suggesting we lowball good jobs and continue mass conversion to McJobs? Dumba dumbdumb.]
This type of insider-outsider dynamic has been very prevalent in Europe during the crisis, where increases in unemployment despite work sharing programs have been heavily concentrated among people on temporary work contracts.
[This jockey seems to be recommending switching permanent and temporary contracts = total disruptive nonsense.]
Additional protection for “insiders” is clearly not what the U.S. labor market needs at the moment.
[It certainly IS what the US labor market needs at the moment, and needs first, because good US jobs are being lost by the thousands every day and they are very difficult to get back. If we preserve them, they can slow the weakening of consumer demand and ease Step Two = more jobs for "outsiders." It seems here that Funk is using a confusing rhetorical device, the term "'insiders" is more often applied to insider trading, and Funk is trying to associate tens of millions of existing good American jobs with tens of thousands of insider-trader "jobs," a completely misleading association.]
Instead, in the short term, Congress should implement a temporary holiday for Social Security and Medicare payroll taxes for new hires.
[Ain't it amazin' how these guys, Krugman too, assume that US taxpayers' credit is infinite and we can keep imposing on it indefinitely?! We're already up to a deficit of $1.4 TRILLION and by 2012, a national debt of $12 trillion. Where to these child-brains want to draw the line in encumbering our children - stop straining to fill a long-frozen 40-hour day in the age of robotics, and ease into simply sharing the vanishing human work = a grassroots, organic, sustainable, market-oriented solution?!]
This could provide an urgently needed, powerful broad-based and immediately implementable job creation stimulus for the U.S. labor market.
[And further burden already struggling employees - ain't it wonderful how these guys keep thinking up more and more ways to ease the burden on those with more money by shifting the burden to those with less money?! We've had one anti-Robin-Hood scheme after another in the past year, and the crisis arose in the first place because of all the similar "steal from the poor and give to the rich" schemes of the previous 35 years since employees lost their bargaining power when the babyboomers grew up and replaced the labor surplus of the Depression around 1970.]
For the long term, Congress needs to get serious about multi-year funding for broad-based workforce skills improvement and retraining programs.
[Yeah? With what funds or credit now they've given it all to the bankers?]
The one-off funding for the Workforce Investment Act (WIA) included in the stimulus bill and the long-warranted expansion of Trade Adjustment Assistance (TAA) to services sector workers are welcome, but must be prolonged.
[Funk's whole thinking is topdown. The lethal flaw is that funding for the top sticks in the top in megasalaries and bonuses and never gets down. We have a black hole of money at the top - "trickle down" is a joke. We need more direct job action, and that would be enforcing our existing 40-hour workweek with an overtime-to-jobs conversion device (such as taxing overtime profits while exempting reinvestment in OT-targeted skills) and then creating more convertible overtime by downward-adjustment of the nearly 70-year frozen workweek.]
Only sustained funding will insure that the relevant skills-enhancing programs are in place when U.S. workers need them.
[And only a tax on overtime profits can provide sustained funding - all these jockeys assume taxpayer credit is infinite - we are currently getting a lesson to the contrary, which will keep getting clearer and clearer until these believers in The Government As Deus Ex Machina sober (or grow) up.]
With job losses in the current recession increasingly of a structural nature (meaning that workers will need to seek new jobs in a new industry [thanks to destructive ideas like his dismissal of "insider," ie: good, jobs], such programs will be more needed to avoid another jobless US recovery.”
[What planet...?? We have not "avoided another US recovery" - Funk hasn't noticed that we're in the midst of one? and isn't challenging the "recovery" part?? Are these guys actually making a living spinning this fuzz?]
- Surveys find public sector workers are better paid, by Paul Cullen, IrishTimes.com
Public sector pay and benefits are markedly superior to those in the private sector, even allowing for differences between the two workforces
THE DIFFERENCE in pay and working conditions between the public and private sectors is one of the most vexed issues in society and bears directly on any consideration of today’s industrial action by public sector unions.
The view of employers’ groups and many economists is that public sector wages are out of line and need to be seriously trimmed. The size of this “haircut” should take into account the more favourable working conditions and pensions public sector workers enjoy, it is argued.
The public sector unions point to the pension levy their members have already paid and claim that analyses of the pay differential between public and private sector fail to take into account differences in the make-up of the respective workforces. A belief that public sector workers have been or will be singled out for unfair cuts explains why so many are taking industrial action today.
So what are the relative pay levels in the public and private sectors? Most of the information comes from the Central Statistics Office (CSO), in particular its regular National Employment Surveys. Researchers at the Economic and Social Research Institute (ESRI) have also produced reports which attempt to explain the pay gap.
What the figures show consistently is that public sector earnings are higher than private sector earnings and have been so since the first round of public sector benchmarking in 2002. Both the CSO and the ESRI put the gap at about 20 per cent, after variations in age and qualifications are taken into account.
Some observers have claimed further analysis and adjustment is needed. Most civil servants work in Dublin, where wages are higher, it is pointed out. Others have questioned whether the data captures the true level of bonuses and perks available to high wage earners in the private sector.
Over half of all public sector employees have third-level qualifications, compared to less than one-third of private sector workers. In the public sector, many workers qualify for extra allowances based on their qualifications, but private sector workers are more likely to be assessed on the basis of performance than educational attainment. Workers in the private sector also tend to be younger – one-fifth are under 25, compared to less than 8 per cent in the public sector. This too could have a bearing on wages.
Analysis of the issue generally assumes that pay cuts have been pushed through for most private sector workers. However, this may be a journalistic misreading of the situation driven by the current problems of the media industry, where pay cuts have been widespread.
In contrast, surveys show that pay cuts in the rest of the private sector appear to be the exception rather than the rule for those still in employment. The Irish Times Ireland Today survey last week found that almost 70 per cent of people had not suffered a pay cut.
A survey of senior managers conducted by the Chartered Institute of Personnel and Development and Deloitte found that just one-quarter of respondents had implemented cuts in pay in the previous six months. Another piece of research by business consultancy Watson Wyatt found that 26 per cent of firms had cut pay.
CSO figures published last Friday show that in the industrial sector, hourly earnings including bonuses actually rose 4.2 per cent in the year to June. It was only in the financial sector that earnings fell, by 11.9 per cent. However, the figures show that even here, core earnings rose slightly and the fall in overall earnings was caused by a collapse in bonuses.
A pay freeze applies across the public sector, of course, where gross incomes dropped an average of 7.5 per cent with the introduction of the pension levy.
Earlier increases were still working their way through the system when the CSO published its most recent figures last month. These show that average weekly earnings in the public sector (excluding health) grew by 3.2 per cent in the year to June. Where wages fell in some sectors – by 3.1 per cent, for example, among An Garda Síochána – this was because of less overtime. These figures did not take account of the pension levy.
The differences: pay, pensions and holidays
According to the CSO, the raw gap in average hourly earnings between the public sector and the private sector was 47.6 per cent in October 2007. The gap in weekly earnings was calculated at 32.6 per cent.
These figures do not take account of variations in the characteristics of employees in both sectors, such as their level of education, gender or experience. With these factors, the pay gap was found to be 19.1 per cent in favour of the public sector: 14.8 per cent for males and 22.9 per cent for females.
The gap is biggest among low- earners and generally decreases as earnings increase. For the lowest earning 10 per cent, the gap was 25.7 per cent while for the top 10 per cent of earners, it was just 5.8 per cent.
The ESRI looked at pay trends in the period between 2003 and 2006 and found that the “premium” for working in the public sector rose over this period from 9.7 per cent to 21.6 per cent. Researchers added that this estimate was conservative as it did not take into account later pay awards.
The gap was estimated at 8 per cent at senior level and between 22 and 31 per cent among lower grades. For women, the public sector pay premium increased from 5 to 23 per cent over the period, while for men it moved from 14 per cent to 21 per cent.
The gap is at its lowest in the Civil Service and local authorities and highest in education, especially the third-level sector. Gardaí and prison officers enjoyed a high premium, while Army workers earn less than private sector equivalents.
It should also be remembered that workers in semi-States such as the ESB or RTÉ were not subject to the pension levy, and ESB staff were paid the last phase of the last national pay deal.
Public sector workers enjoy defined benefit schemes which increase in line with salary after retirement and many can retire early on pension. Entitlements vary depending on whether the person started work before or after April 1995 but in general, public service pensions are markedly better than those on offer in the private sector.
The 2007 benchmarking report found there were “significant differences” in pension provision between the public sector and the private sector; this gap has probably widened since as the problems of private pension funds continue to mount. This report estimated the higher cost of public service pensions as 12 per cent of salary for the grades covered by the benchmarking process.
The McCarthy report noted a number of “added years” arrangements. For example, gardaí are free to retire on full pension at the age of 50 (an effective 10 years of added service), teachers with 35 years’ service can retire from 55 on and a High Court judge can get 25 years added.
CSO figures put the average working week at 32.7 hours in the public sector and 35 hours in the private sector, while the 2007 benchmarking report put it at 39 hours in the private sector and 35-39 hours in the public sector.
The latter report also found that holiday entitlement was higher in the public service, with the gap widest for higher grades.
Public servants, once they have completed their probationary period, generally enjoy permanent employment unless they break the conditions of this employment.
The last benchmarking report opted not to take account of this security of tenure, given the full employment that pertained at the time. This is clearly not an argument that holds water now.
11/22-23/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Ladies' Shirtwaist Makers Vote to Strike, by William Niederkorn, 100 years ago today, 11/23/1909 New York Times via timestraveler.blogs.nytimes.com
Between 17,000 and 18,000 shirtwaist makers, about 70 percent of whom are women, voted last night to strike, and 40,000 are expected to stay out today. They demand recognition of the Ladies’ Waist-Makers Union, an increase of 25 to 30 percent over the current wage of $10 to $12 a week, and a workweek of 52 hours instead of the current 54 to 57 hours. At Cooper Union, Samuel Gompers addressed the largest of five gatherings of shirtwaist makers before the vote. “The conditions of the clothing trade, declared Mr. Gompers, were a blot on modern civilization as he knew through investigation. The clothing trade with its tenement house work, he said, and work under unsanitary conditions breaks the spirit of men and women, and makes children prematurely old.” Mr. Gompers told the audience: “There is something greater than the convenience or profits of Mr. Shirtwaist Maker at stake — there are the lives and the future of the men and women engaged in this work. You seem to be aroused now to your interests. It is time, more than time. I am only sorry that you did not organize long ago. This is the time, and if you let this occasion go by it may be generations before you again get the opportunity to improve your conditions.” The union’s organizer, B. Witaskin, said that several of the 250 shops affected in the city “are already negotiating to effect a settlement in accordance with the demands of the strikers.” 40,000 Called Out in Women’s Strike; Makers of Shirtwaists Vote to Quit Work After Hearing Gompers Speak; More Pay, Shorter Hours; Cooper Union Filled with Cheering Throng — Strike Order Goes Into Effect Here To-day
- Germany to extend shorter hours scheme - ministry, Reuters via Forbes.com
BERLIN, Germany - Germany's labour minister has decided to extend a short-hours work scheme with the aim of avoiding mass redundancies, a ministry spokesman said on Sunday.
Labour Minister Franz Josef Jung had decided that starting next year companies could make use of the 'Kurzarbeit' facility for 18 months, the spokesman said.
Companies are currently allowed to make use of the provision for 24 months as part of government efforts to tackle the economic downturn, but that period had been due to be scaled back to six months from the beginning of next year.
Under the provision, the Labour Office pays 50 percent of all social security contributions of affected workers, and this figure can rise to 100 percent if staff get training courses during their time off. From the seventh month the provision is in use, the Office automatically pays all the contributions.
While unemployment has risen steadily in many of Germany's leading trading partners, it has been largely kept in check here by the subsidy scheme that encourages firms to shift employees to part-time work rather than fire them.
German unemployment fell unexpectedly in October, its fourth straight decline. But most economists expect joblessness to rise steadily over the course of 2010 as firms, which are operating well below full capacity, begin to pare back their workforces.
(Reporting by Thorsten Severin, writing by Paul Carrel; Editing by Jon Loades-Carter)
(email@example.com; +49 30 2888 5214; Reuters Messaging: rm://firstname.lastname@example.org)
11/21/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- At software powerhouse SAS, the good life under siege - Rivals include open-source software and I.B.M., by Steve Lohr, (11/22) NY Times via El Paso Inc via elpasoinc.com
The SAS Institute is the world's largest private software company and among the best places to work. But SAS's specialty, a lucrative niche called business intelligence software, is becoming mainstream. Free, open-source alternatives to some of the company's products are increasingly popular. On the other end of the spectrum, the heavyweights of the software industry -- Oracle, SAP, Microsoft and, especially, I.B.M. -- are plunging in and investing billions of dollars.
James Goodnight, co-founder and chief executive of SAS, has a message for rivals: “No one can match our toolbox.” (photo caption)
SAS subsidizes a company day care center and preschool. There are also company doctors and nurses providing free primary care for employees. (photo caption)
CARY, N.C. - A tour of its carefully tended, 300-acre corporate campus here leaves little doubt why surveys, year after year, rate the SAS Institute [one of our case studies], the world’s largest private software company, among the best places to work.
There is the subsidized day care and preschool. There are the four company doctors and the dozen nurses who provide free primary care. The recreational amenities include basketball and racquetball courts, a swimming pool, exercise rooms and 40 miles of running and biking trails. There is a meditation garden, as well as on-site haircuts, manicures, and jewelry repair. Employees are encouraged to work 35-hour weeks.
Academics have studied the company’s benefit-enhanced corporate culture as a model for nurturing creativity and loyalty among engineers and other workers. Six years ago, in a report on “60 Minutes,” Morley Safer called working at SAS “the good life.”
But that good life is under threat today as never before. SAS’s specialty, a lucrative niche called business intelligence software, is becoming mainstream. Free, open-source alternatives to some of the company’s products are increasingly popular. On the other end of the spectrum, the heavyweights of the software industry — Oracle, SAP, Microsoft and, especially, I.B.M. — are plunging in and investing billions of dollars.
“It will be a dogfight,” says Bill Hostmann, an analyst at Gartner. “SAS has never faced a competitor like I.B.M. And I do think I.B.M. sees SAS as a big, fatted cow.”
The term “business intelligence software” applies to a wide range of products and services, but all the technology is aimed at helping businesses mine nuggets of insight from mountains of data. SAS has traditionally specialized in advanced software to analyze huge data sets and to generate predictive statistical models for large corporations and government agencies.
Credit card companies, for example, use SAS to detect unusual buying patterns in real time, and to spot potentially fraudulent charges. Giant retail chains use SAS to tailor pricing and product offerings down to the store level. Telecommunications companies use SAS to identify the few thousand customers, among millions, most likely to switch to another cellphone carrier, and to aim marketing at them. SAS software is also used to parse sensor signals from North Sea oil rigs, combined with weather and structural data, to predict failure of parts before it happens. Of the 100 largest companies worldwide, 92 use SAS software.
But as the stream of companies’ collected data turns into a torrent, SAS and other software companies are trying to find new ways to harness it. The information is generated not only by computerized systems for tracking operations, customers and sales. It also comes from new data sources like Web site visits, social network chatter and public records accessible over the Internet, as well as genome sequences, sensor signals and surveillance tapes, all in digital form.
This data explosion, experts say, is an untapped asset at most companies, which lack the tools and skills to exploit it. Yet the long-range potential, they say, is to use this data for far more fine-grained analysis of markets, customer behavior and operations, making business more of a science and less a seat-of-the-pants art.
“Now, the data is available so business can move toward evidence-based decision-making,” says Erik Brynjolfsson, an economist and director of the Center for Digital Business at the Massachusetts Institute of Technology. “This market is a huge opportunity.”
That opportunity is not lost on SAS. “Our advantage is the incredible depth of our technology, developed over years and applied to specific industries,” says James H. Goodnight, the chief executive and a co-founder of SAS. “No one can match our toolbox.”
Indeed, no one underestimates SAS’s technical prowess. The big question is whether the company’s seemingly pampered culture can embrace the higher-octane institutional metabolism that it will need to succeed.
“We know we have to change — no question about it,” says Jim Davis, 51, a senior vice president at SAS. “Our market space has changed dramatically in the last 18 months or so, more than at any time over the 33-year history of the company. We can’t sit back. Things are only going to get faster.”
THE company traces its roots to a time when computing was costly and for the few. Originally called Statistical Analysis System, it was founded in 1976 by Mr. Goodnight and three colleagues from the agricultural statistics department at North Carolina State University. Its techniques were initially used to calculate the intricacies of soil, weather, seed varieties and other factors to improve crop yields.
To build an audience, Mr. Goodnight spent nights packing up boxes of computer tapes and manuals, which he sent to university and corporate researchers. Soon, companies wanted him and his academic colleagues to develop software tools tailored for industry. In 1976 at a users’ conference, 300 or so people showed up, many from business.
“That was pretty much an ‘aha’ moment for us, that it was time to expand beyond the university,” Mr. Goodnight recalls. “It was a little scary, cutting the academic umbilical cord. But I was convinced we could do it.”
He and his colleagues at SAS developed their own programming language and software tools, and designed them for eggheads like themselves. Users were analysts with Ph.D.’s, working with programmers and employed by the largest companies at the forefront of using computing in their businesses, including banks, national retailers, insurers and drug companies.
SAS invested heavily in research and development, and even today allocates 22 percent of the company’s revenue to research. The formula has paid off in steady growth, year after year. Revenue reached $2.26 billion in 2008, up from $1.34 billion five years earlier.
Yet the company also faces the classic challenge of being the innovative pioneer — enjoying rich profit margins but facing new competition from rivals seeking to gain market share with lower prices and substitute technology.
In the last two years, the major software companies have scooped up companies in the business intelligence market. Among the larger moves, SAP bought Business Objects for $6.8 billion, I.B.M. bought Cognos for $4.9 billion and Oracle picked up Hyperion for $3.3 billion.
Still, those companies compete in the broad swath of the business intelligence market for reporting and analysis products. Such data on sales, shipments, customers and operations amount to a numbers-laden portrait of the recent past. The SAS stronghold is a more sophisticated kind of software typically called “advanced analytics and predictive modeling,” which uses historical and current data to try to peer into the future and model likely outcomes.
The competitive thrust that really grabbed SAS’s attention came in late July, when I.B.M. announced that it planned to pay $1.2 billion for SPSS, a maker of predictive modeling software. I.B.M. has placed SPSS and Cognos into a new business analytics and optimization group. That business will be supported by 200 scientists, and the company has said it will retrain or hire 4,000 consultants and analysts to work in the group.
“This is the big growth strategy for I.B.M., the company’s next big play for this decade,” says Ambuj Goyal, a computer scientist who is general manager of I.B.M’s business analytics software unit. “SAS comes from the legacy world of statisticians and programmers. The real opportunity is in deploying this technology broadly in corporations.”
To counter I.B.M. and others, SAS is looking to forge a tighter relationship with a big technology services company. It is also shortening product development cycles to 12 to 18 months, down from 24 to 36. “That’s what the market expects,” Mr. Davis says.
The most sweeping change is the company’s move toward the Internet model of software delivery — as a service that customers tap into over the Web, much as Google and other Internet companies do. SAS has dipped its toe in, with some initial products. But a major expansion is planned, supported by a sprawling $70 million data center scheduled to begin operating next year.
The remotely delivered software is part of a drive to broaden the market for SAS technology beyond an elite corps of quantitative analysts and into the rank-and-file of corporate professionals.
Analysts say the company’s strategy looks sound, even if the outcome is uncertain. “SAS has to do a lot of things right to succeed,” says Peter Sondergaard, senior vice president of research for Gartner. “But if it executes correctly, it could be a winner.”
ACROSS its campus here, there are signs that the SAS culture is evolving with the times. Rick Langston..a senior software manager who joined the company 29 years ago, smiles and shrugs when asked about the 35-hour workweek. After leaving the office, Mr. Langston routinely checks on work e-mail at home.
These days, he explains, SAS is a global company with far-flung project teams, and overnight e-mails can resolve problems and speed things along. Deadline work to meet product development schedules, he adds, can mean long hours at times. “But this is certainly not a place where you are working 60-hour weeks, week in and week out,” he said.
To be sure, the corporate cocoon in Cary can breed insularity. SAS, for example, was slow to recognize the brewing challenge from free, open-source alternatives to some of its products. A free programming language and set of software tools for statistical computing, called R, has become increasingly popular at universities and labs.
The company shifted course earlier this year and modified its software so programs written with R work seamlessly with SAS technology. “Shame on us for not engaging more with the open-source community,” says Keith Collins, senior vice president and chief technology officer. “But we’re committed to doing that now.”
THE architect of the SAS culture is Mr. Goodnight, a lanky, laconic billionaire. The benefits have built up gradually over the years as a series of pragmatic steps, he says. The day-care program began after a valued employee was about to leave to take care of her young child. The on-site medical checkups grow out of the belief that “good health is good business,” he says.
Today, SAS estimates that its health care center saves the company $5 million a year, by providing care more cheaply than an outside insurer and by not having employees leave the campus for doctor’s visits. Employee turnover at SAS averages 4 percent a year, versus about 20 percent for the overall software industry.
The office atmosphere is sedate. There are no dogs roaming the halls, no Nerf-ball fights, no one jumping on trampolines — no whiff of Silicon Valley. The SAS culture is engineered for its own logic: to reduce distractions and stress, and thus foster creativity.
“The SAS model is sensible and durable; there’s nothing faddish or ephemeral,” says Richard Florida, a professor at the Rotman School of Management at the University of Toronto, who has studied SAS and is the author of “The Rise of the Creative Class.”
During the technology boom at the start of this decade, SAS considered a drastic change in its model: going public. Goldman Sachs bankers were brought in as advisers, and in 2000 SAS recruited a former Oracle executive, Andre Boisvert, as its president.
Under Mr. Boisvert, SAS installed a new financial reporting system and paid the sales force incentive commissions rather than salary only. But when technology stocks plummeted, the appeal of selling shares to the public also receded. Mr. Boisvert resigned from SAS in 2001 and is now an independent investor and consultant.
Mr. Goodnight recalls those days as a brief period of New Economy surrealism, and going public as a path wisely avoided. SAS, he says, is a culture averse to the short-term pressures of Wall Street, which he characterizes as “a bunch of 28-year-olds, hunched over spreadsheets, trying to tell you how to run your business.”
Unlike many other tech companies, SAS has had no recession-related layoffs this year. “I’ve got a two-year pipeline of projects in R & D,” Mr. Goodnight says. “Why would I lay anyone off?”
Mr. Goodnight, though 66, has no plans to retire himself. His fingerprints, colleagues say, remain all over the business, especially in meeting with customers and in overseeing research.
He is not only a statistician, but also a bit of gambler who enjoys calculating his chances. For example, he is co-author of a paper that simulated millions of possible outcomes in blackjack.
Mr. Goodnight regards his new rivals the way a confident card player might. He likes the odds, and he likes his hand.
“We’re pushing as fast as we can to stay ahead — on the cutting edge of everything,” he says. “We’ll do fine.”
- County sheds $3.3 million in library spending, by Rick Radin, ContraCostaTimes.com
CONTRA COSTA COUNTY, Calif. - Contra Costa County's libraries are on their way to shaving $3.3 million, or 11 percent, of a $24 million budget by negotiating with cities to share costs of providing service, along with a host of budget cuts.
The county library system has reached deals with many of the 17 cities and towns that host 19 libraries. Contra Costa County controls five branches in unincorporated areas.
Each community was offered 35 hours a week of library service, including librarians and computer databases, in exchange for taking over maintenance costs, including utilities, janitors and landscaping, county Librarian Anne Cain said.
"Some of the libraries are open 60 hours a week. Some might be open less than 35 hours," Cain said. "They can provide more than the 35 hours if they pay for it themselves."
The county presented the options to the cities April 1. Some agreements have been completed, and others remain under discussion.
The county has also reduced expenses for secretaries and databases, eliminated vacant positions and cut other costs, Cain said.
The reductions have come as library use rose 9.7 percent during the 2008-09 fiscal year, in part because of the recession, she said. More people are flocking to the libraries to use computers to look for jobs, reading is up and families are taking advantage of low- or no-cost educational programs.
Antioch [city of..] reduced its library hours from 52 a week to 35, said Lonnie Karste, a project manager for the city. The city had used $160,000 from developers to keep the library open 52 hours a week since July 1, when the county cut service. Now, those dollars are going to other things, Karste said.
Concord was paying for exterior maintenance on its library, which is part of its civic center complex, said Assistant City Manager Valerie Barone. The city has taken over interior upkeep from the county and will keep the library open 52 hours a week by paying for an additional 17 hours of service.
Danville has been paying for all the maintenance costs since it opened a new library in 1996, Town Manager Joe Calabrigo said. The town is paying for 25 hours on top of its 35-hour county allotment, he said.
Walnut Creek is building a new library and now has a downtown branch and a second building on Oak Grove Road that the county owns. The city was unable to get the county to pay for maintenance for that building, so it is paying, Assistant City Manager Lorie Tinfow said.
"They asked us to take over the maintenance. We felt it was not really appropriate," she said.
Walnut Creek is kicking in for 21 extra hours of service a week at both branches for a total of 56.
Another benefit for Contra Costa is establishing a standard for the cities to replace piecemeal deals done over the past 60 years, Cain said.
"We had different situations where the county was paying for some things and the cities others," she said. "This was an opportunity to provide equity among the cities."
# East Contra Costa Antioch: Service reduced from 52 to 35 hours; city pays for maintenance.
# Bay Point: 18 hours a week and county pays for maintenance.
# Brentwood: 56 hours a week, city pays for 26 hours and maintenance.
# Oakley: 41 hours a week, city pays for six hours and city and school district pay for maintenance.
# Pittsburg: 35 hours a week, city takes over maintenance.
Central Contra Costa
# Clayton: 44 hours a week, city pays for nine hours and maintenance.
# Concord: 52 hours a week, city pays for 17 hours and maintenance.
# Lafayette: 56 hours a week, city pays for 21 hours and maintenance.
# Martinez: 35 hours a week, county pays for maintenance.
# Moraga: 35 hours a week, town takes over maintenance.
# Orinda: 60 hours a week, city pays for 25 hours and maintenance.
# Pleasant Hill: 35 hours a week; county pays for maintenance in exchange for city funding of a waste recycling program.
# Walnut Creek Main: 56 hours a week, city pays for 21 hours and maintenance.
# Walnut Creek Ygnacio Valley branch: 56 hours a week, city pays for 21 hours and maintenance.
West Contra Costa
# Crockett: 24 hours a week, community pays for six hours, county pays for maintenance.
# El Cerrito: 41 hours a week, city pays for six hours and takes over maintenance.
# El Sobrante: 35 hours a week, county pays for maintenance.
# Hercules: 45 hours a week, city pays for maintenance.
# Kensington: 35 hours a week, county pays for maintenance.
# Pinole: 24 hours a week, county pays for maintenance.
# Rodeo: 24 hours a week, community pays for six hours, county pays for maintenance.
# San Pablo: 39 hours a week, city pays for four hours and maintenance.
San Ramon Valley
# Danville: 60 hours a week, city pays for 35 and maintenance.
# San Ramon Main: 56 hours a week, city pays for 21 hours and maintenance, except for utilities and janitorial.
# San Ramon Dougherty Valley branch: 50 hours a week, Diablo Valley College pays for 15; city pays for maintenance.
11/20/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- State program reduces layoffs - Six local firms use ‘Shared Work’ plan, by Justin Willett, Columbia Daily Tribune via columbiatribune.com
[See also yesterday's story (#1) on Missouri's worksharing program.]
COLUMBIA, Mo. - A state program designed to help employers avoid layoffs has saved more than 37,000 jobs in the state this year, including 284 jobs in Mid-Missouri.
That was the message delivered yesterday by Larry Rebman, director of the Missouri Department of Labor and Industrial Relations, during a visit to Columbia’s Watlow Electric Manufacturing Co. plant to promote the state’s *Shared Work Program.
[And click here for other states' and nations' worksharing programs.]
The program was established in 1987 as the Shared Work Unemployment Compensation Program. It allows employers facing a decline in business to divide available work among a group of employees instead of laying them off. The affected employees receive a portion of their unemployment benefits while working reduced hours.
For example, a company facing a 20 percent reduction in production could lay off one-fifth of its work force or — under the Shared Work Program — it could retain its total work force on a four-day workweek. The reduction from 40 hours to 32 hours cuts the company’s production by 20 percent without layoffs.
Under the example, the affected employees would receive their wages for four days of work and receive a portion of unemployment compensation benefits equal to 20 percent of the benefit the employee would have received had he or she been laid off.
Rebman said there are 461 employers participating in the program, and through their participation, they have maintained a work force of 37,473 employees. Six Columbia employers are participating in the program, he said.
St. Louis-based Waltow Electric designs and manufacturers components of industrial thermal systems, including heaters, temperature sensors, controllers, system assemblies and software. Its clients include the semiconductor processing, medical device, diesel engine and food service equipment industries.
The Columbia Watlow Electric plant applied for the Shared Work Program in August 2008 and began participating two months later, said Carole Eilers, plant human resources manager.
Despite its participation, the company still laid off some workers last year. Twenty-two nonmanufacturing positions were cut at the Columbia plant in December as part of a companywide support staff reduction. In November, the plant cut 30 manufacturing positions because of decrease in demand for the industrial heaters produced at the plant.
Rob Gilmore, general manager of Watlow’s flexible heater business line, said the decline in the company’s business was too steep to totally avoid layoffs, but the Shared Work Program made fewer layoffs necessary. The plant has had no layoffs this year.
Gilmore said the program helps employers respond when business picks back up. “To lay off everybody and to try to hire and retrain when business picks up is very difficult,” he said.
Maria Gearhart, who has worked for Watlow for 21 years, said the company helped employees fill out the paperwork and they didn’t miss any pay. “We got to keep a lot of our people,” she said, “and keep our bills paid.”
Watlow employee Nikki Breuer said the plant’s participation in the program helped keep up employee morale.
“This helped relieve some stress,” she said.
Reach Justin Willett at 573-815-1715 or e-mail email@example.com.
- Program allows partial unemployment benefit, by Robert Kelly, St. Louis Post-Dispatch via stltoday.com
ST. LOUIS, Mo. - Missouri wants more employers to take advantage of an existing state program that allows workers whose hours have been cut to draw partial unemployment payments. The Shared Work Program aims to encourage employers to reduce hours rather than lay off workers.
Though the program has been around for more than 20 years, it still lacks wide participation from employers.
"This program allows employers to reduce their labor costs without having to lose their experienced work force," Larry Rebman, director of the Missouri Labor Department, said Thursday in a news release. "It is a win-win for employers, employees and the state."
Missouri started the program in 1987, but it was little known or used until employers began widespread layoffs and reducing hours during the current recession.
The state's unemployment rate last month stood at 9.3 percent, down from 9.5 percent in September.
The program already has had an 87 percent increase in new participation this year alone, but it is still used by just 461 Missouri employers, according to Rebman. More than 37,000 workers, each working fewer than 40 hours a week, are enrolled in the state program and receiving partial unemployment benefits, he said.
The labor department director said 113 St. Louis-area companies were participating in the Shared Work Program. One local firm highlighted by Rebman was Sunnen Products Co. in Maplewood.
He said the program had allowed Sunnen employees to supplement their wages while helping the company reduce its labor costs.
Lee Holmes, the Sunnen human resources manager, said the company, which employs more 400 people, went to a 32-hour workweek early this year to cut costs.
Holmes said some of Sunnen's workers might have left if the partial unemployment benefits hadn't been available.
Sunnen, which makes precision bore-sizing systems, already had reduced its work force from a peak of nearly 600 workers a decade ago, Holmes said.
The Shared Work Program "has kept us from losing even more people," he said.
In fiscal year 2009, the state Division of Employment Security paid $12.4 million in Shared Work benefits. If the same employers who participated in the program had laid off all the employees getting those benefits, division officials estimated that those workers would have received $45.9 million in regular unemployment benefits.
Employers can get more information on the program by *www.SharedWork.mo.gov.
11/19/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Supervisors question wisdom of furloughs, by NICK REISMAN, (11/18 10:10pm) Glens Falls Post-Star,NY via PostStar.com
FORT EDWARD, N.Y. -- Washington County supervisors are skeptical that forcing more than 800 county workers to take two unpaid days off in 2010 can be accomplished without consent from the county's public employees union.
Supervisors are also split over whether the plan, which would save the county nearly $200,000, should be attempted at all.
Easton Supervisor John Rymph said the plan is untenable for many employees.
"I don't think you're fair on forcing a furlough on people who have no defense," Rymph said.
[So in other words, these geniuses would rather lose their jobs completely than just take a couple of days off without pay. They wonder why there's a recession when their whole approach is biassed toward total downsizing instead of mere timesizing. Brilliant!]
Kingsbury Supervisor Jim Lindsay said many employees have registered protests over the plan.
"I've been getting a lot of calls from people saying furloughs are not going to work," Lindsay said.
Furloughs have been used in both the private and public sectors recently as a way to avoid layoffs. During a furlough, workers cannot receive payment and cannot have contact with their office.
[Never heard THAT before. Who came up with that piece of fear-mongering absolutism?]
It is unclear how many jobs would be saved if the Board of Supervisors keeps the furlough plan in the budget.
[So quit blowing smoke and just do the math! It ain't rocket science.]
For supervisors, questions about the plan focus on the public employee unions, which include the Civil Service Employees Association, Teamsters International and the union that represents sheriff's officers.
Supervisors plan to meet this week with union negotiator Larry Paltrowitz to discuss furloughs.
Jock Williamson, the local CSEA president, has said that any furloughs would have to be negotiated during contract talks.
Budget Officer Gayle Hall said the choice is between accepting furloughs or having department heads lay off employees.
"If there's not agreement, then there will have to be more layoffs because the money is not there," she said.
The feedback she has received from county employees has been split, she said.
"I've had some come up to me and say they aren't happy about it," she said. "Others have said they don't agree with it but would rather people not lose their jobs."
The county has either laid off or eliminated 14 positions over the last year. At the same time, the county has reduced the hours of many employees from 40 to 35 hours a week.
Unemployment insurance paid to ex-county employees has grown to $90,305 in 2009.
Granville Supervisor Rodger Hurley said the cost of unemployment insurance payments shouldn't stop the county from considering layoffs.
"I've always supported furloughs because we don't have the knowledge of how to downsize and right-size," he said. "Unemployment insurance ought not to be a major barrier in the situation."
Posted in Local on Wednesday, November 18, 2009 10:10 pm
- Missouri's Labor Dept. chief, in St. Louis, lauds job-saving efforts, AP via fox4kc.com
[See also tomorrow's story (#1) on Missouri's worksharing program.]
ST. LOUIS, Mo. — Missouri's Labor Department director says the *Shared Work Program has saved over 37,000 jobs in the state, and saved the state money, too.
[Click here for all the worksharing states' programs.]
Larry Rebman made those comments Thursday during a visit in St. Louis.
The program is offered as alternative to layoffs to employers facing a reduction in available work. Employees receive a portion of unemployment benefits while working reduced hours.
Rebman says 461 employers are participating.
The Missouri Division of Employment Security paid $12.4 million in Shared Work benefits in fiscal 2009. Labor Department officials say that if all of the workers had been laid off, they would have received nearly $46 million in benefits.
- [And then there are still people who talk about "forcing" employees to work less for the same pay (and presumably giving them the "free choice" to work more for less pay?) -]
The American Version of the French 35-Hour Workweek Model, by Veronique de Rugy, National Review Online (blog) via NationalReview.com
[Here's another freedom-loving rightwinger who''s afraid of the most fundamental freedom, free time.]
Back in the '90s, the French government thought it would be great idea to force employees to work fewer hours each week (with no salary reduction) so that employers would have to hire more people. The idea was basically to use two people to do the job of one in order to reduce unemployment in the country.
While this model hasn't worked as well as the French government hoped it would (see *this paper, for instance [and there are an equal number of papers "proving" the contrary - and a majority of the "unhappy" French voted on the left in the presidential elections of 2004(?) but LePen got into the finals instead of Jospin because the left was more diverse and divided and the French only had an unnuanced (and unrepresentative) "first past the post" electoral system])
[unemployment was 12.6% in 1997 when the French voted in the 35-hour workweek - there was really no choice since even the previous right-of-center government had a voluntary version going, the "Robien Law," which was working more slowly], and 8.6% in 2001 after it was fully implemented and before the US-led recession hit France - so who's complaining? - their only problem was, they refroze the workweek again at the 35-hour level and their rising levels of productive technology required lower workweek levels than that], the Democrats are thinking that it would be great idea to spend roughly $600 million and try this in the U.S.
Senate Democrats crafting a job creation bill are considering a proposal to give money to workers who cut their hours in order to avoid layoffs.
A bill sponsored by Sen. Jack Reed (D-R.I.) would give unemployment compensation to employees who accept a reduced work schedule to allow their companies to avert layoffs or to hire more employees. Reed's proposal for work-sharing was mentioned during the Senate Democrats' lunch Tuesday, when Majority Leader Harry Reid (Nev.) announced that an initiative focusing on jobs would soon be a priority, Reed's office said.
Democratic Sens. John Kerry (Mass.), Paul Kirk (Mass.) and Patrick Leahy (Vt.) have signed on as co-sponsors.
I am not even sure where to start.
[Bring it on, baby. We're ready - "Make our day!"]
How can these guys think that making employees more expensive, rather than less, is going to help create jobs?
[Easy. More employees with more money means more consumer spending and a more marketable productivity - it means leaching money out of the black hole in the upper brackets and getting it back in circulation, reversing the deadening effect of hyper-concentrating the nation's money supply in the top 1% of the population or less, where they are far beyond being able to spend it and can't even find sustainable investments for those off-the-scale figures.]
This model increases the cost of labor and reduces the incentives for employers to hire people without subsidies.
[Does the astronomical pay of CEOs recently reduce the incentives to hire them? Does the astronomical pay of sports stars or movie stars reduce the incentives to hire them? Does Veronique like the situation today where 5000 desperate resumes come in for 5 open positions? These people are willing to work for peanuts, but there are still only 5 jobs available so 4995 people are going to stay unemployed. And those that do get hired are going to be so insecure, they'll submit to forced overtime while their nextdoor neighbor can't find anything. And Veronique, do you disagree with the 175 years when we cut the workweek from over 80 to 40 and "reduced the incentives for employers to hire people without subsidies"? Did that "not work as well as government thought it would"? FDR blocked the 30-hour workweek bill in 1933 and after just two years of the alternative = socialism and government as the employer and charity of last (which became FIRST) resort, he realized his mistake and managed to get a 44-hour through in 1938 with cuts of 2 hours a year for 2 years - hence the 40-hour workweek. Unemployment was 19.0%, 17.2% and 14.6% over those three years. Employers didn't need subsidies from government - they just needed the management smarts and skills to hire their own markets. You can't count on the "deus ex machinas" of Exports or Subsidies forever and the employers that "need" government subsidies, like GM and Chrysler but not Ford, just shouldn't be in business.]
Also, what ends up happening, as we saw in France, is that employers don’t hire more people
[yes, they do - unemployment was 12.6% in 1997 when the 35-hour workweek was voted in and 8.6% in 2001 after it was fully implemented and before the US-led recession hit France - employers DID hire more people - it takes data window manipulation to make your invalid point]
— employees' work hours are reduced, but their workloads aren’t.
[Some workloads aren't reduced - by the unskilled managers, and some workloads are reduced - by the skilled managers. Some employees don't realize their greater bargaining power now that they're not such a surplus commodity so they put up with work compression, some do realize their new power so they don't put up with it.]
It increases the stress of employees in the workplace [only in some workplaces, as is the case in all transitions} and leads to the use of more sick days [only in some companies].
[In many other conpanies, employees come to work more rested, less stressed and use fewer sick days.]
Finally, employees see their salaries frozen to compensate for the increase in labor costs.
[As their salaries were anyway. In the US, once the babyboomers grew up, entered the job market around 1970 and replaced the labor surplus of the Depression, real wages immediately stagnated. That means their salaries were frozen, Veronique, and if they weren't frozen, the expensive were laid off to pay for the raises of the survivors, who didn't last because the layoffees took longer and longer to get rehired at lower and lower salaries doing less and less consumer spending to purchase less and less of their own overall productivity, so we were into the self-fueling downspiral of downsizing we see today which is lowering us into the third world.]
Overall, it is a terrible idea.
[So the 80-hour workweek is a great idea? Or the 40-hour workweek forever, regardless of waves of worksaving technology which therefore give us no greater freedom but just drag government deeper and deeper into the tax&debt intensive roles of employer and charity of last resort? There are entire factory systems in New England called "lights-out manufacturing" with zero employees - so you don't need the lights on. Who's going to buy that output, Veronica? As Reuther said to Ford when challenged with "Let's see you unionize these robots!" - "Let's see you sell them cars." Better think this through more thoroughly, lady.]
- Innovation update - Merkel: Jobs Program To Be Extended, AP via TheStreet.com
BERLIN, Germany — The German government plans to extend a state-funded jobs program *["Kurzarbeit"] through 2010 in an effort to keep people working while companies ride out the global economic crisis, Chancellor Angela Merkel said Tuesday.
[Click here for other countries' worksharing programs (scan down below the US states' programs).]
Merkel said the details were still being discussed, but it was expected the program would be extended for 12 months. It was due to run out at the end of 2009.
Under the program employees work shorter hours for the same money. Up to 67 percent of the difference is paid by the government.
The program has kept several million people in work and helped keep down Germany's jobless rate. Merkel said it was still needed as the nation has not yet recovered from the global economic downturn.
11/18/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with [notes & comments] by Phil Hyde (email@example.com) unless otherwise initialed -
- Maryville company restores cut hours, salaries; says workers deserve it, by Emily Stroud, WBIR.com
When the economy started to slide, DENSO Manufacturing Tennessee, Inc. wanted to avoid layoffs, so the company cut back salaries and hours instead.
Now the Maryville business looks forward to better times ahead.
"We are cautiously optimistic," DENSO Senior Manager Bob Booker said.
Increased demand for car components is driving up production, restoring cut pay and cut hours for hundreds of workers.
"Our salaried associates who have been at a 5% pay cut, their pay will be restored to 100% as of January 1, 2010," Booker said.
DENSO makes components for cars including alternators, starters, and electronics. Increased demand for those parts allowed the company to not only restore cut pay for 700 salaried workers but also return 1,800 hourly workers to [technologically obsolete] 40-hour work weeks in July.
"Many of those associates are currently working overtime as the demand for products increases," Booker said.
He credits a government program for jump starting demand.
"Of course 'Cash for Clunkers' was part of that, but we have seem some growth following that program," Booker said.
'Cash for Clunkers' also revved up sales at local car dealerships.
"It took our inventory down to nothing. Most dealerships were blank lots on new cars for a couple, three months," Gary Christian said. Christian is the new car manager at Rick McGill's Airport Toyota.
Christian said he's not surprised DENSO is ramping up production because Toyota is producing more cars, and folks at the dealership are selling them.
"Business is not what it was two years ago or even earlier than that, but it's coming back. Every day gets a little bit busier, we get a little bit more traffic," Christian said.
Business growth helped DENSO reward its workers who accepted cuts when business was down.
"All of our associates at DENSO work hard, and they do a really good job, so when the business conditions enabled us to do that, we wanted to get them back to that level we feel like they've earned and deserved," Booker said.
- Taking Sides Over Need for Jobs Bill, by David Wessel, Wall Street Journal via online.wsj.com
Unemployment is shaping up as a key battleground in the midterm elections. WSJ's Economics Editor David Wessel says the Obama administration is keenly aware, and looking at smaller stimulus follow-ups to generate jobs growth. (Video caption)
With the unemployment rate at 10.2% and rising, pressure to do something -- anything -- to create jobs is mounting. The question is what the U.S. government can, should and will do about it.
One camp says: Just wait. They argue the economy is growing again, albeit slowly, along the following lines: first, employers stop firing workers; second, employers extend the hours of their workers; third, employers, confident of recovery and unable to meet demand without more labor, start hiring.
Unemployment is shaping up as a key battleground in the midterm elections. WSJ's Economics Editor David Wessel says the Obama administration is keenly aware, and looking at smaller stimulus follow-ups to generate jobs growth.
"Given the large dose of monetary and fiscal stimulus we already have pumped into the patient, and the signs of a beginning recovery, it is probably better at this point to take a wait-and-see approach," advises Gregory Mankiw, the Harvard University economist who was among President George W. Bush's advisers.
Another camp -- which include politicians from both parties and several Obama economic and political advisers -- wants government to speed the arrival of the recovery's hiring stage. "What we're seeing now is businesses are starting to invest again, they are starting to be profitable again, but they haven't started hiring again," President Barack Obama told NBC News. He said his administration was trying to "figure out if there are ways of us accelerating that hiring."
After all, unemployment creates misery for families, weakens demand for businesses, wastes human potential and can have long-lasting ill effects on economic growth. It also breeds hostility to business, politics and global trade.
"I have never seen anything like this," Sen. John McCain, the Arizona Republican, told The Wall Street Journal CEO Council conference this week. "The level of anger and frustration...at what we do in Washington and what you do on Wall Street."
He warned that, absent change, rising unemployment and credit-starved small business could yield a cadre of populist, protectionist, pro-regulation Republicans to Congress next year.
But the do-something camp is divided. The options fall roughly into two categories.
One set, with a distinctly Keynesian flavor, would aim at employment indirectly -- by increasing overall demand so employers hire more people. Consumers are in the dumps, their ability to spend is constrained by lack of income and an urge to reduce debt. Business is in a funk, shaken by the deep recession, distressed by uncertainty about health, tax and energy policy. State and local governments are struggling. The Federal Reserve already has cut interest rates to zero. So the federal government should step up, the argument goes.
That was the rationale for the much-maligned fiscal stimulus, and the rationale for another round. Lawrence Katz, a Democratic-leaning Harvard labor economist, for instance, advocates more no-strings aid to state and local governments "to ease their budget situation, prevent layoffs and furloughs and cuts in local services." He calls it the "most effective and quick fiscal stimulus out there."
"Increasing overall demand in the economy is important for jobs," says Lawrence Summers, Mr. Obama's economic adviser. "We're looking at a variety of job creation measures. Some would require spending. Others would increase demand with little or no impact on the deficit."
But Mr. Obama shows little political stomach for pushing Stimulus II, resorting instead to a more stealthy approach -- such little dollops as the $250-per-senior checks he got Congress to approve recently. More big stimulus, of course, means more government borrowing. That makes some Obama advisers, already facing a massive deficit and doubts about the stability of the dollar, very uneasy.
So look for the administration to promote cheap ways to spur demand -- attempts to increase the flow of credit to business, speed approvals for the new electricity grid and promote exports. Each will be marketed as creating jobs. In fact, everything the administration does from now on will be marketed as creating jobs.
The other set of options aims at increasing employment directly. The government could cut the payroll tax temporarily, for instance, to make it cheaper for employers to hire. Or it could offer a tax credit to spur hiring -- presumably designed to reward hiring that wouldn't otherwise occur, which is difficult -- or simply tying a tax credit to the expansion in an employer's total work force.
Or it could push more states to offer jobless benefits to workers who are forced to work part-time, essentially making up some of the lost wages as Germany's Kurzarbeit -- "short work" -- program does. Seventeen states do this now, including California.
Proponents of a jobs tax credit or payroll-tax holiday, both inside the administration and in Congress, say the government should nudge reluctant private employers to hire, and that the benefits -- to workers and those who sell to them -- will be significantly greater than the costs and abuse.
Detractors say that pushing more jobs without more output is unwise, a deliberate attempt to reduce productivity that sounds appealing but isn't. It's like taking away shovels and giving ditch-diggers teaspoons so more will have jobs.
Few in the Obama administration are in the just-wait camp. But the do-something crowd is divided between those who favor a headline-grabbing jobs tax credit, and others looking for cheaper ways to boost demand.
The latter group, for now, appears to have the upper hand.
Write to David Wessel at firstname.lastname@example.org
About David Wessel
David Wessel, The Wall Street Journal's economics editor, writes Capital, a weekly look at the economy and the forces shaping living standards around the world. David has been with The Wall Street Journal since 1984, first in the Boston bureau and then the Washington bureau, where he was chief economics correspondent and later deputy bureau chief. During 1999 and 2000, he was the newspaper's Berlin bureau chief. He also has worked for the Boston Globe and at the Hartford (Conn.) Courant and Middletown (Conn.) Press. He has shared two Pulitzer prizes, one for a Boston Globe series on race in the workplace in Boston and the other for Wall Street Journal stories on the corporate scandals of 2002. David is a graduate of Haverford College and was a Knight Bagehot Fellow in Business & Economics Journalism at Columbia University. His book on the Federal Reserve's response to the financial crisis, "In Fed We Trust," www.infedwetrust.com, will be published by Crown on Aug. 4. Follow David Wessel on twitter at http://www.twitter.com/davidmwessel
- A Cure For Unemployment - Forget short-term fixes - Good long-run policies will create jobs, by UCLA Econ Prof. Lee Ohanian, Forbes.com
[Here's a typical comment from an economic "scientist" who is stuck in the pre-technological era - zero understanding of the purpose of innovation = to make life easier. Can't get beyond the Given-By-God-On-Mount-Sinai-Forty-Hour-Workweek, complete ignorance of U.S. and world labor history - just a disgrace. And this retard is probably pulling six figures? He's also director of Ettinger Family Program in Macroeconomic Research but parents in the Neanderthal caves had more family time than parents in his dream world. He wants to create enough artificial demand and busywork to fill a pre-tech 40-hour workweek forever, giving us exactly zero benefit from any and all new technology - ever - in terms of the most fundamental freedom, financially secure free time. Sooo many people are totally time blind - trapped inside the box of a 70-year frozen workweek that had been cut in half over the previous two thirds of American history...]
President Obama recently announced that he will convene a White House summit next month to address the issue of unemployment, which rose to 10.2% in October, the highest rate in over 25 years. But perhaps even more concerning to policymakers is that employment continues to shrink substantially despite the worst of the financial crisis--extremely high risk spreads, the breakdown of interbank lending--being over.
For several months, the Fed has been winding down at least some of the measures it took last fall to stabilize financial markets. And as more than 2 million jobs have been lost since the roughest patch of the financial crisis ended late last winter, a growing number of policymakers are now calling for more short-run economic fixes. The tendency to grasp for short-run fixes during economic crises is all too common, reflecting the demands from at least some political constituents that policymakers "do something."
[As Ohanian is about to do by advising more human makework during the age of robotics, if he ever gets to that.]
This short-run "fix-it" mentality is particularly dangerous now because some proposals to deal with continuing job loss have deficient economic underpinnings.
[Look in the mirror, pal, or become a card-carrying Luddite.]
These proposals include an additional round of federal spending along the lines of February's $787 billion American Recovery and Reinvestment Act. I, and some other economists, expressed considerable reservations about the usefulness of this policy and predicted that it would not help the economy. While it is difficult to say how much employment would have changed in the absence of this program, the fact that more than 2 million jobs have been lost since the ARRA was announced raises questions about the efficacy of this policy and will make it politically challenging within Congress to pursue another major spending plan.
If large increases in federal spending are unlikely [how big a deficit does he want?], other ideas that relate more directly to the labor market may receive attention, including the view that we should consider some European labor market programs, which are designed to share work among employees and stem job loss. But the long-run impact of European labor market policies--including employment protection policies, which penalize employers for laying off workers; work sharing, such as France's 35-hour week; and high tax rates in conjunction with large government transfers--is truly abysmal.
[Is he suggesting that the French unemployment rate would be lower if they had stuck to a 39 or 40 hour workweek?
France's unemployment in 1997 when the cut from 39 to 35 hours a week was voted in was 12.6%. For these results to be "truly abysmal," 8.6% would have to be higher than 12.6%.
France's unemployment in 2001 after the 35-hour workweek had been implemented and before the US-led recession hit France in the summer was 8.6% - one percent reduction in unemployment for every hour cut from the workweek.
These are the same results as the U.S. itself got between 1938 and 1940 when it established a 44-hour nationwide workweek and then cut it two hours a year for two years. Unemployment went from 19.0% in 1938 to 17.2% in 1939 to 14.6% in 1940. And how can he pronounce on "long-run impact" when the 35-hour workweek was only implemented between 1997 and early 2001? And if he's talking about worksharing, why is he muddying the waters with other employment protection policies which penalize employers for layoffs and high tax rates and large government transfers (the last of which the US has just done)?]
Let's begin with France. Would you be surprised to know that France has had virtually no net job creation--measured by total hours worked--for more than 50 years?
[And why is he now going back decades before the 35-hour worksharing was implemented? - history that is irrelevant to worksharing since the workweek was virtually unchanged during that period. But if he does go back further, why not stick to the US and go back to 1776, and try to make the case that the reduction of the US workweek from over 80 hours to 40 in 1940 had an "abysmal long-run impact"? His arguments are disgracefully specious. And as for no net human work creation, that's the whole point of technology - to move human work onto machines, automation and robots and free up people's time and allow us to share the remaining employment at shorter and shorter worktime per person as technology allows. Is this guy a workaholic who just doesn't get it? Does he have a life outside the workplace?]
Total hours worked in France today is lower than it was in 1950, despite significant population growth.
[which means that France has one of the most successfully technologized economies. How much it the total financially secure leisure in France?]
And similar pictures emerge for many other Western and Northern European countries, including Austria, Belgium, Finland, Germany, Italy and Norway. This means that the standard measure of labor utilization--market hours worked per capita--has declined around 25% or more for a number of European countries.
[Then this measure is a negative index, and this genius is complaining that these advanced economies have been reducing it. He must be a happy slave. How many hours a week does he want people to work, all 168? Would that be Progress to him?]
Many economists conclude that European labor market policies, including some that are being recommend[ed] today, are at least partially to blame for Europe's enormous drop in labor and output.
[What's so great about long labor hours per person? What's so great about output regardless of marketability? Does Ohanian want for France the US situation of unmarketable output and excess inventories everywhere?]
But even if economists generally agree on the long-run consequences of these labor market distortions [Ohamian's got the distortion = a 1940 workweek forever!], could they still offer some benefit in the short run? This is harder to say, because it has received much less research attention, but recent data from France is not promising. France adopted the 35-hour week in 2000. After this time, the pattern in total hours worked did not change, but productivity, which had been growing at more than 2% per year, faster than the average of other European countries, fell to about 1% per year, slower than the European average.
[And why not? France froze the workweek again at 35 hours per person and needed to keep trimming it as more technology disemployed more people. But they're still partially infected with workaholism, thanks to the unstrategic brains of the left allowing Jospin to disappear and the inance USA-worship of Sarkozy, so they've frozen the workweek again, as if it should be a God-given Constant.]
Recent research by economists Victoria Osuna and Jose Victor Rios-Rull explains why at least some of this drop in productivity growth may be the consequence of work-sharing.
[Insomuch as our productivity measures, like the GDP, give points for bad stuff, like doctors' "output" dealing with sicker people, it is anything but worrisome that such "productivity growth" has dropped.]
Jobs take some time to come back from recessions, but severe downturns tend to have faster recoveries.
[All this says is that it's easier to have a job "surge" of 25% starting from 4 jobs (all you need is 1 more job) than starting from 100 jobs (you need 25 more) - does Ohanian expect us to rejoice about this? He has zip common sense.]
Typically, severe recessions are followed by recoveries in which about half of all job loss is restored within the first three quarters after [t]he recession trough.
[But generally at lower pay and benefits - so the term "restored" is just a little too rosy. Doesn't Ohanian follow the real wage figures and the decline thereof? He's probably safely tenured, and has zero reason for anything but rationalizing the status quo. It's working for him, so why fix it?]
But many economists do not expect a vigorous jobs recovery now and in fact worry that there will not be significant job growth until late next year. I agree that recovery may be slower this time, because policymaking over the last year--including enormous bailouts of financial institutions and automakers and an enormous expansion of the federal debt--has created substantial uncertainty about the future course of taxes and economic regulations and restrictions. Because there are significant costs associated with taking on new workers and adding new plant and equipment, business will tend to be cautious in adding new workers until they have a better sense of what economic policy will look like. Economists Nick Bloom and Nir Jaimovich of Stanford have conducted new research that shows economic uncertainty can have large depressing effects on the economy.
The impact of uncertainty is recognized by some in Congress, including Rep. Eric Cantor of Virginia, who when asked about job creation by the Los Angeles Times noted, "What we need to do is to lower the price of risk to increase the confidence of those investors and small-business people who are going to be the job creators.
[No they aren't. Consumers are the job creators. And employees are the consumer creators. And jobs, however short we define "full time" work, a completely arbitrary concept with no downside to brevity except challenge to management skills, create employees.]
We also have to address the very real sense that small businesses are very nervous about committing capital right now."
If the president and Congress choose to eschew further short-run fixes and instead focus on sensible long-run policies for which there is broad support, then we should ultimately expect a vigorous jobs recovery. But if policy continues to focus on various short-run band-aids without improving long-run incentives and clarifying the policy environment, a significant jobs recovery may well elude us. This means that the best short-run policy for creating jobs is a good long-run policy.
[Such as...? So he winds up not answering his own basic question? With timid "experts" like this to stand aside while we spiral down to the third world, who needs terrorists? Work-sharing IS the best, indeed the only, long-run policy and therefore the best policy to get started on immediately. And it is happening perforce, because necessity is the mother of invention. Meanwhile, hosts of useless "experts" like Ohanian stand around spreading smoke. Why does Forbes mag publish this empty verbiage? Speeding the death of print media?]
Lee E. Ohanian is professor of economics and director, Ettinger Family Program in Macroeconomic Research, UCLA.
11/17/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- Solution to Unemployment [and Weakening Markets and Investments]: Pay People to Work Shorter Hours - Comment, by Dean Baker, TheNation.com
In the wake of the highest unemployment rate in twenty-five years, the Roosevelt Institute asked historians, economists and other public thinkers to reflect on the lessons of the New Deal and explore new, big ideas for how to get America back to work. The Nation is running selections from the Roosevelt Institute's series on the New Deal 2.0 blog. Below, Dean Baker argues for a work-share program that would save 5 million jobs.
WASHINGTON, USA - The unemployment rate is 10.2 percent and virtually certain to rise even higher in the months ahead. Even with the prospect of extended benefits, unemployment is still a crisis for the families affected, as they struggle to pay their mortgage or rent and cover other essential expenses. Millions will end up falling behind, losing their home--in some cases leading to homelessness and/or family break-ups.
Lizzy Ratner: Young people have lost 2.5 million jobs to the crisis, making them the hardest-hit age group.
Benefits extensions and retraining are not sufficient to address the staggering level of unemployment now facing Americans.
Dean Baker: There is an easy way to get unemployed workers back to work: pay them to work shorter hours....
Fortunately, there is an easy and quick way to begin to get these unemployed workers back to work. It involves paying workers to work shorter hours. The mechanism can take the form of a tax credit to employers. The government can give them a tax credit of up to $3,000 to shorten their workers' hours while leaving their pay unchanged. The reduction in hours can take the form of paid sick days, paid family leave, shorter workweeks or longer vacations. The employer can choose the method that is best for her workers and the workplace.
If take-home pay is left unchanged as a result of the credit, then demand should be left unchanged. If workers are putting in fewer hours and demand is unchanged, then employers will need to hire more workers.
This logic is as simple as it gets. The process is also quick and cheap. In principle, the government can go this route to save jobs at a cost of a bit more than $20,000 per job--far less than the cost per job saved through the stimulus package.
Germany has used this policy to keep its unemployment rate at 7.6 percent, about the same as it was before the recession. Imagine if workers in the United States, like workers in Germany, were dealing with the recession by putting in four-day weeks (while getting paid for five) or getting an extra two weeks of paid vacation. This sure beats being unemployed.
Seventeen states already have a "work-share" program in place that allows employers to use unemployment insurance money to cover a reduction in work hours, without a corresponding reduction in pay. More than 100,000 layoffs have been prevented as result of this program.
Senator Jack Reed, a Democrat from Rhode Island, has a bill that would increase funding for work-share programs and remove some of the bureaucracy. The bill also provides start-up money for the states that don't have programs.
The Reed bill would be a big step towards following the Germany model, taking advantage of a program that is already in place. It could quickly make a big dent in the unemployment rate, by preserving many of the jobs that are now being lost.
In this respect, it is important to clear up a common confusion about the economy. The monthly job growth number is a net figure. Approximately 4 million people leave their jobs every month, half involuntarily. We have job growth if we either create more than 4 million jobs or reduce the number of jobs lost below 4 million.
If a work share program reduced involuntary job loss by 20 percent, or 400,000 per month, it would have the same effect as adding 400,000 new jobs. Over a full year, this would generate nearly 5 million new jobs. This would be a quick and effective way to reduce unemployment.
About Dean Baker -
Dean Baker is the co-director of the Center for Economic and Policy Research.
- All work and no extra pay, by Kirsty Needham, (11/18 dateline issue) TheAge.com.au
AUSTRALIA - Already working the longest week in the Western world, Australians have now been revealed to be working more hours in unpaid overtime than their annual holiday entitlement, and white-collar workers are carrying the burden of the free time being taken by the boss, an Australia Institute study shows.
Once Australia led the world in advocating shorter hours, with Melbourne stonemasons the first to gain an eight-hour day in 1856.
That culture has been tipped on its head, as OECD figures show Australians work the longest week of any developed country - an average 44 hours.
More and more of those long hours are being worked for nothing.
[So much for the "truism" that longer hours mean more pay and shorter hours mean less pay.]
Total unpaid overtime worked is the equivalent of 1.16 million new full-time jobs that have not been created. That equates to $72 billion in lost wages - money that could be taxed.
''In an economy where unemployment is rising, overwork is an obvious area for government to address,'' said Richard Denniss, the institute's executive director.
The study found 44 per cent of people who work unpaid overtime said it was compulsory, while 43 per cent said it was not discouraged.
[Step One is to convert overtime into jobs, and training if needed.]
- Work isn't working, by Isobel Lindsay, ScottishLeftReview.org
[Note that this issue "is neither left nor right but out in front" - Anders Hayden.]
Isobel Lindsay looks at how 'work' is now as much a part of the neoliberal ideology of control as it is about producing things.
SCOTLAND - From a contemporary perspective, it is strange to think that much of the debate in the 1950s and 60s on 'automation' and the future of work was about the opportunities and challenges of the huge increase in mass leisure and the end of scarcity that was about to come. How then did we get to where we are now in the UK with a high proportion of those in employment who are 'time poor', experiencing ever-increasing intensity of effort at work with long hours and later retiral? The outcome of forty years of economic development has been a vast expansion of things, the commodification of many services, greater inequality and high-pressure lives. For the minority who are unemployed, poverty, social rejection and low morale make it difficult to use time constructively.
The Anglo-Saxon model has been more extreme in these respects than most other developed countries. In the UK there are some pre-Thatcherite origins to this. Trade unions here in the post-war period prioritised wages over working hours. I can recall doing some research in an Italian-owned factory in Glasgow in the 1970s and finding that workers did not know that in the same factories in Italy, employees had much longer holidays. The shop stewards' convener did know but did not think it was an important issue. Matt McGinn's song - *Two Nights and a Sunday Double Time* - was not so far off the mark. Continental workers, then as now, had better holidays and hours and it was the Scandinavians who led the way in parental leave. Nor did the French and Germans and Swedes have to sacrifice earnings and other financial benefits for the sake of more leisure. It is difficult to know whether this failure to promote better working- time conditions in Britain arose because of lack of political and trade union vision or because this was simply a response to the priorities of employees. Since few UK workers were (or are) aware of their disadvantaged position, we do need to look at the reasons for the lack of aspirations. The closed shops in Germany for much of the weekend to enable people to have social time together would be a culture shock for the younger generation here who have been socialised into the assumption of seven day consumerism as the bedrock of our society.
The Thatcher period and the continuity of neo-liberalism through the New Labour years removed much of the choice from workers. Weakened unions and the fear of unemployment greatly strengthened managerial power to dictate the terms of work. There is extensive unpaid overtime because jobs depend on being seen to be keen. This applies at all levels and particularly at middle-management. In addition the past few decades of hyper-commercialism has driven people to maximise earnings as the over-riding priority. The housing market was used initially by Thatcher to tie people into high mortgage dependency and the Blair/Brown use of spiralling housing costs and high personal debt to fuel economic growth resulted in the pressure to make money taking precedence over everything else and the two-wage family becoming a necessity for many households. For those who are graduates, student debt adds to that personal debt burden (a much bigger problem in England) and now many students have to work long hours in paid employment throughout the year at the expense of their studies.
Apart from mortgage payments, the constant multi-media promotion of ever-changing goods and services as essential to social status and personal fulfilment has increased people's money dependency. Contemporary capitalism cannot sustain itself without constantly speeding up the frequency of consumption while ironically undermining this by trying to reduce the costs of labour through increasing the intensity of work and keeping earnings for the majority low. Each company has to hope that others will increase the consumption capacity of the public. If it were not for public expenditure, cyclical crises would be more frequent. Yet the result of so much of this consumption is to make us run fast to stand still. More care services have to be commodified because people are short of time. More expensive pre-prepared food is bought because people are short of time. More recreation is bought because it seems easier for stressed workers. The peak financial pressures come at a point in the life-cycle when the need for personal time is greatest. Young families need time but they are under pressure to maximise earnings rather than leisure in order to buy and furnish homes, to pay for child-care, to pay for cars because of so much geographical centralisation, and for graduates to pay off student loans. Time poverty and the stress it produces have become a taken for granted aspect of modern life.
In his 1974 book, *Labour and Monopoly Capitalism*, Harry Braverman predicted that new technology and new managerial practices would sharply increase managerial control of the labour process, not only for manual workers but significantly also for white-collar workers. Thirty years later the extent of that centralised control has been one of the defining features of the modern workplace, depersonalising the work and leaving the employee as subject rather than agent. Most striking has been the extent to which this has spread to the traditional professions. New Labour has been characterised by its obsession with the control of everyone except those at the top in business. The 'light touch' applied to the senior people in financial services contrasts with the constant micro-management of everyone in the public sector and support for the same ethos in the private sector. This control is imposed through excessively detailed job specifications, constant measurement, 'naming and shaming' with league tables. The same values that produced the call centre have been applied to the health service, to education, to policing, to postal services and throughout the private sector. New technology has enabled management in public and private services to keep tight control of what each worker is doing from portion control in catering to hourly sales figures in retail to patient throughput in hospitals to access to the content of telephone calls and emails. One of the most consistent complaints when people talk about their work is about this micro-management with its lack of personal discretion, its constant reorganisations to meet imposed targets and to be seen to be showing initiative, and its frequent rigid irrationality that junior employees dare not challenge. This creates a stressful work environment with no shortage of evidence that the outcome frequently involves displacement of goals - working time channelled into box-ticking rather than thinking about how to achieve the real objectives of the organisation. All the old research into assembly-line work identified lack of any personal control over the job as the most disliked aspect. That feeling has seeped into many other areas of employment. At least the public sector should be able to move away from these managerial approaches and engage with its employees in genuine co-management.
Add all of this to the most basic change that has been prevalent since the 1980s - job cuts to boost profits - and we have millions of employees with increased workloads who feel they haven't time to do their job thoroughly and also lack discretion and control.
Our intellectual heritage has provided us with a rich source of material on the significance of work in our lives. In the 19th century Marx, Ruskin, Morris were outstandingly perceptive in identifying the social and spiritual/psychological aspects of work as well as the importance of fair economic rewards. From the 1960s and 1970s there was a growing interest in Marx's concept of alienation, in industrial democracy and in job enrichment. The 1980s saw a new interest in understanding the role of informal labour or 'self-provisioning' and the past decade has seen 'happiness' and 'well-being' research and the relationship to work.
Unfortunately little of this has found its way into mainstream party political discourse. More accurately, none of it has. The outstanding late 20th century theorist on rethinking work was Andre Gorz who challenged the Left to question traditional patterns of employment. Why, he asked, are we not benefiting from new technology by sharing work and radically reducing working hours? Why not the 30 hour week or the six month working year? Why are we not spending more time on labour for our own use/own choice rather than on exchange value labour? This, after all, was Marx's vision for communism. This is certainly not a private enterprise vision. A strong state would be necessary to regulate hours, essential production and a guaranteed social wage. Strong local government would be necessary to provide some of the amenities to enable people to make best use of their increased free time. Recreation facilities, workshop and studio space, shared access to equipment would provide us with the opportunity to improve the quality of life for ourselves and the community. Many of the services that have become commodities to be purchased because we are time-poor could be provided from the skills of family and friends.
A serious initiative to develop a programme across all areas of employment to reduce working hours would address many of our current problems. Child-care, a major expense for young families and a bar to employment for many single parents, would be radically cheaper if all parents were working much shorter hours. A later retiral age would not be problematic if the working week or the working year was much shorter. Voluntary work would have a much wider range of participants. There could be more genuine care in the community. Gorz's assumption was that more free time and support for creative work and community involvement would reduce the demand for constantly accelerating consumption as the principal source of status and meaning, that more control over time would contribute to a more sustainable society.
Of course, far from rethinking the meaning of work and giving people more control over time, British Governments have been the worst in Europe in opposing reform in employment conditions and British business has been among the most regressive in demanding worse conditions than their continental competitors. The opt-out from the working time directive, shamefully demanded by Labour as well as Conservatives, has made it easy for employers to impose long working hours and unsocial hours. The trend towards centralisation of public and private services has imposed longer travel to work on employees. The financial services were encouraged to trap increasing numbers in high debt. Developing new objectives for work and time needs to be the start of a radical process of change that brings together the traditional aspirations of socialists and the social and environmental aspirations of Greens. Above all, it will resonate with the day to day experience of most workers.
Isobel Lindsay is a retired academic who specialised in industrial sociology.
- At a Brentwood company, shorter workweek beats layoffs, by firstname.lastname@example.org, Newsday.com
BRENTWOOD, N.Y. - In May, Mannix Exterior Wall Systems Inc. in Brentwood notified the state Labor Department that it was planning to lay off almost half of its 121-person staff.
The company makes aluminum doors and windows for New York City high-rise apartments. But the number of start-up projects that produced work for the company had dried up because of the economy, said Paul Greenstein, a company vice president.
"We came off an all-time high to an all-time low," he said.
So the company planned to lay off most of its manufacturing workers, about 50, and four office workers. It wanted to be nimble so it could shift its focus to smaller buildings and simpler products.
"There was a bit of a lag for us to jump into that business," Greenstein said.
But the Labor Department contacted the company and told it about shared work. The company submitted a plan to retain those workers by reducing their five-day workweek 40 percent to three days, entitling the workers to 40 percent of unemployment benefits.
The company participated in the program from August until October, when the workers went back to work full-time, Greenstein said.
"That brought us some time to change our marketing focus," he said.
11/15-16/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- Senators push plan to subsidize lost hours, by Walter Alarkon, 11/16 TheHill.com
[Whoo-hoo, this is really starting to take off! Maybe there is hope for the U.S. after all. We've now got a champion in New York (Krugman), two flavors of DC thinktanks (Baker & Zandi) and the US Senate (Harry Reid, in the great tradition of Hugo Black). They're breaking it into a dozen little steps we never thought of, but for a playlist of the functions that have somehow to be performed, check out our five-phase Timesizing program. Then these same five functions can be detached from worktime per person and dropped on the money-per-person dimensions ('flowing'= income per person, 'standing'= wealth p.p. and 'potential'= credit p.p.) and we'll really get substantial progress on this planet instead of just evermore technological whizbang, which when responded to with downsizing instead of timesizing is downright destructive.]
Senate Democrats crafting a job creation bill are considering a proposal to give money to workers who cut their hours in order to avoid layoffs.
A bill sponsored by Sen. Jack Reed (D-R.I.) would give unemployment compensation to employees who accept a reduced work schedule to allow their companies to avert layoffs or to hire more employees. Reed's proposal for work-sharing was mentioned during the Senate Democrats' lunch Tuesday, when Majority Leader Harry Reid (Nev.) announced that an initiative focusing on jobs would soon be a priority, Reed's office said.
Democratic Sens. John Kerry (Mass.), Paul Kirk (Mass.) and Patrick Leahy (Vt.) have signed on as co-sponsors.
Reed's plan calls for up to $600 million for the program, which would last for up to two years. Rhode Island and 16 other states already have their own work share programs, which have saved more than 146,000 jobs this year so far, according to the Labor Department. Reed's bill would provide funding for existing work share programs and grants for states that have yet to start them. If all 50 states participated in work share programs, between 400,000 and 500,000 jobs a year could be saved, according to Reed's office.
“Work share programs provide businesses with the flexibility to reduce hours instead of cutting jobs,” Reed said in a statement. “This plan will help prevent layoffs, make businesses more productive, and save taxpayers money by keeping people on payrolls and off unemployment benefits."
A federal work-sharing program is one of several proposals likely to be considered by Democrats as part of a new jobs bill. Reid's announcement Tuesday that he is looking at ways to boost job creation came on the heels of the October jobs report, which showed the unemployment rate hitting double digits for the first time since 1983. President Barack Obama is making his own jobs push, announcing this week that he will convene a jobs summit next month.
The renewed focus on jobs reflects concern among Democrats about a jobless economic recovery. Though the U.S. economy began growing again in the third quarter, White House and independent economists expect the unemployment rate to remain above 10 percent into next year. The Obama administration's own projections expect the jobless rate to average more than 9 percent for 2010 and more than 8 percent for 2011.
Reid hasn't tipped his hand on what the coming legislation will include. Labor unions have called for more aid to states to help prevent cutbacks of public employees, loans for small businesses and more investment in infrastructure projects.
Republicans have attacked the Democratic approach to restarting the economy, noting that the centerpiece has been the $787 billion stimulus. Though independent economists said the stimulus has created about 1 million jobs, Republicans have used the persistent high unemployment rate and the record $1.4 trillion 2009 deficit to attack Democrats' economic policy.
Republicans will be eager to paint any new Democratic legislation as more spending.
"The best unemployment program is a job and Republicans believe it's time to start giving American businesses the opportunity to create more, but if Democrats continue to hinder economic growth with their reckless tax and spend approach, nobody's gonna be headed back to work anytime soon," the aide said.
But a federal work-share program is winning some support from nonpartisans.
Prominent economists pushing the work-share idea include Mark Zandi, an economic advisor to Sen. John McCain's (R-Ariz.) 2008 presidential campaign who also advises Democrats. Dean Baker, co-director of the left-leaning Center for Economic and Policy Research, and Paul Krugman, the New York Times columnist. Krugman touted the benefits in his column Friday, noting that German's work-share program has helped drive down its unemployment rate, which has gone from about 9 percent last year to less than 8 percent in October.
Zandi, the chief economist at Moody's Economy.com, said that increased small business loans and more work-share programs could be an economical way to create more jobs. Zandi told the Joint Economic Committee last month that expanding work share to all 50 states would cost less than $2 billion and would provide more "bang for the buck" than unemployment insurance extensions. Congress passed and Obama signed last week a extension of unemployment benefits that cost $2.4 billion.
- America needs a jobs program, by Joseph Perkins, 11/16 Examiner.com
Not since 1983 – when Barack Obama was pursuing his undergraduate studies at Columbia University – has the nation’s jobless rate been as high as it is today.
Some 10.2 percent of American workers were unemployed in October, according to the U.S. Labor Department. But that figure did not include discouraged workers, who’ve stopped looking for jobs, and underemployed workers, who are holding down part-time jobs because they cannot find full-time work.
If the unemployed and underemployed are taken together, they add up to 17.5 percent of the entire U.S. labor force. That’s more than one of every six workers.
It might be some solace to the 25 million or so Americans that are either out of work or relegated to part-time work if they could see signs of rebound in the job market. But the reality is that the jobs landscape is getting bleaker, not better.
Indeed, the economy shed a net 190,000 jobs in October, the 22nd straight month of job losses. Such carnage in the job market has not been seen in seven decades.
That’s why President Obama is hosting a White House jobs summit next month. He understands that, if his administration does not address itself squarely to the nation’s job crisis, our Great Recession might very well transmogrify into the second coming of the Great Depression.
What the nation’s unemployed and underemployed don’t need are more platitudes from the White House, from lawmakers on Capitol Hill. What the need is a national jobs program.
Such a program might include the following components:
* Employer Subsidies. The government would pay a certain portion of the salary or wages of each net new worker a private employer hires. The first year, the government might pay 25 percent; the second year, 15 percent.
* Payroll Tax Holiday. A one-year moratorium on FICA, the Social Security and Medicare taxes jointly paid by employers and their employees. FICA is an economic disincentive to employers to add workers to their payrolls. Meanwhile, for 80 percent of American workers, payroll taxes are actually higher than incomes taxes.
* Small Business Loans. Increase the maximum SBA loan guarantee – on transactions between private banks and small businesses – to 95 percent from 85 percent. Increased availability of credit will allow small businesses to obtain the capital they need to grow their businesses and create jobs.
* Work Sharing. Congress would create a temporary national program in which financially-strapped employers are encouraged not to lay off workers, but to reduce their work week instead. The government provides the workers unemployment benefits to make up for their lost salaries or wages. Such work sharing programs already are in place in California and at least 15 other states.
The price tag for a jobs bill could amount to $100 billion and maybe more. But the nation is facing an historic crisis in the job market that is no less urgent a matter of state than health care or global warming or the continuing military engagements in Iraq and Afghanistan.
Our lawgivers in Washington are prepared to spend a trillion dollars to remake the nation’s health care system. They are prepared to commit the American people to a trillion dollars in higher energy and related costs to address climate change. And they have already spent trillions of dollars waging war in the Persian Gulf.
Against that backdrop, it hardly seems unreasonable to invest $100 billion or so to revive the nation’s foundering job market, to help the nation’s jobless get back to work and earning a paycheck.
- The worst is yet to come: Unemployed Americans should hunker down for more job losses - Top economic prognosticator says job seekers must face grim economic facts, by Nouriel Roubini, 11/15 New York Daily News via nydailynews.com
Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.
While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.
Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.
So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.
There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.
The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages.
[Pain? with more free time? There's total compensation there for anyone with a life and a lust for freedom.]
Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.
[But those jobs aren't lost and those 3-million-plus people are still working and spending, which they wouldn't be doing if they'd axed the jobs for the 'few' (3m) rather than just a few hours for everyone.]
This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.
Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1;
[Same as the ratio of health-insured to non-health-insured before all the job losses. Now it's probably 1 in 5 uninsured.]
initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.
Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.
The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double dip recession.
As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures.
The damage will be extensive and severe unless bold policy action is undertaken now.
Roubini is professor of Economics at the Stern School of Business at New York University and Chairman of Roubini Global Economics.
- German work scheme carries risks - Labour Office, Reuters via 11/15 Forbes.com
BERLIN - The German government's part-time work scheme has so far prevented a sharp rise in unemployment but may be giving workers false hope by merely delaying a wave of layoffs, the head of the Federal Labour Office said.
[Do that and your economy is dead. Much smarter to convert Kurzarbeit to Langarbeit by shifting the funding to a tax on overtime with a complete exemption for reinvestment in overtime-targeted training and hiring.]
The scheme, known by its German name 'Kurzarbeit', encourages firms, through government subsidies, to shift employees to part-time work instead of firing them.
Thanks to the subsidies, the German labour market has remained surprisingly robust in the country's deepest recession since World War Two. Data released last month showed unemployment fell in October for a fourth straight month.
But Labour Office chief Frank-Juergen Weise told the Welt am Sonntag newspaper that he was sure unemployment would begin to rise at the start of 2010.
'Kurzarbeit has had the biggest influence on the moderate developments (in the labour market),' Weise said.
'But here lies the biggest risk. We do not know if the staff that have been retained thanks to Kurzarbeit will end up being used in the future, or whether the scheme is merely a masked extension of unemployment.'
Weise said that if this were the case, the scheme could be giving workers false hope that they would have jobs once the subsidies run out.
The scheme operates under the assumption that employees benefiting from it will return to full-time work once the economy recovers and business picks up.
Workers can draw the subsidies for up to 24 months and must be registered by the end of this year to profit from it, although German Chancellor Angela Merkel announced in a speech to parliament last week that this deadline would be extended.
The Labour Office, which runs the scheme for the government, is expected to spend over 5 billion euros on it this year.
Together with costs related to government jobless payouts, the scheme has ripped a huge hole in the office budget. To help plug it, Merkel's government has pledged to transfer 16 billion euros in federal funds to the office next year.
'The real risk of Kurzarbeit is not so much the direct cost, but rather that layoffs happen anyway and we end up having to pay unemployment subsidies for those who have already benefited from Kurzarbeit,' Weise said.
'On top of that, we have sent the message to people who draw Kurzarbeit that they should stay in their jobs and not look for new ones, that things will improve. Of course this can get in the way of structural changes that are necessary.'
(Writing by Noah Barkin; Editing by Hans Peters
(firstname.lastname@example.org; +49 30 2888 5091; Reuters Messaging: rm://email@example.com)
11/14/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Targeted job creation programs needed now, editorial, Milwaukee Journal Sentinel via jsonline.com
Stimulus spending helped keep the economy from sinking into the abyss earlier this year, but now targeted spending aimed at creating jobs is needed or the nation risks slipping back into recession.
Green shoots are sprouting, economists like to say, signs that the American economy is growing again after the longest economic winter since the Great Depression.
But read the letters on the opposite page; there are few signs in them of blossoming hope.
"On March 3, after six years as a structural engineer with a small metal building firm, I was laid off," writes Jon DeBroux of Milwaukee. "After three weeks on unemployment, I returned to work for two weeks in April, then was laid off again. I have not worked since. It has been very hard to even get a foot in the door for an interview. In fact, it has been nearly impossible to get even a rejection letter. So here I sit."
There are at least 16 million Jon DeBrouxs in America - 10.2% of the workforce, the most since the Rust Belt years of the early 1980s.
But it's worse than that.
Millions of people have given up looking for work; these "discouraged workers" are no longer being counted by the government. Many more people would like to have full-time jobs but have been forced to take part-time work or jobs far below their abilities. And like DeBroux, many find it is taking them months to find a job. The number of long-term unemployed is at its highest rate since the Great Depression. About 26 million workers are either unemployed or underemployed - 17.5% of the workforce.
Green shoots may be sprouting, but growth will wither if unemployment continues to rise and more families are forced to cut spending. Another recession hard on the heels of the one that just ended could be the result. It would be legislative malpractice to allow this to happen.
Congress should pass a series of emergency measures before the end of the year aimed at spurring job growth. These should include a tax credit for businesses that create new jobs, an idea Sen. Russ Feingold (D-Wis.) is working on. Congress should consider a version of a work-sharing program and extending the tax credit for first-time homebuyers through 2010. It should help small businesses get the money they need to grow and to hire workers.
We're mindful that many Americans believe the government has done enough and that some of the criticism of the $787 billion stimulus bill passed in March is valid. Critics complain that the stimulus hasn't worked as advertised and argue that with barely a third of the money spent so far, it is too soon for additional measures. Some critics also are concerned, as are we, about adding to an already dangerously high federal deficit.
The truth is, stimulus dollars have been slow to reach the states in some cases. But it's incorrect to argue that the stimulus hasn't helped. The biggest bang for the buck came from extension of unemployment insurance benefits as well as aid to fiscally strapped states such as Wisconsin. That federal aid kept police, firefighters and teachers on the job this year. And as more infrastructure projects take off in the coming months, more skilled trades workers will be back on the job.
And while there are billions of dollars left to spend from the original stimulus, the design of the bill means spending will take months to roll out. That is not necessarily a bad thing, considering that the economy will likely remain soft for many months to come. But that long, slow windup doesn't help create jobs now, which is why measures focused on job creation are essential.
Deficit hawks are right that the growing imbalance is worrisome - though we sometimes wonder where most of these folks were in the previous eight years. The Obama administration expects the deficit to reach $1.5 trillion this year, the third straight record. And the red ink could flow even faster if Congress passes a health care reform bill that insures millions more people without bringing down health care spending. The House bill, which passed narrowly on Nov. 7, fails miserably on this score. The deficit is a clear and present danger to the nation's fiscal health. It could lead to higher interest rates during a slow-growth economy.
But the more immediate risk is a nation of 26 million out-of-work people. Joblessness is not only a lead weight around their ankles, but around ours as well. Out-of-work people spend far less money and use far more government services. Joblessness leads to family and social strife as well, especially the longer it drags on.
There is little question that the nation will be worse off if growing unemployment crushes the nascent recovery. It is a dark possibility that would spawn even larger deficits as tax receipts dried up and require ever more aggressive measures from a desperate government. Let's not go there.
Instead, let's take sensible measures now to spur job growth:
Give companies that expand payrolls a tax credit. Structure the size of the credit so that it equals the cost of new hires for a year or two. Allocate a set amount of money - the first companies to apply get the credit.
Expand lending by the Small Business Administration. Companies with fewer than 20 employees account for about 25% of all jobs but nearly 40% of job losses during the first 12 months of the recession, reports economist Mark Zandi of Moody's Economy.com. Their biggest complaint? Credit has dried up. SBA loan guarantees were increased to 90% and some fees were waived as part of the stimulus. Extend these incentives for at least another year.
Extend the tax credit for first-time homebuyers for at least another year to nurture recovery in the housing market, a jobs driver.
Make permanent the federal tax credit for research and development. Innovation, over the long term, is economic salvation. Incentivize it now.
Create a federal work-share program. Zandi reports that 17 states now offer some type of work-sharing in which employers reduce weekly hours and pay and states make up for some of those lost wages. Work share, pioneered in Germany, provides the economy with an immediate shot of Adrenelyn by keeping people on the job. It works.
[Hopefully, Krugman yesterday, plus the trigger stories from Germany (Can the U.S. learn from Germany's coasting through the downturn) and Dean Baker (Stimulus and Jobs: We Can Do Better - below, 11/01-02/2009 #1), will create a firestorm of stories pressuring for federal-level worksharing, of which this is one of the first.]
Create public service jobs. Yes, we know this is likely a political non-starter, but there are large segments of the jobless - as University of Wisconsin-Milwaukee professor John Pawasarat argues on the Crossroads cover this week - who seem impervious to conventional means to get them into jobs. And W-2 is not making a dent in these numbers. Public service jobs can be short-term fixes both for the chronically unemployed or for more recent casualties of this Great Recession. There is something to be said for a direct government role, if only temporarily as a stop-gap measure, in keeping people employed in times of national distress.
President Barack Obama knows he will be judged on his stewardship of the economy. He plans to hold a White House forum on job creation in December. The president said, "we all know there are limits to what government can and should do even during such difficult times. But we have an obligation to consider every additional, responsible step that we can to encourage and accelerate job creation in this country."
Agreed. But there is no need to wait to take further steps to create jobs. The health of the economy depends upon swift action.
Is the government doing enough to improve the job outlook? What more should it do? To be considered for publication as a letter to the editor, e-mail your opinion to the Journal Sentinel editorial department.
- Reeling between the lines - State budget cuts could have some libraries shelving services throughout the West Shore, by Matt Miller email@example.com, Cumberland Patriot-News,PA via pennlive.com
A33 percent state funding cut has made the Cumberland County Li brary System's financial position difficult but not disastrous, Executive Director Jonelle Darr said Friday.
While more service cuts are likely, the system has reserves to weather the $860,000 state funding loss for 2009-10, Darr said at the system's annual legislative breakfast at the New Cumberland Public Library.
After that, the situation could become dicey, she said, with budget deficits possible by 2013.
"We're still in the process of evaluating our services and determining which we need to reduce or eliminate," Darr told the assembled county, state and federal officials. "We're looking to stretch our dollars in every way possible."
The New Cumberland library and the Fredricksen library in Camp Hill already have cut hours to save money.
The state supplies less than 30 percent of the system's annual budget of more than $6 million. Nearly half of its support comes from the county library tax.
That tax and other county aid has the system in better financial shape than many others in the state, Darr said.
Still, she said if current losses can't be recouped, the system will exhaust its reserves and face budget deficits of $1.6 million by 2013 and $4.2 million in 2014.
Darr said the crunch coincides with a rise in library use that for years has made the system the state's busiest on a per capita basis.
Countians borrowed 2.6 million items in 2008, up 5 percent from 2007, she said, and use of public access computers at the libraries rose as well, especially among job-seekers.
On average, an adult saves $1,500 a year by borrowing items, she said.
11/13/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Free to lose - What's wrong with America's jobs policy? op ed by Paul Krugman, NY Times, A27.
Consider, for a moment, a tale of two countries. Both have suffered a severe recession and lost jobs as a result — but not on the same scale. In Country A, employment has fallen more than 5 percent, and the unemployment rate has more than doubled. In Country B, employment has fallen only half a percent, and unemployment is only slightly higher than it was before the crisis.
Don’t you think Country A might have something to learn from Country B?
This story isn’t hypothetical. Country A is the United States, where stocks are up, G.D.P. is rising, but the terrible employment situation just keeps getting worse. Country B is Germany, which took a hit to its G.D.P. when world trade collapsed, but has been remarkably successful at avoiding mass job losses. Germany’s jobs miracle hasn’t received much attention in this country — but it’s real, it’s striking, and it raises serious questions about whether the U.S. government is doing the right things to fight unemployment.
Here in America, the philosophy behind jobs policy can be summarized as “if you grow it, they will come.” That is, we don’t really have a jobs policy: we have a G.D.P. policy. The theory is that by stimulating overall spending we can make G.D.P. grow faster, and this will induce companies to stop firing and resume hiring.
The alternative would be policies that address the job issue more directly. We could, for example, have New-Deal-style employment programs. Perhaps such a thing is politically impossible now — Glenn Beck would describe anything like the Works Progress Administration as a plan to recruit pro-Obama brownshirts — but we should note, for the record, that at their peak, the W.P.A. and the Civilian Conservation Corps employed millions of Americans, at relatively low cost to the budget.
Alternatively, or in addition, we could have policies that support private-sector employment. Such policies could range from labor rules that discourage firing to financial incentives for companies that either add workers or reduce hours to avoid layoffs.
And that’s what the Germans have done.
[And a lot of other advanced economies - see country list below our list of worksharing states.]
Germany came into the Great Recession with strong employment protection legislation. This has been supplemented with a “short-time work scheme” [Germ. *Kurzarbeit, literally 'short (kurz) work (arbeit)'], which provides subsidies to employers who reduce workers’ hours rather than laying them off. These measures didn’t prevent a nasty recession, but Germany got through the recession with remarkably few job losses.
Should America be trying anything along these lines? In a recent interview in The Washington Post, Lawrence Summers, the Obama administration’s highest-ranking economist, was dismissive [as Krugman has been up until this moment]: “It may be desirable to have a given amount of work shared among more people. But that’s not as desirable as expanding the total amount of work.” True.
[Why kneejerk 'true' - the whole argument for more technology is to "make life easier," that is, to reduce, not expand, work - how does this kneejerk desirability of expanding the total amount of work square with that? The whole gauge of progress from 1776 to 1940 - and beyond, was "how short is the workweek?" - are Krugman and Summers suggesting we should reverse this and glory in workaholism and long hours? Also, work is essentially turning over control to another person or persons ('The Market') - what's so great about that? Sounds like some of it is essential, but how can anyone who's thought this through argue that unlimited expansion is Good?]
But we are not, in fact, expanding the total amount of work [not with automation and now robotics - sounds like Krugman and Summers are passive luddites - if the expansion of the total amount of work is so desirable, let's get with Cap. Ned Ludd, each grab a sledge hammer and start smashing worksaving technology) — and Congress doesn’t seem willing to spend enough on stimulus to change that unfortunate fact. So shouldn’t we be considering other measures, if only as a stopgap?
Now, the usual objection to European-style employment policies [and 18 US states] is that they’re bad for long-run growth — that protecting jobs and encouraging work-sharing makes companies in expanding sectors less likely to hire and reduces the incentives for workers to move to more productive occupations. And in normal times there’s something to be said for American-style “free to lose” labor markets, in which employers can fire workers at will but also face few barriers to new hiring.
But these aren’t normal times.
[They certainly are normal times for high-tech economies with worksaving technology pouring in! But sustainable high-tech economies have the sense to respond to worksaving technology with timesizing, not downsizing.]
Right now, workers who lose their jobs aren’t moving to the jobs of the future [such as? - any job that can be routinized can be robotized]; they’re entering the ranks of the unemployed and staying there. Long-term unemployment is already at its highest levels since the 1930s, and it’s still on the rise.
And long-term unemployment inflicts long-term damage. Workers who have been out of a job for too long often find it hard to get back into the labor market even when conditions improve. And there are hidden costs, too — not least for children, who suffer physically and emotionally when their parents spend months or years unemployed.
So it’s time to try something different.
Just to be clear, I believe that a large enough conventional stimulus would do the trick.
[You're right, Paul, but perhaps you haven't noticed that the conventional stimulus of the last century - the "conservatives'" makework program, was world war.]
But since that doesn’t seem to be in the cards [thank God], we need to talk about cheaper [and safer] alternatives that address the job problem directly. Should we introduce an employment tax credit, like the one proposed by the Economic Policy Institute? Should we introduce the German-style [work]-sharing subsidy proposed by the Center for Economic Policy Research? Both are worthy of consideration.
["Job" sharing implies subdividing a frozen 40-hour workweek. What we want here is to resume the 1776-1940, 80+ hours to 40 hours reduction of the workweek.]
The point is that we need to start doing something more than, and different from, what we’re already doing.
[We'd argue that worksharing is considerably less than, not more than, what we're already doing so ineffectually, but it is effective, and something we should have been doing since the Great Depression.]
And the experience of other countries suggests that it’s time for a policy that explicitly and directly targets job creation.
[Krugman is apparently ignorant of all the worksharing that's been going on in his own country. Truly, "further fields are greener" and "a prophet is not respected in his own land" and "he can't see his nose for his face" or "the forest for the trees." Worksharing is independently reinvented, mothered by necessity, hundreds of times a day throughout America in every recession, but our blind and insulated economic "scientists" are so busy playing with their other-worldly econometrics that they haven't noticed. Here's another case now -]
- Shared-work program sees brisk demand, by Kim Crompton, Spokane Journal of Business (subscription) via SpokaneJournal.com
SPOKANE, Wash. - As sales softened over the last couple of years, locally based manufacturer EZ Loader Boat Trailers Inc. was concerned about the increasing likelihood of having to lay off a sizable number of employees, so it decided to seek help through the Washington state Employment Security Department's shared-work program.
Bill Baker, the company's human-resources director, says it was a wise move that "has worked out wonderfully."
The shared-work program enables employers to r[eplace lost wages(?)]...
- Red Wing Shoe to close 1 of 3 plants, lay off 200 workers, by Brett Boese, Rochester Post-Bulletin,MN via postbulletin.com
RED WING, Minn. -- After operating at reduced capacity for months, Red Wing Shoe Co. has decided to downsize because of the recession.
The restructuring process will close the manufacturing facility in Danville, Ky., and eliminate the second shift in the Red Wing plant.
Approximately 200 workers will lose their jobs, including up to 60 in Red Wing.
The plant in Potosi, Mo., is expected to add employees to handle the higher work load.
A year ago, Red Wing Shoe Co. enjoyed a record financial showing. While sales have continued to be strong in 2009, according to company communications director Peter Engel, the prolonged recession forced the enterprise to make an overhaul.
"During the recession, we have been operating our plants at less-than-ideal efficiency through reduced work weeks and occasional shutdowns," Red Wing Shoe President Dave Murphy said via press release. "We were optimistic that the economy would recover sooner than later, however, the continued record unemployment in the blue-collar segment, which is our core consumer base, shows no signs of quick recovery."
The company is expecting to create the same amount of footwear with two facilities operating at full capacity as it did with three functioning at around 70 percent, but costs will be significantly reduced.
Second-shift employees in Red Wing will be offered an early retirement package. Engel expects the proposals to be completed next week. The deadline to accept will be some time in December.
However, the move will also restore the first shift back to full-time status in Red Wing. The local plant had been operating under four-day work weeks since May. Under the Minnesota's Shared Work Program, employees were able to maintain their benefits package while also claiming unemployment on the day they didn't work to receive around 90 percent of their former wages, Engel said.
Red Wing Shoe distributes its products to more than 100 countries, including more than 4,000 dealers in the United States. It opened in 1905.
11/12/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- Blunting the pink slips, by Scott Carlson, Finance and Commerce via Finance-Commerce.com
MINNESOTA - Can you imagine a program under which Minnesota companies cut their workers’ hours – and the workers’ union likes it?
Especially in the midst of this lousy recession, that sounds like an urban legend. But it’s not.
St. Cloud-based manufacturer DCI Inc. is among more than 400 Minnesota companies taking advantage of a state-administered program helping businesses blunt the need for layoffs.
Under the “Shared Work” program, Minnesota companies can reduce full-time workers’ hours by as much as 25 percent of what they normally work, and then the affected employees can collect unemployment insurance for their lost time.
The program is designed to help companies suffering temporary slowdowns keep their work forces intact as much as possible, says Kirsten Morell, spokeswoman for the Minnesota Department of Employment and Economic Development (DEED).
The Shared Work program has given DCI, a manufacturer of stainless-steel containers, greater flexibility to adjust its workers’ schedules to meet fluctuating business orders.
Since enrolling in the program in May, DCI has been running both 32-hour and 40-hour workweeks for its 114 fabricators, says Allison Waggoner, DCI human resources, safety and communications manager. And its office and support staff have been mostly on a reduced work week as well.
In April, DCI laid off 25 of its approximately 200 workers because of a slowdown in business. But DCI didn’t have to file a federal Worker Adjustment and Retraining Notification (WARN) Act notice because the company anticipated it would be enrolling in the Shared Work program, according to Waggoner.
After crunching the numbers, “the layoff was much smaller than if this [Shared Work] program hadn’t been available,” she says.
DCI (originally known as Dairy Craft Inc.) had to secure support from the fabricators’ union, Boilermakers Local 647, before completing the firm’s application to participate in the program, according to Waggoner.
Bernard Hilla, Local 647 business manager, says that initially his DCI Inc. members were deeply divided over whether to support the company in applying for the Shared Work program. The fabricators narrowly approved the company’s request.
But many of those skeptical fabricators are now Shared Work supporters, Hilla says: “It is better to work 32 hours a week than not have a job at all,” he says. “We are in the business of keeping people employed, if at all possible, and part of a check is better than no check. There has not been much contention since it [Shared Work] went into effect.”
Minnesota’s Shared Work program is one of several measures that employers are using in an attempt to thwart or reduce the severity of layoffs, in the midst of the worst job market in decades.
Other labor cost-saving tactics include implementing furloughs, offering early retirement packages, cutting salaries, freezing pay levels and restricting work travel.
“We have a very resilient employer base in the Twin Cities and they are working very hard to not only maintain business but [also] look for opportunities,” says Sue Eskedahl, executive vice president of the 1,400-member Employers Association Inc., which is based in Plymouth and serves Minnesota, North and South Dakota, Wisconsin and Iowa.
In a survey earlier this year, Eskedahl’s association found that about 40 percent of respondents said their companies were freezing employee pay levels and that 10 percent were cutting salaries.
The Employer Association’s survey results were similar to those in surveys done by the Watson Wyatt human resources consulting firm. For example, earlier this year, Watson Wyatt reported that 56 percent of company respondents had instituted hiring freezes, up from 47 percent last December.
In a more recent poll of 245 companies, Watson Wyatt reported that 82 percent of respondents who had imposed hiring freezes said they planned to retain those freezes on some positions and in some of their business locations.
And while many employers feel the worst of the current downturn may be behind them, most are not expecting to go back to business as usual. Laura Sejen, Watson Wyatt global director of strategic rewards consulting, says in a statement: “The challenge for companies will be to determine which cost-cutting changes can be reversed and which will become ingrained into the permanent business environment.”
For many companies, “the jury is still out” on what kinds of temporary cost-cutting measures will become permanent, according to Sandy Prestine, a Watson Wyatt senior compensation consultant.
Prestine predicts companies that froze employee salaries will eventually need to retreat from that measure because “[pay freezes] can’t go on indefinitely.” She also anticipates employee pay raises will be small and workers will continue to pay a bigger share of their health insurance premiums.
In a recent survey, Watson Wyatt reported that 22 percent of companies said they don’t intend to restore reduced salaries and 66 percent said they won’t reverse the increased percentages employees now pay for health care premiums.
Meanwhile, of some 800 businesses applying for an initial round of grants or loans under the Minnesota Chamber of Commerce’s “Get Ready to Grow” program, “most of these companies have done some combination of pay freezes, furloughs and UI [unemployment insurance] shared work,” says Bill Blazar, a Chamber senior vice president of public affairs and business development. (See “GROW” sidebar for more on the program.)
George Gmach, survey manager with Employers Association, Inc., says it’s a balancing act for employers as they implement labor cost-saving measures but also try to retain talented workers.
“It may be possible that competitors might take a run at your people, so you need to be careful on being too aggressive in implementing freezes or reductions and risk losing [your best employees],” Gmach says.
On that score, Waggoner notes that the Shared Work program has enabled DCI to maintain the staffing it needs for handling orders on work that typically takes several weeks to complete.
“It [the Shared Work program] has been a remarkable tool,” Waggoner says. DCI makes stainless steel containers for the dairy, pharmaceutical, food and beverage industries.
Apparently, many other Minnesota employers agree. Currently, 423 state companies are participating in Shared Work, nearly eight times the number compared with a year ago, according to DEED data. Altogether, “shared work” unemployment insurance pay is going to some 21,000 workers.
“Whenever there is economic downturn, we have seen an increase in Shared Work participation,” Morell says.
Congress established the Shared Work program under a 1994 federal unemployment insurance law, a voluntary initiative that Minnesota and 16 other states are offering. Unemployment benefits are available for as long as a year, according to Morell.
“We think it important to offer to employers who are undergoing a temporary slowdown an opportunity to keep their work forces intact so that when things rebound they can resume at full capacity,” Morell says.
- New job subsidies scheme has its work cut out, by Laura Slattery, IrishTimes.com
ANALYSIS: The softening of criteria for employers will get more of them into the subsidies system, but questions remain over the scheme’s usefulness
MARY COUGHLAN to “vulnerable but viable” exporters: here’s €9,100 to help you pay the wages, as long as you commit to keeping as many as 10 staff for every subsidised job.
Exporters to Mary Coughlan: thanks, but, um, that’s not especially helpful.
IRELAND - The announcement by the Minister for Enterprise, Trade and Employment in August of a €250 million scheme to “protect up to 27,400 vulnerable jobs in the productive sector of the economy” hasn’t exactly been met with ecstatic whooping by employers; this week the Tánaiste admitted she was “surprised” by the low take-up of the scheme.
With the first round of applications yielding approved subsidies of a more modest €68 million (supporting 7,478 jobs over 15 months), Ms Coughlan’s department now plans to broaden the eligibility criteria.
But do wage subsidies actually work or are they just a temporary – and costly – sticking plaster?
While employees whose jobs are supported by such schemes may feel more secure in the knowledge that their employer is receiving State support to pay their wages, critics of wage subsidy schemes argue that they pose a “deadweight” loss to the economy: in other words they pay for jobs that would otherwise not have been lost.
Fergal O’Brien, economist from employers’ group Ibec, believes the Government’s priority must be to preserve as many jobs as possible, despite the risks. “I think it is inevitable that there will be some element of deadweight with these schemes, but I think the rationale is still strong, because the cost of unemployment is so great,” he says.
O’Brien has some sympathy with what the Government was trying to do when it set up its original eligibility rules, which were designed to eliminate deadweight. But they went too far, he argues.
“It was so restrictive in terms of the criteria. Anyone with less than 10 employees were excluded, for a start,” says O’Brien.
Crucially, the food and drink sector came a cropper because the conditions stated that, to receive a subsidy for an employee, an employer had to keep a certain number of full-time jobs until the end of 2010.
“Food and drink exporters, who have been affected by the global commodity price collapse, would have a high number of seasonal employees – permanent, but seasonal. So they found they were not eligible,” O’Brien notes.
The figures released by the Government this week suggest that it is generally larger companies who were approved in the first round.
The 453 approved employers will receive support for an average of 16 employees, for which they have committed to retain a total of 35,283 jobs, or 77 employees per company. This indicates that companies chose a ratio of five committed additional jobs to every one for which they wanted a subsidy.
The more jobs that the company committed to retain for each subsidy, the higher the points they scored. This made the scheme biased in favour of larger employers – arguably the kind of companies most likely to have enough reserves to survive an economic crisis and most likely to be able to absorb the cost of firing and rehiring.
But the scoring system also made it difficult for companies who really did need the cash to make a call on how many jobs they needed to promise to keep. And the clawback conditions meant that these couldn’t simply be empty promises.
As the winners in the first round were only informed this week, we are some way off discovering whether the subsidies will work.
Critics argue that subsidies are simply a very visible way for the Government to look like it’s doing something about the jobs crisis. However, the lessons from Germany, which has experimented with different schemes to varying degrees of success, is that these schemes can work if they are structured correctly.
As director of Forschungsinstitut zur Zukunft der Arbeit (Institute for the Study of Labour), German economist Prof Klaus Zimmermann has seen both the merits and flaws of wage subsidies.
“Global wage subsidies to entire industries or all companies to encourage new employment are very expensive and provide no substantial employment effects,” he says. But subsidies granted to individual companies to hire unemployed people have been effective, especially when combined with job-related training.
Although it is aimed at full-time workers, the Government’s Employment Subsidy Scheme has some things in common with Germany’s successful Kurzarbeit, or short-time work programme, in the sense that the cost of paying existing employees is shared, Prof Zimmermann says.
“The programme is very effective, since it mainly applies to the high-quality workers from the export-oriented industries,” he explains.
“These high-skilled workers are of value; the firms are anxious to keep them since they are afraid they cannot find such workers after the crisis is over.”
But the schemes are not without risk, Prof Zimmermann adds.
“The danger is that such programmes delay necessary structural adjustments, and in general they are not justified for normal economic periods,” he says.
“From all this, I find the Irish model to have a high potential to function if applied to the export-oriented companies. But I am less optimistic if applied to companies in general and for a long time.”
The Tánaiste will give details of the softened criteria for the subsidy scheme, which is co-ordinated by Enterprise Ireland, next week, and has already said it will be extended to non-exporters.
At Ibec, O’Brien believes this time around there will high demand for the scheme from non-exporters. But he would rather see those exporters who were put off by the original application process prioritised, alongside companies in the sub-supply sector (who supply goods and services to exporters), employers in seasonal sectors and employers who have been hurt by cheaper imports.
The debate about how good wage subsidies are at spurring economic growth will continue as budgets tighten. In the meantime, the message from the Government to employers seems to run a little like this: Come and get it if you think you’re hard enough (but can also prove you’re having a rough time of it right now).
11/11/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Obama urged to bolster federal program that curbs layoffs, by Tony Pugh, McClatchy Washington Bureau via mcclatchydc.com
WASHINGTON — As job losses continue to slow the nation's economic recovery, labor experts and economists are urging Congress and the Obama administration to boost funding for a little-known program that 17 states are using to avert layoffs and keep workers in their jobs.
Mass layoffs of 50 or more employees claimed 278,000 jobs in the third quarter alone, according to new government data. All the laid-off workers were idled for at least a month and only one-third of their employers expected any of them to be recalled.
In the face of continuing business slowdowns, however, thousands of employers are forgoing layoffs and taking advantage of state "work-sharing" programs in which they cut the hours of full-time workers, who then recoup a portion of their lost wages — usually 50 to 60 percent — from unemployment insurance benefits.
The rules vary by state, but work sharing typically helps reimburse employees for wage reductions ranging from 10 to 60 percent.
For example, an employer that needs to cut 20 percent of its full-time work force could do so through layoffs. If those laid-off workers earned an average of $500 a week, they probably could expect roughly $250 a week in unemployment benefits.
However, if instead of layoffs those workers' hours were cut by 20 percent through the work-sharing program, they'd each earn $400 a week. They'd also be eligible for the program's jobless benefits, which would make up about half of that $100 wage cut, or $50. With this approach, the worker's earnings would be roughly $450 a week, a 10 percent cut instead of a 50 percent cut.
Employees like the program, which is sometimes called "short-time compensation," because the wage reductions are absorbed equally among workers, avoiding the stress and income loss of layoffs. Employers like it because they can reduce payroll and retain experienced workers and don't have to pay to recruit, hire and train new workers when the economy improves.
State governments like work sharing because participants receive less in cash benefits than laid-off workers do, easing the drain on state unemployment funds, which have been hard hit during the recession.
Streich Brothers Inc., a machine and fabrication shop in Tacoma, Wash., has used the program for nearly four years. Thirty-six of its 40 employees are enrolled.
After eliminating six positions this year, company President Christine Fisher said the work-sharing program helped her avoid at least four temporary layoffs by adjusting the hours of her machinists and welders.
"The flexibility is what's good for us," Fisher said. "It allows me to fluctuate and have a certain amount of workers here all the time, every day. One week they may be down four hours, and the next week I may only need them to work three days."
Steve Barry, a union welder at the company for nearly 20 years, said he sometimes lost 16 to 24 hours a week in the program, but unemployment benefits make up more than half of his lost earnings. Barry said he liked work sharing because all employees shared the benefits, and he was more financially able to handle the lost hours than younger workers were.
"If I want to take a little time off and give a guy below me with less seniority a chance to work, and he needs it worse than I do, then it works out great for all of us," Barry said.
Work-sharing programs are available in Arizona, Arkansas, California, Connecticut, Florida, Iowa, Kansas, New York state, Maryland, Massachusetts, Minnesota, Missouri, Oregon, Rhode Island, Texas, Vermont and Washington state. Their popularity has skyrocketed since the economy tanked in December 2007.
In California, which established the nation's first work-sharing program in 1978, nearly 183,000 workers were enrolled through the first nine months of the year, compared with a little more than 80,000 for all of last year.
The nation's second-largest work-sharing program, in Washington state, has a record enrollment of more than 2,500 businesses and more than 50,000 workers who filed claims this year. The program already has paid out more than $31 million in unemployment benefits this year, compared with $4 million in 2008.
In New York, more than 1,800 companies have enrolled this year, compared with 483 last year. The increase has helped save an estimated 10,500 jobs through the first eight months of the year, more than two-and-a-half times as many as last year.
That surge in participation has convinced many that it's time to take work sharing national.
"It should be an option in every state," said Neil Ridley, a senior policy analyst at the Center for Law and Social Policy, a liberal research center in Washington, D. C. "It doesn't work in every situation, but it should be an option that's on the table for employers and workers."
At the New Buffalo Shirt Factory in Clarence, N.Y., all the company's 120 hourly workers are in the program. Employee retention is the biggest benefit, said Pam Thayer, the company's human resources director.
"My employees know that if they only work four days a week for a month or two, they know they'll get that one day of unemployment, so they don't have go out and look for another job, worried that, 'I don't have a steady income. I need something I can depend on.' This provides them with that," Thayer said.
The lack of work-sharing programs in other states could reflect confusion about how to comply with the federal laws that govern the programs, said Richard Hobbie, the head of the National Association of State Workforce Agencies.
After originating in California, work sharing operated as a temporary national program in the early 1980s before federal laws adopted in the early 1990s allowed states to establish their own programs.
Work-sharing programs require union consent when employees are covered by collective bargaining agreements. Some states, such as Washington, require that health benefits be provided to all employees who participate.
Fisher of Streich Brothers in Tacoma said the added cost was a drawback, particularly when employees weren't working 40-hour schedules.
The Center for Law and Social Policy wants the Obama administration to shore up any legal questions surrounding the federal law and provide technical assistance and financing to expand work-sharing programs.
In congressional testimony last month before Congress' Joint Economic Committee, Mark Zandi, the chief economist of Moody's Economy.com, urged Congress and the Obama administration to provide $2 billion in seed money to establish work-sharing programs nationwide next year.
An economic adviser to Arizona Sen. John McCain's 2008 Republican presidential campaign, Zandi estimated that every dollar spent to fund work-sharing programs would result in a $1.69 increase in the gross domestic product the following year.
"Like the temporary extension of unemployment insurance benefits, work share has a high bang for the buck, as it provides financial help to distressed workers, who are likely to quickly spend any aid they receive," Zandi said in written testimony.
To help ease the strain on state unemployment-insurance funds, Sen. Jack Reed, D-R.I., introduced legislation in August that for two years would finance all work-sharing benefits paid to employees for up to 26 weeks. The Senate Committee on Finance is considering Reed's "Keep Americans Working Act" (S. 1646).
Senate Democrats are crafting a job-creation bill, but it's unclear whether it would beef up funding for work-sharing programs.
The White House didn't respond to a request for comment about the programs, but in his inaugural address, President Barack Obama said: "It is the kindness to take in a stranger when the levees break, the selflessness of workers who would rather cut their hours than see a friend lose their job, which sees us through our darkest hours."
Like regular unemployment insurance, work-sharing benefits are drawn from the state unemployment insurance trust funds and from the employers' unemployment reserve accounts. The benefits paid to workers count against their unemployment insurance accounts as well.
Douglas Holmes, the president of the National Foundation for Unemployment Compensation and Workers' Compensation, said that his organization hadn't taken a position on work sharing. However, he said that some states' restrictions — such as maintaining employee health benefits — could limit employers' flexibility to cut costs under the program. He also said the programs were complicated to administer.
Thayer of the New Buffalo Shirt Factory said the added paperwork for all her employees took 30 to 45 minutes a week.
"But I don't find it a real burden," she said. "Investing 45 minutes to retain my employees and help them out financially is worth it."
- Forget the pundits, this jobless data is positive, rates will rise, by Glenn Dyer, Crikey.com.au
AUSTRALIA - The Reserve Bank just got there with its October rate rise, backed up by November’s lift: the latest labour force figures from the Australian Bureau of Statistics show an economy gathering pace and regaining its job-creation momentum.
So forget media reports about the rise in the unemployment rate by 0.1% to 5.8% “underscoring the fragility of the economy’s recovery in the same month the Reserve Bank began raising interest rates”.
In fact while market forecasts for a rise in the unemployment rate back to 5.8% were spot on, their estimates for 10,000 jobs to be lost in October, were again wide of the mark.
The figures are also considerably at variance with the downturn in online and newspaper job ads last month.
Jobs growth happened in the resource rich states of Queensland and Western Australia. NSW was again the laggard with a large rise back over 6% in the month.
The reality is that the Australian economy has created over 65,000 jobs in the last two months in a surge of employment not seen for over a year, but not enough to absorb both the growth in the work force and the ranks of unemployed.
The Federal Government reckons the unemployment rate will peak at 6.75% early next year, but if this rate of job creation continues until December, then you’d have to wonder if the rate won’t end up close to where it is now, perhaps at a peak of 6%.
So pencil in a December 1 rate rise from the RBA, with the market analysts and economists now to debate whether a rise of 0.25% or 0.50% will happen.
Seeing many of them were out of the ballpark on the jobs numbers, perhaps their forecasts for a rate rise might be equally wide of the mark.
The ABS said today that overall employment rose 24,500 to 10,831,600 with full-time employment up 2,900 to 7,590,800 and part-time employment 21,500 to 3,240,800.
In September, over 40,000 new jobs were created, weighted heavily towards new full time gigs.
The rise in part time employment is more typical of an economy recovering momentum and employers hesitantly adding to their employment numbers.
Unemployment rose 11,100 to 670,100, the highest since early 2002. The number of people looking for full-time work rose 3,500 to 501,100 and the number looking for part-time work was up 7,600 to 169,000. The participation rate remained steady at 65.2% and aggregate monthly hours worked fell 1.9 million hours to 1,521.1 million hours, according to the ABS.
That’s another sign that the job creation momentum is nowhere near full strength, but its approaching take-off.
Over the year from October, 2008, 17,000 extra jobs were created, but there was an extra 154,000 people unemployed, plus hundreds of thousands of others working shorter hours.
No other major developed economy can claim to have added jobs in the toughest year their economies have seen in over 50 years.
On a state by state basis, NSW was the worst performer with the jobless rate jumping sharply top 6.1% from 5.5%. Victoria was unchanged at 5.7%, Queensland saw a fall to 6.0% from 6.3%, WA, was down sharply from 5.7% in September to 5.0% last month, South Australia was also down, to 5.3% from 5.7%. Tasmania, the Northern territory and the ACT were all either down, or steady.
11/10/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- The Wages of Professionalism, by Jonathan Cutler, (11/06) WesleyanArgus.com
Professor’s Perspective is a part of the Op-Ed section in which the editor invites a member of the faculty to engage a topic of their choosing.
WESLEYAN UNIVERSITY, USA - There is something strangely—but significantly—slippery about the idea of a "profession" and what it means to have one. There is, no doubt, a lot of symbolic status that comes with professional identity, and sometimes considerable money. But I'm wondering if it is worth the bread. Professionals seem to work without end—long hours that stretch into night, workweeks that infiltrate weekends, and obligations that vitiate vacations. If all that work is simply the unavoidable path to a fat paycheck, so be it. But there may be signs that professionals aren't even in it for the dough so much as an identity. That is, professionals don't do a job—they are a job. This may be a symptom of privilege, but it might also turn out to represent a pretense for profound exploitation, class dogma that masks an increasingly raw deal.
In some contexts, professional activity appears to be all about getting paid, as in the distinction between the unpaid amateur and the professional. The world of professional sports and entertainment seems to be unabashedly about big money and neither professional athletes nor media celebrities are particularly shy about it. Many sports professionals hire agents and/or belong to labor unions with the understanding that both agent and union are supposed to drive a hard bargain to win the big money. It’s Jerry Maguire’s, "Show me the money." You remember.
Most of the time, however, the idea of the professional suggests the exact opposite: lofty indifference to the profane world of money and the market. Inside and outside of academia, all professionals are really professors; they profess a kind of sacred public vow, a religious or quasi-religious calling that implies a notion of service. Professional "ethics" trump the all-mighty dollar. Isn't this at least one of the reasons why most professionals and professional institutions—unlike business-types and commercial enterprises—traditionally stay clear of advertising? Sure, there is Dr. Zizmor, the self-promoting NYC subway dermatologist, and all the ambulance-chasing attorneys who ply their trade on television. But everyone knows that these are the fallen angels willing to sell their professional birthright for a mess of pottage.
Professional status also signifies a collar color. Blue-collar workers do manual labor; white-collar professionals engage in more cerebral activities and bring to bear advanced knowledge. Blue-collar-workers join labor unions, at least in the iconography of the collar wars. Professionals go to college. Although the whole aloof orientation of college ostensibly abjures the instrumentalism of trade unionism, college may actually be the one place where professionals sometimes adopt some of the practices of traditional guilds. Trade unions issued membership cards that afforded access to lucrative work, at least insofar as the unions were able to effectively limit the supply of membership cards on the market. Within the skilled trades, the difficulty is not getting paid so much as getting in; membership was necessarily exclusive because the whole market strategy required minimizing labor supply relative to demand. Admission was always the site of the greatest contention and bitterness, especially insofar as the easiest way to become a member of the guild is to be the child of a member. Contemporary colleges operate according to an almost identical logic: they issue membership cards (diplomas); admission is both necessarily and intentionally limited; admission is the site of the most contentious and bitter battles; and parental membership ("legacy") remains a relevant admission criterion.
There is, however, one crucial way in which professionals depart dramatically from the strategic logic of the guild. Guilds always put tight controls on the hours of labor. They knew that a labor supply logic demanded shorter hours. Less work and more pay; it was the rallying cry of every trade union. Professionals don't watch the clock. In fact, professionals negotiate pay, but never even discuss hours. With great pride and fanfare, professionals boast about being paid an annual salary instead of an hourly wage. It is precisely the annual salary, however, that lays the foundation for endless work because pay is fixed even if work hours are dramatically inflated. This is hardly the stuff of trade unionism, although employers could be forgiven for being delighted.
In fact, within the United States, this attribute of professionalism is inscribed in law. The Fair Labor Standards Act features some very specific language about what it means to be a professional. According to the most recent Labor Department definitions, a professional must perform work "requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment." In order to distinguish between blue-collar skilled trades and white collar professionals, the law also specifies that the advanced knowledge "must be in a field of science or learning" and such knowledge "must be customarily acquired by a prolonged course of specialized intellectual instruction."
The government didn't get in to the business of defining professional work in order to congratulate those who fit the bill. The Fair Labor Standards Act is the law that enshrines the forty-hour week as the social norm, but not for professionals. Professionals are special. They have the privilege of being exempt from the wage and hours law. Everyone else earns premium pay for any hours worked beyond the forty-hour weekly standard, a provision that effectively discourages endless work. Little wonder that employers are eager to "concede" professional status to anyone who will accept it.
As a technical matter, it wouldn't be that difficult for professionals to get back into the trade union game. Although many professionals are exempt from the National Labor Relations Act that provides the legal framework for unionization, this isn't even necessarily the key legislative domain. Formal recognition of professional unions would be an important step, but even more immediate consequences would flow from a few small amendments to the Fair Labor Standards Act: end the professional exemption and—just to take it out for a spin—amend the law to provide overtime after 30 hours, rather than 40.
Employer opposition to these amendments would be tremendous, and maybe professionals would lose more battles than they would win in a fight for shorter hours and higher wages. But the real barriers to change are neither technical nor political. The battle cannot be won so long as professionals refuse to take up a cause that challenges the dogma of work and the cultural politics of disinterested professionalism. Work shmirk, job shmob. Show me the money.
Jonathan Cutler is Chair of the Department of Sociology.
- Rude awakening for ex-communist countries as financial crisis made in west hits hardest in east - New democracies that embraced the free market are facing their deepest crisis after years of rapid growth, by Ian Traynor, guardian.co.uk
BUDAPEST, Hungary - The large inflatable columns toppled one after the other in Berlin on Monday night in a play on democracy's chain reaction in 1989. Twenty years on in Budapest, Daniel Bebesy has a gloomier domino theory.
"Western banks and business have made huge profits in this region for years. Now there's a reluctance to support us," said the economic analyst and fund manager at a large foreign bank in Hungary. "If one of our countries defaults, it will be contagious. There will be a domino effect."
The Hungarians are the Cassandras of central Europe. Bebesy's pessimistic vision of spiralling debt, tumbling economies, and political mayhem may be overwrought.
But for the newish democracies and market economies of the region, 2009 has been a rude awakening, the biggest shock since they switched from Soviet communism to western capitalism 20 years ago. "There is no doubt the region is in deep crisis," said the European Bank for Reconstruction and Development last week. "The worst output collapse since the great recession that followed the end of communism."
The financial and economic crisis was made in the west, but has hit hardest in the east. After years of growth far outstripping rates in the west, governments in Hungary, Latvia, and Romania have fallen, economies have slumped, and leaders have had to call in the salvage squads from the International Monetary Fund, whose tens of billions in bail-out funds are conditioned on swingeing budget cuts.
The US and western Europe this year saw the comeback of the state, nationalising banks and car companies, taxpayers shelling out squillions to buy bad debt, toxic assets, and high street fixtures. But in eastern Europe states are weak and small, the banks are western-owned. The resources for coping with the crisis are thin.
The west does fiscal stimulus. The east cannot afford to.
"The crisis signals the inevitable end of the political and economic cycle that central Europe has come through since 1989," Jacques Rupnik, a Czech political scientist in Paris, wrote recently in an obituary for neoliberal economics in the region.
Pal Tamas, a Hungarian sociologist, said that the problems went much deeper. "This is not a financial crisis, as in western Europe. Here it is a fundamental crisis, a paradigm shift. The 20-year transition since the end of communism has come to an end. The model that we saw being implemented in the 1990s and 2000s is finished."
In Latvia, whose economy is expected to shrink by more than a quarter before the upturn begins, scores of schools and hospitals are being closed as budgets are slashed. Public sector wages have been cut by up to 40%, pensions reduced, and under the 2010 budget agreed last week there will be further steep public spending cuts.
Since overthrowing communism two decades ago the new democracies of eastern and central Europe have eagerly embraced the western free market model lock, stock, and barrel.
Not only did they join the European Union and Nato, but they handed their banks to the big western players, closed down their communist-era industries, privatised what was left and sold them to western multinationals, opened their economies entirely to the forces of globalisation, and fuelled their race to prosperity through a huge western-supplied cheap credit boom that has come to an abrupt halt.
In Latvia, for example, the Swedish banks dominate the market. They helped to create one of the world's biggest property bubbles through profligate lending in euros. The bubble burst. Property prices collapsed. The new middle class finds itself in negative equity.
This is a new phenomenon for these capitalist neophytes. Only 15 years ago there was barely any household debt.
"We had unlimited belief in the capacity of the markets to regulate themselves. Most believed that property prices cannot fall, that it was a law of physics," said a Latvian economist working at one of the big Scandinavian banks in Riga.
In Budapest, Daniel, who did not want his full name published, used to restore old buildings before losing his job to a leg injury. He fell for the slick advertising and the western offers of easy loans to feed, as with many Hungarians, a consumption binge. The 36-year-old took out two mortgages on two flats, one in Swiss francs, the other in euros. Then the Hungarian forint slumped against the euro, meaning his monthly repayments soared by 50%.
"It's a catastrophe. Everything is under a frog's arse," he complained, using a salty Hungarian expression meaning things could not get worse.
Veronika Mildenberger is also at her wit's end, fearing her retirement nest-egg will be devoured by the crisis. After 40 years' work in Budapest as a typist, the 76-year-old has 7m forints in the Italian-owned bank.
That is €25,000 (£22,460). A year ago it was €30,000. Although the Austrian and Italian banks which dominate the Hungarian market have promised not to abandon the country, her confidence is slight. "I'm very afraid that the Italian bank will close down and move back to Italy. If that happens I'll lose everything. It's sad, but that's what we wake up to every morning."
In Riga and Budapest there is a sense that governments failed to exploit the boom years to secure future economic prospects, but also anger with the western banks and a conviction that they should share the blame and the costs for the mess.
"The banks were too willing to lend," said Valdis Dombrovskis, the Latvian prime minister. "We've had some issues with the Swedish banks. The debt levels were mainly driven by them. And when the crisis came, it stopped abruptly. The banks stopped lending and made the recession worse."
In Budapest Gyoergy Czirmes, a Hungarian lawyer, is campaigning to force the foreign banks to limit repayments by struggling customers. "I'm trying to raise awareness that the banks should not be allowed simply to raise the monthly instalments. If the currency is devalued [as in Hungary], the client and the bank should share the costs."
But the crisis is more systemic, not confined to the mess in the housing market. Eastern Europe has been kept afloat by cheap international credit for more than a decade, with western banks lending more than a trillion euros to households and companies across the region.
That era looks to be over, complicating the outlook for any quick recovery. Gordon Brown said earlier this year that global international capital flows collapsed by 80% last year. Private capital flows to eastern Europe are drying up, expected to drop to $30bn (£18bn) this year from $254bn last year, according to the Institute of International Finance.
This spells a big shock to a system which, unlike in the west, is young, fragile, and has shallow roots.
The revolutions of 1989 threw up winners and losers. The losers were the elderly, the poor and ill-educated, the small towns and rural populations, the eastern parts of countries. The winners were the well-educated, metropolitan, flexible younger generation for whom a new life of opportunity beckoned – owning an apartment, buying a new (western) car, winter skiing in Austria, summer holidays in Croatia. For young Hungarians, Poles or Slovaks, life just kept getting better.
It is this new middle class, the bedrock of the new democracies, that is being hit hardest for the first time since communism collapsed.
According to Tamas, the director of Hungary's Institute of Sociology: "International liberalism in its Atlantic form, we've only had it for two decades, and it's dead. In financial terms, the middle-class dream is over here."
Bebesy, the 30-year-old fund manager, was one of the winners. "This is all we talk about in the cafes in the evening. Who's kept his job, who's losing his job. You can't borrow money any more. There are nominal wage cuts, short-time working, firms closing down, people getting fired. We couldn't imagine this happening. It's a big shock, the first crisis since the changeover [post-1989]."
There is no palpable nostalgia across central Europe for the bad old days on the wrong side of the iron curtain. But there is growing grievance.
The structure of the economies in "new Europe" – more open, more global and less experienced than those of "old Europe" – means they are at the mercy of Germany and western Europe.
When they opened up to the west countries like Hungary or Slovakia willingly turned themselves into cheap assembly plants, inside the European single market, for western giants manufacturing cars, car parts, mobile phone handsets, computer components or plasma TV screens.
"What you have in central Europe is cheap labour production for the big west European companies with the output going back to western Europe to be consumed," said Zsoltan Pogatsa, who teaches the economics of European integration at the University of Western Hungary.
This was the tacit bargain struck in the 1990s, an arrangement that would gradually haul the east towards parity with the west, embedded in Europe's prosperous single currency zone.
At the very least, the crisis has delayed that process of convergence.
But given where they are coming from, the resilience of the east Europeans suggests they are well placed to cope with the hard times.
"Many political systems could have collapsed under this kind of stress," said the Latvian bank economist. "Life got too easy after we joined the EU. But I remember the Soviet lifestyle. Things are still a lot better now. We've probably been set back five years, but there's no need for a new paradigm."
Nils Muiznieks, a Latvian political scientist and former government minister, is also sanguine.
"The 20-30-year-olds are hard hit. They borrowed lots of money for cars and apartments and the market cannot sustain their expectations. Many of them will emigrate," he said. "But we had hyperinflation in the early 90s. People have weathered crises before and they will do again. There's a lot of stoicism."
This article has been corrected since it was originally published. Daniel Bebesy, and the Daniel who lost his leg to a work injury, are two different people. In the original article the latter's comments were wrongly attributed to Bebesy due to an editing error.
11/08-09/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Lean hiring for holidays - Seasonal jobs in short supply at many local retailers, by Sherry Slater, F11/09 Fort Wayne Journal Gazette via JournalGazette.net
U.S. MIDWEST - If you’ve been waiting for the annual holiday hiring surge to pick up some part-time work, you’d better rethink your job-hunting strategy.
Most retailers can’t afford to recruit armies of seasonal help these days.
A survey by Aon Consulting found 44 percent of the leading U.S. retailers are hiring fewer seasonal workers this year than last. And 37 percent are keeping holiday hiring flat.
That leaves only 19 percent of survey participants who are increasing seasonal hiring this year. The Chicago research firm surveyed more than 100 major retailers for data in the survey that was released last month.
Staffing decisions are all about the bottom line. Retailers vividly remember last year, when holiday sales fell 3.4 percent to $442 billion, the first time holiday spending failed to grow since the National Retail Federation started tracking the statistic in 1992.
The Washington-based industry group is forecasting holiday sales this year will fall 1 percent below last year’s total.
Retailers can’t force shoppers to spend, but they can hold down costs. Interviewing job applicants takes time – already a scarce commodity for overworked managers. And training takes money.
Besides, many stores have cut hours for year-round employees who are happy to pick up more hours.
Meijer spokesman Frank Guglielmi said the Midwest discount chain offers part-time workers more hours this time of year. But the decision wasn’t driven by the recession, he said.
The Grand Rapids, Mich., company routinely keeps a relatively stable workforce.
“We don’t hire a lot of folks at the holidays,” he said. “Our business model hasn’t changed.”
Sweetwater Sound Inc. operates with the same philosophy.
The world-class music technology and equipment company sees its strongest sales each year in November and December. But staff numbers don’t surge then, said Jeff McDonald, Sweetwater’s human resources director. The company prefers to hire at “a very modest and healthy pace all year,” he said.
“We like to think we have that under control at all times and don’t go into panic mode in the fourth quarter,” he said.
Sweetwater’s sales were up in September and October compared to the same months of 2008. The company, which employs about 350, anticipates strong sales through this holiday season.
In past years Sweetwater hired some seasonal workers in its shipping department, but a strong crew and improved efficiency allowed the company to cut back to only one or two temporary warehouse workers this year, McDonald said.
Sears added four seasonal workers to its warehouse/receiving operation at its Glenbrook Square store this year, associate Phillip Haugabook said.
The retailer’s other departments have also hired several seasonal workers each. Haugabook didn’t have a total number.
Across the mall, J.C. Penney is hiring 100 part-time associates for the holidays, store manager DeAnna Ragan said last week.
The temporary work will be mostly on weekends and will help the department store cover expanded holiday hours, she said.
Ragan “absolutely” encourages job seekers to put in applications this week. Only about half the jobs have been filled.
Hobby Lobby, which added 10,000 square feet to its Coldwater Road store this year, hired five temporary employees for the holidays.
Steve Rubin, store manager, said it’s about the same number as in previous years. The additional workers represent about 10 percent of his workforce.
“We’re doing pretty well here,” Rubin said. “The cooler weather will help the seasonal sales.”
The Oklahoma retailer specializes in crafts, framing, silk flowers and art supplies. The added space allowed the store to add more furniture, including dressers, armoires and bookcases. Walmart stores normally hire additional cashiers for the holiday season, district manager John Wolf said. The average is 10 to 15 per store.
Part-timers also get the chance to work more hours, assuming they’re available when the store needs more help. Business picks up in the evenings and stays busy until midnight most weekdays and until 2 a.m. on Fridays and Saturdays, Wolf said.
The discount retail giant has been able to maintain its workforce because sales are still strong.
“We’ve been pretty fortunate,” Wolf said. “Normally, when the economy is bad, we do better.”
The retail industry has suffered during the recession, with numerous companies that had Fort Wayne area stores filing for bankruptcy, including Circuit City, Steve & Barry’s, S&K Men’s Store and Linens ’n Things.
More than 500,000 retail jobs were lost last year. And almost 90,000 more retail jobs were cut in the first eight months of this year, according to Challenger, Gray & Christmas Inc., a Chicago employment research and recruiting firm.
CEO John Challenger said the hiring surge could come later than usual this year as retailers wait to be sure they have the sales numbers to justify the added expense.
“The good news for retailers is if there is a need for late hiring, the labor pool is flush with qualified candidates who undoubtedly would be eager to earn some extra holiday spending money and take advantage of employee discounts,” Challenger said in a prepared statement.
Bob Lopes, Aon Consulting’s executive vice president, said retailers have good reason to be cautious. Consumer spending hasn’t fully rebounded because the job market hasn’t recovered.
“According to our survey results, there are a number of qualified candidates who will not find a retail job during the holiday season,” he said in a prepared statement.
But Lopes had some advice for job seekers.
“Those individuals should also consider the travel, hospitality and food service industries,” he said. “While these industries don’t receive the same type of attention as retail during the holiday season, they typically increase their hiring this time of year.”
- Stay on board and just enjoy the ride as IMI steams ahead, by Nic Hasell, 11/09 Times Online via business.timesonline.co.uk
UNITED KINGDOM - IMI, which supplies hydraulic controls for trains, is running ahead of time.
Yesterday’s year-end trading update was released more than a week ahead of schedule. More important, the FTSE 250 engineering conglomerate said that current-year profits would be “materially ahead” of forecasts. With IMI set to deliver this year the earnings that the City had expected in 2010, its shares surged by more than 15 per cent.
If there is a disappointment, it is that, like others in its sector, IMI’s recovery is being driven by lower costs rather than higher sales. The company acted swiftly to cut overheads, laying off 2,500 staff in the 12 months to June 30 — 16 per cent of its total headcount — and putting a further 3,700 on short-time working. It has also taken advantage of lower demand to accelerate the shift of production to lower-cost countries, such as China, India and the Czech Republic, while its factories were running below capacity. And it has benefited from cost reductions outside of its control, largely in its indoor climate division, which makes ventilation and cooling equipment, where it has been assisted by lower copper prices and raw material hedging contracts that were struck near the bottom of the market.
The result is that IMI will produce record operating margins of more than 14 per cent in the second half of 2009, suggesting that recession has done nothing to knock the company off course in meeting its long-term target of 15 per cent.
The broader encouragement is that IMI has been able to hold its prices firm — they are up between 1 per cent and 2 per cent across the group — and that there are tentative signs of a pick-up in orders in recent weeks (although these are mostly confined to its fluid power operations in Asia and North America). Overall, orders are down 12 per cent year-on-year, compared with the 20 per cent decline reported in June. Further, although IMI’s heavy-duty valves business has been hit by the postponement of capital spending on oil and gas facilities, its interests in power generation are showing signs of life.
Yesterday, IMI said that its CCI subsidiary had won its largest order in the nuclear sector, a deal with an undisclosed customer worth £55 million over eight years. The company will not start shipping valves until late 2010, but the nuclear contracting world is tight-knit and IMI’s ability to seal a deal at a time when nuclear new-build programmes are gaining momentum — witness yesterday’s government approval for ten possible sites in the UK — augurs well for future sales.
At 529½p, IMI’s shares have surged 87 per cent since July. However, on raised 2010 earnings forecasts, the shares still trade on only 11 times next year’s numbers, not dear given the scope for further upgrades. The 4.2 per cent prospective dividend yield also appeals. Hold on.
11/07/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- Lumber recovery may come next year - A trade group predicts Lane County’s biggest manufacturing industry will begin a slow climb, by Sherri Buri Macdonald, The Eugene Register-Guard via RegisterGuard.com
ROSEBURG, Ore. - Western lumber mills should see brighter days next year, according to the latest forecast from Western Wood Products Association, a Portland trade group.
The glimmers of recovery will come after five straight gloomy years of losses, the forecast said.
The U.S. financial crisis and collapse in residential construction pushed lumber demand to its lowest level in modern history, so it will take a while to crawl back up, according to the new forecast.
“Given the unprecedented downturn, recovery for the lumber industry is unlikely to follow the same path as it has in the past,” said David Jackson, the association’s economist. “The challenge for mills will be adjusting to a ‘new normal’ for the future.”
With 3,700 workers in September, wood products manufacturing still is Lane County’s largest manufacturing sector, even though the sector has lost 500 jobs since September 2008, said Brian Rooney, labor economist with the state Employment Department.
The “new normal” at many local mills has been lower production, reduced hours and, in some cases, a smaller work force.
Weyerhaeuser spokesman Greg Miller said the company is hopeful that the industry will turn around next year, but “I’m not sure that we share as much optimism as Western Wood Products Association.”
“We see 2010 still as a pretty flat year,” he said.
“My own view is that consumers need to have a lot more confidence in the job picture out there” to see a solid recovery, Miller said.
Weyerhaeuser’s Cottage Grove sawmill has responded to the weak market by taking more downtime than usual this year, he said.
The mill was down this week, and production will cease again the week of Thanksgiving, Miller said. Each downtime affects about 200 production workers, he said.
“The downtime has been occurring all year long because of the poor market conditions and weak customer demand,” Miller said. “It’s reflective of the entire recession that we’ve been in and continue to be in.”
Miller said he wasn’t aware of any downtime at the company’s engineered wood products division in west Eugene, which employs about 400 people.
Roseburg Forest Products, which operates multiple facilities in the Roseburg area, will cut hours at its Dillard sawmill starting Monday, said Hank Snow, vice president of human resources.
The mill had been running three 40-hour shifts every week; now each shift will be 30 hours, he said.
The move, projected to last through the end of the year, affects about 200 workers, Snow said.
“Market conditions are terrible, and the prices don’t justify running the volume,” he said. “We can’t get enough orders to sell everything we make.”
Snow said Roseburg Forest Products has been cutting back hours at its plants since the summer.
“We’ve just gradually been reducing shifts in other plants. The sawmill had not taken reductions up until now.”
Roseburg Forest Products forecasts modest improvement in the spring, but no marked improvement until spring 2011, he said.
To survive the recession with minimal layoffs, Roseburg Forest Products has used the *[Oregon] Employment Department’s Work Share program at several of its facilities, now including the Dillard sawmill. Under the program, instead of being laid off, employees work reduced hours and receive reduced unemployment insurance benefits, which helps fill the income gap.
The Western Wood Products Association projects that only 31 billion board feet of lumber are expected to be used in 2009 — less than half of the amount consumed in 2005, which was the peak of lumber demand.
Housing traditionally accounts for 45 percent of annual lumber consumption, the association said. This year, only 551,000 houses are expected to be built nationwide, down 39 percent from last year. The second largest market for lumber — home repair and remodeling — has fared slightly better through the recession than homebuilding, but it’s also down.
U.S. lumber mills have responded to the slackened demand. Western lumber production this year is estimated at 10.2 billion board feet, down 21 percent from last year, the forecast said.
For next year, the association predicts lumber demand will rise 11 percent to 34.5 billion board feet; housing starts will increase 21 percent to 668,000; and Western mills will produce 11 billion board feet of lumber, up 8 percent.
- Bad economy spurs jobs agency deficit, The Local via thelocal.de
BERLIN, Germany - Germany’s Federal Labour Agency confirmed Saturday that it is facing a €17.8 billion deficit as the worsening economy, higher unemployment claims and government support for a shorter working hours scheme drain the its coffers.
Policies such as *Kurzarbeit, which cover a portion of workers’ pay packets if their employer has to cut hours, have kept unemployment lower than most economists expected. But the government, already facing record deficits and ambitious plans to cut taxes, will have to fill in most of the budgetary gap itself.
The agency, which is financed primarily by worker and employer contributions, expects to spend almost €54 billion next year, but will take in just €36.1 billion and has just €1.8 billion in reserves to cover the deficit itself.
According to a report first published by Der Spiegel newsmagazine, the agency expects to pay out €22.5 billion in unemployment benefits in 2010, a €4.8 billion increase over 2009.
The agency’s figures are certain to intensify the political debate over planned tax cuts. The new centre-right coalition of Christian Democrats and pro-market Free Democrats have planned tax cuts of €24 billion and the FDP in particular had hoped to implement those cuts immediately. With government budget deficits projected to pass €86 billion, CDU Finance Minister Wolfgang Schäuble has indicated he would like to roll back the planned tax reductions.
DPA/The Local (firstname.lastname@example.org)
11/06/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- Are Dalton Days [days off instead of jobcuts] a good idea? Talkback Toronto via CTV.ca via toronto.ctv.ca
TORONTO, Ont., Canada -..Comments...now closed for this story
It's about time the public sector shared in reduced spending from the recession. If tax revenues decrease, then spending should decrease too! That is just common sense and we should not be running up debt for our children.
Dalton Days? Rae Days? Dalton will certainly secure a place in the history of Ontario if he goes ahead with Dalton Days. McGuinty and his Liberal government has done so much damage to education and health care in this province it will take more than Dalton Days to make it right. Why do the Liberals think they can waste money, give it to their friends, and then make provincial employees pay for it? Dalton better prepare for retirement because Dalton Days will seal his fate.
Robert in Courtice
The incompetence of the McGuinty Liberals just boggles the mind.These people never learn from the mistakes of previous governments.Bob Rae tried this same lunacy decades ago.It was an unmitigated disaster.Now,here comes McGuinty,allset to do the repeat.Unbelieveable!!!
Wasn't Mayor Miller smart to have the new tax ideas announced while he is away....maybe that would work for Dalton
A nurse or teacher would be missed the second they leave their patients and students. Many administrators could be gone for weeks, and no one would even notice their absence. Those are the people, with their very large salaries who should get the Dalton Days!!!
If the government thinks that this is such a great idea to hit the hardest working sector, than it is time that they hit the one sector that is over paid and under worked themselves. Dalton McQuinty and his government should take a pay cut and this would cover the losses that is needed to be recovered. I work in the field he always wants to hit and we have yet to get a cost of living increase,it's always well below. As we are an essential service so we are unable to strike, so again we are at the mercy of a settlement of whatever we get. To threat a layoff for these forced days off good luck see what happens to the healthcare that is already faltering. Rae days didn't work why is he doing it again?
Let me get this straight. First off we "loan" millions to car companies who haven't been keeping up good business practices for years, then we are going to cut services to the taxpayer and penalize public servants to pay off the resulting debt. Hmmm, sounds like more good government to me.
As a single parent, I am barely scraping it together as it is. If our government, the same one that has misspent billions of dollars on e-health, etc. wants us to take 12 unpaid days, they may as well take our home as well. I will no longer be able to pay for it!
We have just survived two, going on three months without any money coming in, due to some problems with the company getting his pension paperwork together, so yes it would be easy to survive with a few less days a month for us.
Years ago we had to do the same sort of thing under a forced worksharing plan to keep the plant he was at at work.
[Yep, then it was called Rae Days after Bob Rae, the articulate and photogenic NDP premier of Ontario whom the suicidal backroom 'progressives' drove out of the party. Now it's named after the Liberal premier, Dalton McGinty, and some zero-solidarity employees are still trying to spin cutting jobs and markets as preferable to merely trimming hours and keeping everyone employed and spending.]
Recently,several manufacturers and other private sector workers have been required to give up pay, benefits, cut back hours etc just to keep their jobs while government workers at all levels keep full pay because their source of income is us, the taxpayers. It is about time they had to tighten the belt like the rest of us...we are no longer an unlimited source of income
Since basically everyone in the private sector has had some type of pay cut in the past year, Dalton Days can be a good idea. However, cutting nurses and EMS staff and services is not and this is what will ultimately happen if these days are approved.
Those of you who voted "yes" obviously will not be directly affected and don't remember the good old "Rae Days". These cutbacks will not affect the coffers in the government they will affect regular people who are already struggling to survive. Nurses, police, fire....anyone who is an Ontario "civil" servant will be the ones affected. The screw ups at OLG, eHealth, Cancer Ontario and other Dalton supervised organizations have cost this province billions. It should not fall on the backs of the little guy to fix it.
After all the government waste at ehealth and im sure many other departments, as well as programs that make no sense to keep paying for, HOW DARE this government suggest that the answer is to take salary out of the pockets of hard working civil servants. It's the sign of a very poor leader and desperation by a government on the last thread of its life. Lets get these clowns out of office.
I worked for the old City of Toronto Fire Dept prior to Amalgamation. Our Social Contract included losing 8 days pay, whether you were off or not.
A fellow employee was unable to take any of his 8 days off, because they were always cancelled due to staffing. At the end of that year, he had 8 days pay deducted from his first paycheque, even though he did NOT take a single Rae Day off.
In the new City of Toronto, what will happen is simple; if they permit 8 firefighters off per shift, they will just take two trucks out of service for the shift. If they permit 20 per shift, that's 5 trucks out of service.
We do not have an Overtime Callback clause in our Collective Agreement that would permit off-duty firefighters to work OT to cover those sent home on unpaid days off.
However, I'm sure if McGuinty days are legislated upon us, the City of Toronto & the Unions will come to an agreement whereby Emergency Services personnel will be exempt from this.
On second thought, I doubt it...
Why do people think that every thing is free. We expect the government to pay for good roads, schools, hospitals etc. but we don't want to pay. I experienced Ray days back in the early 90s and I loved having a day off without pay. It gave me a chance to catch up on all my chores on a weekday when everything was open and not feel guilty about taking a day off. I don;t think anyone should have to take more than 4 days a year and they should be spread out evenly over 365 days. The government should be very clear about the "Dalton Days" and do not leave it up to the employer to decide how to administrate the days. Public Sector Unions must also be willing to give a little in bad times. Public sector workers are not affected by the economic slowdown as much as the private sector workers.
reduce govrnment employees by 25% than we dont need dalton days
I cant believe I am hearing this. The Government gives money to the Car companies but then turns around and sticks it to the every day worker who already is being done in with increased taxes, TTC fare hikes and a host of other stuff. Do people not learn from others mistakes.? I sure remember Rae days see where that got him , even the unions turned against him. I have a great idea. Get all the big wigs on Council to give up 1-2 days pay, they can afford it, people like Shelley Carroll, Mayor Millar,O'Connell, Moscoe Giambrone, to name a few. That would help a lot.Then start with the provincial members maybe they all should set an example, rather than cut the people who really matter ie Nurses teachers EMS fire Police etc. How about CEO's , Presidents of companies et. We the workers would not even miss them they are so often not there anyway, but still get paid for absences. Start at the top for a change.
Rae did this to me in the past and I will never forgive him. There wasn't any advantage after 5 years into it. Here we go again, now that Rae has turned Liberal, has he once again talked Dalton into doing the same thing? The NDP will never see a lot of seats in government again and the same will happen to the Liberals. While the Conservatives are killing us now...who do we elect in government next?
Strange isn't it how government overspending always comes back and haunts the working force whether it be private or public sector.
I was layed off last April like many people where but was fortunate to secure a job before I had to accept Unemployment benefits.
I had to take a pay cut though and lost $8,000.00 a year off my salary and my expenses, rent, insurance, gas and a few other things went up a bit.
I had to cut back on my spending which I did and in time I'm running on an even keel again.
Too bad the government can't do the same thing and stop spending what they DO NOT have. This applies to all facits of government as well.
Give me a break
It's called your fair share !
Private sector - most lost jobs or pay or benefits
Public sector - most kept jobs or had pay increase or had benefit increase.
Start at the top and don't do no pay for a whole day, just reduce the wages by something small like a dollar. No one will miss that but spread over all the public workers that's got to save a bundle surely ????
And stop giving money to stupid causes you can no longer afford e.g. overseas aid sorry help starts at home first; T.O. stop funding carnivals !!
We should go to an Election, and get rid of the Liberal's Goverment once and for all.
I can't wait for the PC returned back to Government.
The PC party is the only party you can Trust.
- Companies show 'disturbing' lack of pandemic readiness - Quarter of firms in survey say planning for impact of H1N1 virus in the workplace was not a priority, Toronto Star via thestar.com
FLU IN THE WORKPLACE: A COPING GUIDE
Set policy: Decide whether employees who have any flu symptoms will be told to stay away from the office. Will they require doctors' notes?
Equip employees: Give them hand sanitizers as well as access to information about the flu, its symptoms and how to stay healthy.
Share the load: Figure out work-sharing agreements, with rivals if necessary, to ensure customers' needs will be met even if absenteeism doubles or triples.
[So there's more than one reason to get into worksharing.]
Cross-train: Got teams with extensive expertise? Great. Now train a whole bunch more in the same skills, or enough so they can get by for a few days or a week if half your expert team falls sick.
Network capacity: Will your network crash if half the team needs to work from home? Plan to expand secure network capacity, but in the meantime tell workers there's a strain on the system. That means no streaming video.
WINNIPEG, Man., Canada - If you ask Lauren Gervais how she's feeling this week, the answer is: "Good. No flu." But if the H1N1 virus does knock on the door at Gervais' market research firm, Data Probe, she will be ready.
The Winnipeg entrepreneur has been checking the World Health Organization's website to track the progress of the flu. She's provided 150 employees with hand sanitizer, encouraged those who are high-risk to get vaccinated and told them to stay home if they aren't feeling well.
Most importantly, she has a work-sharing agreement with her competitors. If the flu keeps seats at her call centre empty, she can subcontract her firm's work so it still gets done and her clients remain happy.
Whatever happens, they will ride it out, Gervais said.
"Small business is the backbone of the economy so we just have to keep chugging along."
Across the country, businesses are quietly making plans to ensure that, in the face of the flu, the lights stay on and customers can keep coming through the door.
At least, that's what some are doing. Two recent surveys have found that most small businesses, in particular, are unprepared for any event that may disrupt the workflow and only a minority actively make contingency plans.
A June survey by Bank of Montreal found that 82 per cent of Canadian small businesses did not have what business experts call a health-related continuity plan. "When you consider the potential risk to business, this low level of preparedness is disturbing," said Cathy Pin, vice-president of commercial banking.
A quarter of respondents said having a plan was not a priority. A poll by American Express Canada uncovered a similar sentiment: 40 per cent of respondents said a plan was a low priority.
"The kind of economy we've been in the last 18 months makes it difficult for them to step back and prepare for something like this," said Howard Grosfield, general manager of small business services at American Express Canada.
Banks, financial institutions and business groups such as the Canadian Chamber of Commerce have posted tool kits on their websites for small business owners who want to develop a plan.
At Telus Corp., the focus is on communicating with employees, said senior communications manager Shawn Hall. It has launched a special section on its internal website giving flu updates, health information and links to government authorities.
"Our overall plan goes back two or three decades. We updated it for SARS and we updated it for H1N1," Hall said. "Companies that plan for any eventuality tend to survive crises. Companies that look at that as a luxury tend to fail."
Nearly half of Telus's 35,000 employees are equipped to work from home or another site using laptops, video and audio conferencing and a virtual private network that keeps the company's data secure. Several hundred of its call-centre employees already work from home.
Employees showing flu-like symptoms, even mild ones, are told to stay away from the workplace. In B.C. and Alberta, where Telus operates the 911 emergency systems, extensive cross-training ensures that properly-trained employees can cover for absent colleagues.
"That means those technical teams don't feel like they need to be the hero and come in and infect the rest of the team," Hall said.
The task of preparing for an event that may never occur can seem daunting for small business, Grosfield said. It's important to remember that each company is different and would have different priorities in an emergency.
"Businesses need to think about what are the top one or two things that would create the biggest issue for the kind of business we're in, and what are the top one or two things that we could do to solve that," Grosfield said.
For many firms, clarifying company policy would be a good start. "You'd better make sure that supervisors know what to say. They're going to be getting calls from employees asking, `My son came home with a fever. What should I do?'" said Rod Phillips, president and chief executive of Shepell.fgi, an employee assistance plan provider.
Shepell.fgi handles about 4,000 calls from workers each day. "The biggest single increase in calls has been people asking about health," Phillips said.
Small business owners also need to determine whether they have the technology to handle a large number of employees working away from their usual workplace. Many may need to upgrade.
- Gas stations cut hours, By GENALYN KABILING & MYRNA VELASCO, Manila Bulletin via mb.com.ph
[And here's yet another reason for worksharing = vacillating supply.]
MANILA, Philippines - As their finances get battered by the price freeze on oil products imposed by Malacañang, many of the industry’s smaller players have been forced to cut operating hours starting Friday mainly because they are running out of supply.
The shortened operating hours and supply shortages in gasoline stations have been causing exasperation among motorists, industry sources said.
Oil companies said it is becoming more difficult each day for them to serve the needs of consumers “since you are being directed to sell your products at a loss”.
For their part, oil majors Petron Corporation and Pilipinas Shell Petroleum Corporation said they are still operating normally but admitted they are also feeling the pinch of supply shortages because of volume shift.
“We have noted sudden increase in our demand, especially when other players temporarily stop their operations as they wait for the next batch of their supply to come. Unfortunately, though, we cannot accommodate such sudden spike in our volumes,” a source from one of the major oil companies noted.
Industry players said it is a reality of supply and demand that if a certain station is already running out of products, its hours of operations will also be curtailed.
As of press time, it was learned that the oil companies have decided to exhaust legal remedies through the filing of petition for temporary restraining order (TRO) at a Makati regional trial court against Executive Order 839.
Malacanang for its part said oil companies should desist from blackmailing the government to compel the lifting of the price freeze on petroleum products “because it is not working.”
Press Secretary Cerge Remonde at the same time also appealed to oil firms to make some sacrifices and comply with EO 839 which was issued by President Arroyo for the duration of the state of calamity in Luzon.
Remonde said the government would not deny the oil companies “legitimate profit” but they should at least consider the welfare of families still trying to recover from the devastation brought by the recent typhoons.
“The government is not out to drive them to bankruptcy. We are just asking them to please understand the situation that our country and our people are in because of the consecutive calamities.
“We appeal to stop these grim warnings, dire predictions because it does not help the people,” he said in a Palace news conference.
"We continue to appeal to oil companies and their executives to stop raving and ranting because they are not helping the situation any. Definitely, they cannot blackmail this government," he added.
Remonde said the President is unfazed by threats of an imminent oil shortage supposedly arising from a prolonged implementation of the EO 839 and would continue to do the “right thing” and enforce the price freeze.
He said they are aware that the oil companies have adequate stocks given their recent long-term contracts.
“The President is determined to protect the interest of consumers at this time of calamity where people need all the help they can get to recover,” he said.
Remonde denied that the Department of Justice has recommended a partial lifting of the EO and said the joint task force of the DoJ and the Department of Energy will continue to monitor the compliance of the oil companies with EO 839 as well as check their oil inventories.
“If they will divert or hoard supply then we will throw the book at them,” Remonde said.
On warnings that some oil companies would implement a steep price hike once EO 839 is lifted, Remonde said: “Let us allow the spokesmen and executives of oil companies let off steam. Let us not go into a word war with them.”
“Let us just apply the powers of government, the powers of state under the law in so far as what is the good of the majority,” he said.
On reports that some traders of liquefied petroleum gas will raise prices of their products in Visayas and Mindanao, Remonde said the Department of Trade and Industry has been directed to look into the matter if these are justified.
Petron has actually imposed a P3.50 per kilo increase on prices of liquefied petroleum gas (LPG) prices in the Visayas and Mindanao.
Petron Spokesperson Virginia Ruivivar said the hike, the first by any oil player on the sensitive commodity since the first week of September, took effect at 6 a.m. Friday. The increase translates to a P38.50 increase for every 11-kilo cylinder of cooking gas.
Ruivivar cited the rise in world contract prices for November for the increase. Their LPG prices in Luzon will remain unchanged, she said.
World contract prices for cooking gas jumped up $57 per metric ton for November, according to Arnel Ty, head of the LPG Marketers Association (LPGMA).
Ty assured that his group of independent retailers will not raise prices in compliance with the EO, although some LPGMA member-brands with outlets in Quezon City were recently found to have overpriced tanks.
Data compiled by the Bulletin/ Tempo showed that the customary LPG cylinder price last month was between P575 and P610 for big oil firms such as Petron and P520 for the LPGMA. The LPGMA last jacked up prices on August 31.
Meanwhile, Opposition Sen. Francis Escudero pressed Congress Friday to act on proposed amendments to the controversial Oil Deregulation Law when both the Senate and the House of Representatives resume regular sessions on Monday.
“The law has become unresponsive to our needs. It has failed to spur competition and establish a regime of fair prices,’’ Escudero, chairman of the Senate ways and means committee, said.
Escudero joined Sen. Joker Arroyo in slamming the callousness of oil companies and their ‘’lackeys’’ by continuously criticizing without letup EO 839.
(With reports from Ellson Quismorio and Mario Casayuran)
- Bosses cut hours to work smarter instead of longer, by Elizabeth Allen, Brisbane Courier Mail via news.com.au
BRISBANE, Qnsld., Australia - Employers are beginning to count the cost to their bottom line of overworked employees, as workers compensation claims rise.
With Australians clocking up some of the longest working hours in the developed world, workers compensation cases because of stress are on the rise.
Associate Professor Paula Brough, of Griffith University's School of Psychology, says decades of research have shown the link between work and health.
"Work can affect both physical and psychological health," she says.
Brough, author of the recently published Workplace Psychological Health, says reducing working hours leads to greater productivity.
As technology removes work boundaries, some European employers have begun enforcing maximum working hours.
"Some organisations say you have to leave work at 5.30pm and if you send emails on a Saturday you are called in on Monday and asked why you were doing that," Brough says.
"To be healthy you need to have time away from work. Workers who are healthy tend to be more productive, therefore it's in employers' interests to have healthy employees."
Brough says Australian employers lag behind European and US corporations in awareness of the cost of overwork.
"But awareness is certainly growing and that is fuelled partly by the economy and the work stress cases that are going through WorkCover," she says. "Employers are being forced to consider the psychological health of their employees."
A Right Management Consultants study of 28,000 employees in 15 countries this year found a quantifiable link between health and productivity.
"Where health and wellness is managed well, organisational performance increased more than 2.5 times," RMC Australian general manager Bridget Beattie says.
The study also found a strong link between employee well-being and engagement and retention.
"The study demonstrates that failing to manage wellness effectively has a significant negative impact on an organisation's profitability, so the business case for psychological health is stronger than ever," Beattie says.
However, the study also found only one in two Australian workers believed their organisation promoted health and wellbeing.
According to a Beyond Blue survey of Australian workers, 16 per cent of professionals exhibit moderate or severe forms of depressive behaviour – at an average cost of $10,000 a year for each employee.
Brough says some ways of reducing job stress include employees gaining more control over their working hours, identifying the causes of their stress and raising it with their manager, and finding ways to "turn off" when away from work.
Centacare, the social and community services arm of the Catholic Archdiocese of Brisbane, is participating in a Griffith University work-life balance project with the aim of improving its work practices.
Centacare workplace relations assistant director Teresa Walters says Centacare's 2000 workers, in areas such as counselling, childcare and aged and disability support, are a dedicated lot.
"Our people do work with a fairly vulnerable section of society and they are very committed to their work rather than the organisation, so they are an interesting crowd to manage," she says.
Many Centacare employees want to work long hours to help others.
"We do always attempt to control hours," Walters says."We are aware of the risks to the employees of long hours. You can see that in your WorkCover claims.
"For their own good we are saying, 'You can't work all this overtime'.
"Shorter hours are more productive, that's my personal view. They are happy to be at work and they are more motivated.
"They need time to unwind, time to spend with their family, then they have more vigour when they are at work."
How to switch off
1. Leave work at a set time every day – and stick to it.
2. If it is necessary to bring work home, give yourself a time limit.
3. Find an activity that helps you forget about work and relax.
4. Exercise in the morning or at lunchtime before energy levels have dropped.
5. Have a regular day, or better days, on which you exercise.
6. Try to regain some mental energy before you start to exercise.
- Swiss unemployment at highest in over 4 years - Seasonally adj. unemployment rate stable at 4.1 pct - Unadjusted rate hits highest level since Feb 2005, Reuters.com
ZURICH, Helvetia - Unemployment in Switzerland rose to 4.0 percent in October from 3.9 percent in September, hitting the highest level since February 2005 although economists said deterioration in the job market seems to be slowing. On a seasonally-adjusted basis, unemployment was stable at 4.1 percent, remaining at the highest level this decade, the State Secretariat for Economic Affairs (SECO) said on Friday.
"As we expected the labour market is a lagging indicator and jobs continue to be lost, although the seasonally adjusted rate has remained relatively constant, so it seems unemployment is not rising as fast as could be expected," said Bank Sarasin economist Jan Poser.
"We have to see if gross domestic product growth numbers are going to be as strong as leading indicators suggest and support the labour market next year," Poser said.
There were, however, some signs of continuing underlying weakness in the job market, with the number of jobseekers up 44 percent year on year and the extension of a programme of shorter working hours aimed at limiting job cuts.
The SECO said that in August, the last month for which data are available, almost 47,000 people had seen their working hours reduced, up almost 6,000 on the previous month.
"What is a bit disappointing, is that short-time work seems to be up which means overall production hours should be down," said UBS economist Reto Huenerwadel.
[So worksharing is happening in Switzerland, but apparently there is still no government program to facilitate.]
Many experts say unemployment could continue to rise into 2010 despite indications from improving macroeconomic data that Switzerland is now moving out of its deepest recession in three decades.
Swiss National Bank board member Thomas Jordan and economists at the KOF Swiss Economic Institute have warned unemployment may rise to nearly 6 percent next year, reaching the highest level since World War Two.
But others say the data point to a less extreme scenario.
"The employment situation is still deteriorating but at a slower pace, which is good news," said Huenerwadel.
"This is the most lagging of all lagging indicators, but even so unemployment may not reach the worse case assumption of 6 percent."
SECO said the number of jobless rose to 158,138 October, while the number of vacancies fell to 13,147 from 13,940 in September. Earlier this week the SNB's Jordan indicated the central bank was at present unlikely to exit loose monetary policy given that economic uncertainty remained extremely high.
11/05/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Alive & Unedited: Donna Zuiderweg, by John Ross, ColumbusAlive.com
COLUMBUS, Oh. - Her book tattoo tells you everything: Donna Zuiderweg lives for libraries. Right now, she's one staff member fighting to maintain the national reputation of the Columbus Metropolitan Library. This summer, the city's 20-branch system was forced to cut hours and services in response to a 31-percent reduction in state funding.
I've been in libraries all my life. I was the geeky kid who spent my Saturdays walking to and from the public library and spending hours at a time there. It was several miles each way. I can't believe my mom let me walk back and forth.
We moved to Columbus from Youngstown when I was 16. My dad had a position with the post office and transferred. It was one of the best things that could've ever happened, at least in my life. I love Columbus.
I thought I hit pay dirt when I discovered the Columbus Metropolitan Library. We had the Austintown library in a suburb of Youngstown. It was very nice, but Columbus has one of the best libraries in the country. It was even true back then.
Part of the reason is because Ohio has strong library funding. We've been fortunate from that perspective. We've been supported by the State of Ohio, so in general Ohio has better libraries than a lot of the country. It's a bit of a shame that some of that state funding is going away right now.
Columbus is a city of readers. They've recognized the value of the library and have used it. For that reason and many more, we have a great library here.
As the development director, I find and connect people who love the library, too. I make it easy for them to support the library through sponsorships, through volunteerism, through gifts. I work with individual donors, and I work with corporate partners to help the programs and services of the library.
We've had to make some changes because of the cuts. We are hopeful that they can be temporary. We're up for a renewal levy in November 2010, and one of our goals with the passage of that levy would be to resume the hours that we lost and more.
For me, reading is escapism. I'm a fiction person. I like stories that allow me to escape. I unfortunately don't spend enough time in the nonfiction section. I like serial killers, travel, adventure, all of that.
The first book I ever really loved is The Outsiders by S.E. Hinton. It's one of the best books ever. It was the first time that I remember crying over a book and being so engaged in the characters that I sobbed.
Other than reading, I love to play soccer. I play in a women's over-30 league. We're fast approaching the women's over-40 league. I played until I was 11, then I played basketball for a long time, then picked soccer up again when I turned 30.
When my boss introduces me, he says, "This is probably the only development director you'll meet for a library who has a book tattooed on her foot."
Three things I can't live without are books, wine and my family, including my dog Harvey.
- The Dark Side of the Productivity Surge - The third-quarter productivity numbers show that business is squeezing more work out of employees in hard times, by Peter Coy, BusinessWeek.com
WASHINGTON, D.C. - Rising productivity is usually one of the best things you can hope for in an economy. It means people are producing more for each hour they work. That's the path to higher living standards.
But the huge burst in productivity that the U.S. economy experienced in the third quarter is not entirely good. In fact, it's a sign that the U.S. economy is still in a sickly condition—a conclusion that is likely to be driven home by the latest job-loss figures release on Nov. 6. Economists who cheered the productivity number are ignoring the dark side of its sudden growth.
On Nov. 5, the Bureau of Labor Statistics announced that productivity—that is, output per hour of work—in the non-farm business sector grew at a 9.5% annual rate in the July-September quarter. That was one of the three biggest gains in the last 30 years, and it followed a strong annualized gain of 6.9% in the second quarter.
What could be wrong with that? The problem is how the productivity growth was achieved. It wasn't because of clever efficiency measures or the purchase of wonderful tools that help people get their jobs done faster. Such improvements take years, not mere months. Rather, it was because companies cut jobs and work hours drastically.
Work hours fell at a 5% annual rate even as output increased at a 4% rate, the government said. So people working shorter hours had to do the same amount of work as before, or more.
[Actually, this doesn't follow - bad management is everywhere. Hours are falling because output is unmarketable. So why is management increasing unmarketable output? There's no need to further damage their own consumer base and corporate morale by overworking their staff - except to further The Great Leak Upward and concentrate more currency in the top 1%, decelerating its circulation and deepening the recession.]
People who kept their jobs had to pick up the work of ex-colleagues.
[Fine, if there's now less work for both because of decreased demand.]
Many workers probably put in extra hours that weren't counted in the statistics in order to get all their work done. That would exaggerate the output-per-hour gain.
[Undocumented hours are rampant, and US productivity (output per hour) is definitely inflated by this unaccountability.]
Speedups are rarely good for worker morale. Recent surveys by firms such as Watson Wyatt and Spherion Staffing Solutions show that workers are increasingly fed up and are likely to bolt for other jobs as soon as the economy strengthens and hiring resumes.
What's more, productivity that's achieved through slashing hours is a negative for the overall economy. Workers who are laid off or given reduced hours can't afford to spend as much money, so demand for consumer goods remains soft.
Economists who welcomed the productivity numbers observed that they should be good for corporate profits. It's true that companies are getting a bargain. The government said that unit labor costs—namely, the amount of money that employers had to pay for each unit of workers' output—fell 3.6% over the past year, "the largest decrease since the series began in 1948."
Bad for Business
The trouble is that with demand so weak, employers may not be able to enjoy the benefits of those lower unit labor costs, says Paul Ashworth, senior U.S. economist for Capital Economics in Toronto. Instead, competition for scant business may force them to pass along their labor savings to customers by cutting the prices of their goods and services. There could be, he says, a vicious cycle of falling prices and falling wages, worsened by the fact that Americans have huge debt burdens that loom larger when incomes fall. In a research note, Ashworth said: "The upshot is that deflation is still by far the biggest threat."
University of Texas economist James Galbraith, in an e-mail message, says that "'Productivity' in this situation is a fairly meaningless construct," adding that the decline in hours "is not good for the working population." Galbraith said he sees "little reason for optimism" that economic growth will be strong enough to get employment back on track anytime soon.
True, it's not wise to read too much into one quarter's numbers. Economic Policy Institute economist Josh Bivens notes that "productivity quarterly numbers get really kind of goofy and volatile around turning points in the economy," such as now. Also, some optimists argue that higher productivity growth will eventually encourage companies to do more hiring. "In the second half of 2010 businesses will accumulate a strong pent-up desire to add more high-quality workers into their teams," IHS Global Insight (IHS) Chief U.S. Financial Economist Brian Bethune said in a Nov. 5 report.
But Capital Economics' Ashworth argues that the optimists on productivity are getting things backwards. The optimistic argument is that higher productivity will lead to more employment. But he notes that it was falling employment that caused the higher productivity in the first place. "People are basically saying the decline in employment is going to cause more employment," Ashworth says. And that is not a very good bet.
Coy is BusinessWeek's Economics editor.
- Glen Electric announces the loss of up to 40 jobs, BelfastTelegraph.co.uk
[See also story #4 yesterday = 11/04/2009 #4.]
NEWRY, Northern Ireland - Heater manufacturer Glen Electric is to make 40 workers at its Newry factory redundant as a result of increased competition and the recession.
The firm, part of the Glen Dimplex Group, said it had seen a gradual decline in the production of convector heaters and panel heaters in recent years.
It blamed the increase in imports from the Far East, which has led to key customers sourcing portable heaters in China, and the slowdown in the construction, refurbishment and retail sectors due to the economic downturn.
In a statement, the company said: "We continue to hold a strong market share in the UK and Irish panel heater markets, however these markets are currently depressed due to the reduction in new house building.
"It is also clear that we can no longer be economically competitive in the retail convector business by manufacturing in Newry and we are proposing that this product category will be transferred to our facility in China.
"Short-time working has been in place since early October but our forecasts do not show any recovery in market volumes for the foreseeable future."
Glen Electric has proposed reducing its workforce by up to 40 people to maintain the competitiveness and viability of its manufacturing plant in Newry.
It said it regretted the proposed job losses and would consult fully with those affected in order to minimise the impact.
The group was founded by its chairman Dr Martin Naughton in Newry in 1973.
The company has grown to become the largest manufacturer of domestic heating appliances in the world, with a range of more than 400 products.
It employs more than 500 people at its facilities in Newry, Portadown and its £3.5m logistics and product training facility in Craigavon, which was opened in March this year.
"To this end the group plans to invest, given appropriate Government support, in the manufacture of heat pumps, part of its renewable energy offering, at the Glen site.
"This is a clear statement of intent by the group to maintain manufacturing jobs in Newry.
"New jobs will be created in the renewables area over the coming months and years as the markets for these low carbon products develop," the statement said.
11/04/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (email@example.com) unless otherwise initialed -
- Orange Park police cut hours in lieu of layoffs, by Stephen Kindland, ClayTodayOnline.com
ORANGE PARK – Town council members have approved a memorandum of agreement with the police department that reduces the number of hours police officers will be on duty each month due to budget constraints.
The council voted 5-0 to accept 12-hour-a-month furloughs and other police department cutbacks during a town council meeting on Tuesday, Nov. 3.
Sgt. Randy Case, who represents the Coastal Florida Police Benevolent Association union, said police officers decided among themselves to reduce their hours – which amount to a 6.88 per cent cut in pay – rather than lay off or terminate any members of the 22-member force.
“We have a good group of officers now,” Case said. “It made more sense to do this. We didn’t want anyone to lose their jobs right now.”
The furloughs mean 16 patrol officers will be working one less shift each month, but the manpower reduction won’t compromise public safety, according to Police Chief Jim Boivin, whose department is operating on $200,000 less than last year’s budget.
Boivin said the reduced hours mean his department – which normally has four officers on duty during most of the force’s 12-hour shifts -- will use more three-person rotations than last year.
“The town is definitely covered,” he said. “A three-man shift is nothing unusual.
“I’m very surprised and very proud of them” for agreeing to the furloughs, Boivin added.
The furloughs are in addition to the police department’s decision to eliminate – at least for now -- the town’s policy of covering the cost for repairing, replacing and cleaning uniforms. Compensatory time will be used in place of overtime as well.
Also on Tuesday, council members received an overview of an $8,600 audio-visual system the town purchased to accommodate residents who attend town council and other meetings held at the council chambers.
The new, computer-based digital system allows documents and other objects to be displayed on a large screen installed on the council chamber wall. Slide shows and other presentations also can be made.
- Rapid Print cuts hours with new gluing machine, by Adam Hooker, PrintWeek.com
Raffle ticket printing specialist Rapid Print has cut hours from its production process with the installation of a new gluing machine from finishing manufacturer Rollem.
The bespoke machine [Brit. for "aforementioned machine"?] was installed at the printer's Sudbury-base at the end of September, predominantly to handle raffle and draw tickets, which accounts for around 90% of the company's business.
Previously, the husband and wife team would bring in outworkers to staple the tickets.
The Rollem, which is specially designed because Rapid Print prints ticket books three-up on an A4 sheet, takes the sheets straight from press.
Managing director David Risley said: "It may take someone an hour and a half to finish a job by hand, but with the gluer it comes straight off. That's an hour and a half saved, imagine what you could save when you have 10 jobs going through."
[This is how managers induce recessions - by cutting employees (and markets) instead of cutting workweeks and maintaining employees and markets.]
Rapid Print numbers tickets while they are still three-up and an A4 sheet could consist of similar or varying tickets. Glue patterns and frequency can be altered so that the top sheet of each set of booklets does not have glue applied.
As well as its ticket work, Rapid Print also produces commercial work.
- Government policy on jobs is to 'switch on the tap of emigration', bvy Marie O'Halloran, (11/05) IrishTimes.com
DUBLIN, Ireland - The government's strategy to deal with unemployment is to “switch on the tap of emigration”, Fine Gael leader Enda Kenny has claimed.
[Anything to get rid of the wage- and prosperity-depressing specter of labor surplus!]
Taoiseach Brian Cowen insisted, however, that making the economy more competitive was the best way to maintain and increase jobs. As the October unemployment figures, released yesterday, showed, jobless numbers were down 11,200 from the previous month.
Mr Kenny said “in the year to April, more than 18,000 Irish nationals emigrated” and 30,000 people from eastern Europe had returned home.
“It seems as if the Government’s strategy to deal with the employment situation is to switch on the tap of emigration and to facilitate longer stays in education.”
Mr Cowen said the unemployment rate was down 0.2 per cent from 12.6 per cent, but “the year-on-year increase of 162,000 since October 2008 is 62.3 per cent up on that date”. The Live Register included 70,000 people on short-time work or doing casual work and signing on for part of the week.
The number of people on Fás training programmes “has practically doubled this year from 66,000 to 128,000”, and 25,000 people were on back-to-work and back-to-education schemes.
However, Mr Kenny said “putting people in programmes and placements here and there is only camouflage for the real problem”.
The taxpayer has paid for the training and high qualifications of young graduating professionals “but there is no future for them in this country in view of the increasing redundancy rates”.
The Fine Gael leader also highlighted an OECD report released yesterday which “states there is a risk that the high rate of unemployment could be sustained due to a combination of weaknesses in activation policies, which is jargon for a jobs strategy”.
Mr Cowen said the Government was putting in place the “fundamental building blocks” to come through the recession.
- Heating firm in downturn lay-offs, BBC News via news.bbc.co.uk
NEWRY, Northern Ireland - The Glen Electric plant in Newry, which makes convector and panel heaters, has said it will lay-off 40 employees.
It blamed the redundancies on competition from China as well as the global recession, which has led to a slowdown in construction.
The company said it regretted the job losses and will consult with those affected to minimise the impact.
Glen Electric NI is part of the Glen Dimplex Group, one of the world's largest electrical heating business.
It employs about 500 people at its manufacturing plants in Newry and Portadown and a new product training facility in Craigavon.
Short-time working has been in place at the Newry plant since early October.
- Buying Itself Out of a Recession - Countries Ask How Germany Avoided Mass Unemployment, Spiegel Online via spiegel.de
Germany, second only to China as the world's leading exporter of goods, has been particularly hard-hit by the collapse of global markets. But the mass unemployment some had feared has failed to materialize. Labor experts in many countries are wondering how Germany has done it.
Business wasn't going well for Schneider, a mid-sized company in the western German state of Rhineland-Palatinate, at the beginning of the year. But the company, which manufactures camera lenses and filters, did not lay off any of its workers. Instead, it put 230 employees onto a short-time working program, including Dirk Christian, a technical supervisor in a final assembly plant.
Christian, 33, took advantage of his free time to renovate his apartment -- and to get married. "Short-[time] work prevents layoffs," says Christian, "which, of course, makes it easier to make important life decisions, like getting married."
Germany currently has 1.1 million workers participating in short-time working programs, known in German as *Kurzarbeit. They include people like Christian, who don't have enough work, but who also are nevertheless not being let go. They stay at home for days or even weeks at a time, and yet they receive 80 to 90 percent of their wages, thanks to subsidies paid by the Federal Employment Agency.
It was due in part to the workers in the program that Germany's new labor minister, Franz Josef Jung, was able to report an astonishing development last Thursday. In the midst of the country's deepest economic crisis, which has led to dramatic declines in order volume in key industries, unemployment was only half a percentage point higher in 2009 than it was in 2008. "The current figures are encouraging," Jung said. There are 3.2 million people registered as unemployed in Germany. At the beginning of the year, many had predicted up to 5 million would be unemployed by this fall.
The German numbers are particularly impressive when compared with those of other countries. Even though Germany was more sharply affected by the economic downturn than most other industrialized countries, it experienced only a moderate rise in unemployment. Countries like the United States, France and Spain, on the other hand, experienced both a shrinking economy and exploding unemployment. In the United States, more than 5 million people lost their jobs within a year, and developments in the labor market in France and Spain are equally dismal.
Union officials and labor market politicians in many countries are now paying attention to how Germany is pulling itself out of the crisis. Its efforts have been conspicuously successful to date, something which comes as a surprise even to many in Germany, who had predicted a gloomy fall for the labor market. "It would take a miracle to prevent us from heading in the direction of 5 million unemployed," Berlin economist Michael Burda had predicted back in September.
There was a "threat that after the Bundestag election, companies would move toward extensive layoffs," says Bosch CEO Franz Fehrenbach, but that, he adds, will "not happen, at least not to the extent that was feared." And Berthold Huber, the president of the German metalworkers' union IG Metall, says: "The predicted wave of layoffs hasn't materialized yet."
There are explanations for the surprisingly positive developments. One is short-time working programs, whose duration had been gradually increased from six to 24 months in recent years.
[This extension of the Kurzarbeit (Brit: short-time working, US: worksharing) program in Germany is Step One in the the transformation of worksharing programs from temporary to permanent. The key change in Germany is yet to come = the shift of funding from mounting "temporary" imposition on the job-seekers allowance fund (US: unemployment insurance fund) to a permanent tax on overtime with a complete exemption for overtime-targeted on-the-job training and hiring. Companies introducing efficient high-productivity (ie: worksaving) technology must be held accountable for maintaining the direct or indirect markets for that productivity, instead of welching out on the promise they used to introduce that technology (that it would make the work easier) and using it merely to move more of the money supply up the income hierarchy to the top brackets of executives and investors where, function shifted from high-frequency exchange (spending) to low-frequency exchange (investing), its circulation decelerates and markets for the productivity it needs to invest in cascade to weaker and weaker levels.]
In addition, the previous "grand coalition" government of center-left Social Democrats (SPD) and Chancellor Angela Merkel's conservative Christian Democratic Union (CDU) completely relieved companies of the burden of paying social security contributions for their employees from the seventh month of short-time work onwards.
However thereduction in working hours for 1.1 million short-time workers only corresponds to about 335,000 full-time jobs. Even without short-time working programs, unemployment would hardly have reached the levels once predicted. Agreements among unions, company works councils and corporate executives have given Germany a relatively soft landing until now. Working-time accounts and employment alliances provide Germany companies with unique flexibility. In many companies, employees who work overtime during a boom receive hours credited to a working-time account instead of overtime pay. These hours can then be redeemed during a crisis, with the employees working less while continuing to earn their regular pay.
[These "same-time working programs," called "comp time" or "compensatory time" in the U.S., are simply a way of converting overtime into same time or "straight time" over a period of time, instead of allowing overtime to become a chronic laziness on the part of management, burnout on the part of labor, that excludes more and more worker-consumers from the workforce and consumer markets, to the mounting cost of the economy at large.]
How to Survive the Downturn Without Laying Off Workers
Some companies were so well prepared for a possible downturn, they were able to survive an almost unbelievably sharp decline in business relatively well. The truck division of the Daimler Group, which employs more than 70,000 people worldwide, has only been able to sell half as many trucks this year as it did in 2008, and yet it did not lay off any of its employees in Germany.
In his "worst-worst scenario," Andreas Renschler, the member of the Daimler management board responsible for the truck division, made early preparations for a 30-percent drop in sales. His goal was to ensure that the truck division, which is particularly susceptible to economic fluctuations, would not plunge into the red the minute the next downturn arrived. During the boom, which lasted until 2008, Daimler hired hardly any new employees. Instead, employees worked special shifts and accumulated up to 300 hours of overtime per employee in their working-time accounts. Now that the economic crisis has cut truck sales in half, employees are working less, which has pushed their working-time accounts into negative territory.
In addition, short-time work was introduced to some of the workforce. For other workers, management and the works council agreed to an 8.75-percent reduction in working hours, together with corresponding reductions in pay. In addition, the company now uses about 1,700 fewer contract and temporary workers in its German truck plants.
Daimler also makes trucks in Asia, North America and South America. Renschler is familiar with the pros and cons of the various production sites. Daimler has laid off workers in Japan and the United States. In Germany, such harsh measures are not planned, not even for next year. "This is where we have the greatest flexibility," says Renschler.
[So the Germans have basically stolen the leadership away from the French in terms of the most fundamental progress toward the future, despite the fact that the French still have, nominally, the lowest nationwide workweek. It's to be hoped that Sarkozy will smarten up in France and realize that it's Germany, not the suicidal USA that he's got to imitate, so that he quits weakening the shorter workweek by weakening overtime enforcement and the vital overtime-to-job conversion process, or that the French get rid of Sarkozy before he ruins them as the USA has been ruined by their downsizing-suckered elite.]
Part 2: Labor Laws in Different Countries
In the United States, companies can use the tool of short-time work in some states, like New York and California. Elsewhere, such as in the Netherlands and most Eastern European countries, employees who are on reduced working hours receive no government subsidies to offset their lost wages. In Greece and Italy, government financial support is restricted to seasonal temporary work, in cases in which hotels and restaurants are closed during the winter. But industrial workers are not eligible for the programs.
The labor laws in Austria, Switzerland, Spain and France are the most similar to those in Germany. But *Austria is the only country that follows the German example, and pays social security contributions for short-term [ie: short-time, 'term' makes no sense] workers for up to 24 months.
In Germany one in five companies adjust work schedules to reflect order volume, accumulate overtime hours and, when order volume is down, reduce working hours.
[= Timesizing, not downsizing. The future belongs to those economies that switch from corporate adjustment of the work schedule to reflect order volume, to economy-wide adjustment of the "full-time" workweek to reflect rising levels of productive technology (most simply managed by varying the workweek inversely with the underemployment rate - see Timesizing Phase Four]
Only 12 percent of all companies take advantage of this measure in France, 10 percent in Great Britain, 7 percent in Spain and 6 percent in Italy.
[Plus Nucor Steel and Lincoln Electric and a few other companies in the U.S. These are the most flexible, adaptable, competitive and sustainable companies to invest in.]
Company agreements that provide for flexible working hours are often not possible in other countries. In Brazil, France and Spain, for example, there are usually multiple unions that are at odds with one another, and one union almost always stands in the way of reaching agreements with management. When a crisis strikes, layoffs are usually management's only option.
[Another case of suicidal behavior on the part of the labor movement (and the left in general - witness the abandonment of Jospin when it counted, and the resulting Hobson's choice? between monster LePen and gangster Chirac), only half of which has ever realized that their power issue is shorter hours, not higher pay or any of the other 'messes of pottage' for which they've sold their birthright = control over their own aggregate supply&demand.]
The fact that many German companies do everything possible to keep their core workforce has something to do with experiences from the previous upturn, when there was suddenly a shortage of skilled workers. Companies like Schneider in Bad Kreuznach are dependent on skilled workers. Schneider manufactures high-quality lenses, not only for cameras and movie theater projectors, but also for NASA and Germany's highway toll system.
"If we laid off employees," says Schneider CEO Josef Staub, "we wouldn't have been able to find skilled workers during a subsequent recovery."
At first, employees depleted their time accounts, in which they had accumulated up to 200 overtime hours each. After that, many were sent onto a short-time work program, with the exception of employees in R&D and sales -- the reasoning being that, during the slow period, engineers would improve the products and the sales staff would work all the more aggressively to secure orders. The strategy worked, says Staub, particularly in Asia.
Another reason Schneider has avoided layoffs is that its employees have also proven to be flexible in another respect: by working in locations where there is enough to do. Some employees agreed to be transferred from Bad Kreuznach to a plant in Dresden, while others moved from Göttingen in central Germany to Bad Kreuznach. Those for whom no work could be found attended training classes that were partly financed by the employment agency. Now orders have picked up again. In October, 180 employees, including newlywed Dirk Christian, switched from short-time work back to full-time employment. Short-time work is the ideal tool for cases like Schneider's.
[And cases economy-wide for economies that want to be able to purchase their own output instead of becoming dependent on increasingly unpredictable export markets.]
In other companies, however, short-time work programs and working-time accounts cannot prevent layoffs.
[That's why this strategy needs to be promoted to the economy-wide level, so that the very definition of "full-time workweek" varies inversely with the underemployment rate. As long as underemployment is too high, as defined by regular economy-side referendum, the workweek automatically adjusts downward at a referendum-determined rate - and vice versa, for a kind of money-back guarantee. But people who keep talking about "hard work to get ahead" in the age of robotics are living in the past. A good thing, considering that free time is the most basic freedom, and talking as if accountable time (work) is the be-all and end-all is just fear of freedom.]
Automotive supplier Karmann, for example, is letting go half of its workforce. The company has filed for bankruptcy protection, and if the VW Group doesn't follow through with plans to acquire Karmann, all of its remaining 1,600 employees will also be out of work. Steelmaker ThyssenKrupp cut 13,000 jobs in the last fiscal year alone, and according to internal planning documents, the company will trim its labor force even further in the coming fiscal year. It plans to eliminate an additional 20,000 jobs worldwide, including about 10,000 in Germany, by September 2010. When positions become vacant, they will no longer be filled, and entire divisions will be either sold or shut down.
These harsh cutbacks are also the consequence of flawed business planning. ThyssenKrupp had planned for a sustained growth phase. "Everything in the company was expanded beyond what was necessary," says a senior manager.
But when the crisis came, the demand for steel and ships collapsed. ThyssenKrupp is expected to report a loss of half a billion euros for its most recent fiscal year. ThyssenKrupp executives say that there are industries in which Germany is no longer competitive, such as container shipbuilding, which is now dominated by emerging economies. Those industries, say the executives, ought to be abandoned altogether, and keeping the related divisions artificially alive with [corporate-level] short-time work programs doesn't make any sense. For this reason, ThyssenKrupp has more than cut in half its number of short-time workers, from 49,000 to 20,000 [thus increasing the need for economy-wide worksharing].
Company labor representatives, like Bruno Fischer of ThyssenKrupp Gerlach, a subsidiary that supplies parts to carmakers, are protesting against the reduction of short-time work programs. Fischer wants to use short-time work to secure the 950 jobs at the company's plant in Homburg in southwestern Germany until the end of 2010, to see if the order situation improves by then. Management, on the other hand, wants to cut 350 jobs -- 150 of them immediately, if possible. Fischer, a member of the works council, says: "We will escalate the dispute, if necessary."
Short-Time Work Isn't a Long-Term Solution
[Oh yes it is - it is the ONLY long-term solution, but it must be elevated to the economy-wide level and financed on a permanent basis from overtime taxes and not on a temporary basis from jobseekers' allowance funds (alias unemployment insurance funds).]
The developments at ThyssenKrupp show that Germany's currently favorable unemployment statistics are merely a snapshot in time. By no means do they prove that Germany is already over the worst in this crisis.
[It certainly isn't while the bad managers at ThyssenKrupp are downsizing nearly 30,000 jobs - and consumers and their dependents, and no one is hiring because Germany does not yet have an economy-wide "short time" working program to counteract aggregate unemployment. The point is, "short" time working is not "short" in the age of automation and robotics - it is right-time working and when more productive technology is introduced, it will become long-time working. The appropriate workweek is a moving target depending on technology levels, and the idea that the workweek can be frozen forever is totally untenable.]
BASF CEO Jürgen Hambrecht says that his company's sales are still down by 20 to 25 percent. It will take years before the company returns to 2008 levels.
[Without nationwide worksharing ("short"time working programs), it will take forever.]
"We aren't out of it yet," says Hambrecht.
All of the tools that have protected Germany against sharply rising unemployment so far are only effective for a limited period of time. Working-time accounts and short-time work programs can help bridge a downturn, but they are no substitute for [full] order books.
[Full order books only come from full employment and full consumer markets, and the downsizing that these are still being subjected to will have to be replaced by permanent timesizing programs or there will never again be any "full" order books for managers who are trying to get growth (UPsizing) out of downsizing.]
The bridges are still holding up. Companies can continue to employ their core workforce for one or two more years. But if sales don't pick up by then, they too will not be able to avoid cutting jobs.
[and their own throats - funny how few journalists or economists can see the obvious - there is no magic bullet or voodoo economics to make sales pick up, except a fuller consumer base founded on a fuller employment basement founded on homeostatic workweek adjustment to absorb the current "army of the unemployed" (surplus labor, excess resumes) that is depressing wages and markets and investments.]
The Federal Employment Agency is cautiously optimistic for the near future. None of its early indicators suggest that large-scale layoffs are to be expected any time soon. The Nuremberg-based agency does expect, however, a slight [dream on], seasonally adjusted rise in unemployment in the coming months. But Frank-Jürgen Weise, the head of the agency, warns against too much optimism. "We are cushioning the crisis with too much money," he says.
[In other words, panic $bandaiding is unsustainable. Sustainable is Timesizing = developing the corporate, temporary, short-time working programs into economy-wide, permanent, ongoing, grassroots&hierarchy-ranging skills&employment reallocation programs like Timesizing.]
The [German] government is spending €5 billion this year on short-time working programs alone -- €5 billion for a small miracle in the labor market, but one with only a limited shelf life.
[Convert the funding to the problem, overtime, and design the worksharing and economy-anchoring consumption-per-capita maintenance to base on the incidence of overtime = this is as close as you can get to market determination. Make overtime target, trigger, fund, pace [speed] and gauge [duration] skill transfer and job creation on a flexible, permanent, sustainable basis, and then hook the threshold where overtime begins (the top of the "full-time" workweek to the un(der)employment rate. In short, enforce your current 40-hour workweek by converting market-demanded overtime into jobs, and then adjust your 40-hour workweek, which was appropriate for 1940 levels of technological productivity, down to levels appropriate for 2010 levels of productive technology. This is a Do Or Die.]
It is "completely clear," says the head of the employment agency, "that we won't see the real effects until next year."
MARKUS DETTMER, FRANK DOHMEN, DIETMAR HAWRANEK, JANKO TIETZ
Translated from the German by Christopher Sultan
11/03/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Reading City Council learns that closing of library branches could be costly, by Don Spatz, ReadingEagle.com
READING, Pa. - The Reading Public Library's decision to close its three neighborhood branches next year in response to losing nearly $700,000 in city and state funds could cost it much more in state and county funds, officials said Monday.
Because of that possibility, City Council on Monday discussed ways to restore at least some of its library funding.
And later a county commissioner said that Berks is considering taking over the main library, if the city will fund the branches.
Mayor Tom McMahon has proposed eliminating the city's entire $483,000 annual allocation to the library because of a $15 million budget gap that will mean layoffs for dozens of police and firefighters, along with other cuts and tax increases.
At the same time, the state has cut its funding for the library by $200,000.
Faced with those cuts, the library decided it had to close the branches, just to keep open the main library at Fifth and Franklin streets.
But council members and Ronald R. Hatt, president of the library board of trustees, said closing the branches could have three serious repercussions:
Loss of more state funding because it is based in part on circulation. The branches account for 40 percent of the circulation, Hatt said after the meeting.
Loss of more state funding because the state provides $41,000 annually to each library, and Reading is counted as having four libraries. If the branches close, the city system would lose $123,000 a year, Hatt said.
Loss of county funding because the $900,000 that Berks provides is part of an agreement that requires that all the branches stay open, council members said.
Hatt said he and the county commissioners have already discussed what might happen if the branches close.
He said one possibility suggested by the commissioners was giving the $900,000 to the entire county system.
Hatt said Reading would be left with a share so small that it would have to close even the main library.
That, too, would have repercussions: The main library is the county's only district library, its main source of interlibrary lending, feeding 50,000 books a year to other county libraries, its only source of reference librarians and the caretaker of libraries computer system.
Commissioner Kevin S. Barnhardt, reached after the meeting, acknowledged the change in county funding was one suggestion but said it was not a good one.
Instead, he said, the county is considering taking over the main branch - since it is the resource center that feeds the rest of the county library system. But the city would have to keep the branches open, he said.
"We don't want to neglect the city library system, but we are mindful of the agreement that says the city must maintain the resource center and the branches," he said.
Other efforts to fund the branches also are under way.
Hatt said the library will be going to community groups served by the branches to see whether they would commit money to keep the branches open at least a few hours a week, if not the 35 hours they're open now.
And last week several pastors and other community leaders said they would see what they can do to help.
City Council members, who worked through the proposed city budget line by line Monday, also are looking for ways to restore some library funding. Councilman Jeffrey S. Waltman Sr. said there's a high return on every dollar spent on the library.
"Our biggest population is a young age group," he said.
Contact Don Spatz: 610-371-5027 or email@example.com.
- The Government of Canada delivers Employment Insurance fairness for the self-employed in Québec, (press release) CNW Telbec via NewsWire.ca
MONTREAL, Québec - The Honourable Jean-Pierre Blackburn, Minister of National Revenue and Minister of State (Agriculture), on behalf of the Honourable Diane Finley, Minister of Human Resources and Skills Development, today announced that the Government of Canada has introduced the Fairness for the Self-Employed Act. This legislation would extend Employment Insurance (EI) sickness and compassionate care benefits to self-employed residents of Quebec. It would also extend EI maternity, parental and adoption benefits, in addition to sickness and compassionate care benefits, to self-employed workers in Canada's other provinces and territories.
"Our government knows that self-employed Canadians should not have to choose between their family and business responsibilities," said Minister Blackburn. "Extending access to these benefits is the fair and right thing to do. It is good family policy, and it represents one of the most significant enhancements to the EI program in the last decade."
For the past several years, the Government of Quebec has already been requiring self-employed residents to participate in a maternity, paternity, parental and adoption benefit plan through an agreement reached between the governments of Canada and Quebec in 2005. Today, the Government of Canada wants to extend special benefits to self-employed workers across the country.
"Self-employed residents of Quebec will continue to receive maternity and parental benefits through the Quebec Parental Insurance Plan," added Minister Blackburn. "However, if they so choose, they can also now access the sickness and compassionate care benefits being offered by the Government of Canada through the Employment Insurance program."
This measure responds to the Government's 2008 pledge to help provide improved economic security and support for all those who are self-employed. By introducing this legislation, the Government is delivering on, and in fact exceeding, its commitment. With these changes, self-employed Canadians would be able to voluntarily opt into the EI program and receive special benefits. Overall, the special benefits for self-employed individuals would mirror those currently available to salaried employees under the EI program.
"About 2.6 million Canadians are self-employed, including over 500,000 Quebecers. The majority of them have long asked for this support, and our government is responding to this strongly expressed need," said Minister Blackburn. "We think that the self-employed should have the option of getting the same income protection that salaried employees currently receive when it comes to major life events."
This measure demonstrates that the Government continues to make responsive and responsible choices to support Canadians through the EI program. It is just the latest in a series of improvements the Government has already made to the EI program.
Through Canada's Economic Action Plan, the federal government is helping those hardest hit by the economic downturn by providing longer EI benefits, more efficient service and support for training, while protecting jobs through Work-Sharing agreements. The Government has also frozen EI premiums for 2010 at the same rate as 2009.
Most recently, the Government introduced legislation to extend EI regular benefits for unemployed long-tenured workers, who are individuals that have paid EI premiums for years and made limited use of the program, and who now need additional support while they look for jobs in a recovering economy.
This news release is available in alternative formats on request.
Income protection for life-transition events, such as the birth of a child, adoption, illness, and the care of a gravely ill family member, is a key contributor to the financial security of all Canadian workers. The 2008 Speech from the Throne recognized the challenges facing self-employed Canadians as they deal with the dual pressure of being entrepreneurs and caring for their families. In Budget 2009, the Government proposed to examine ways to best provide self-employed Canadians with access to Employment Insurance (EI) maternity and parental benefits. The Government has introduced the Fairness for the Self-Employed Act, legislation that would fulfill and exceed this commitment.
Under this new legislation, self-employed residents of Quebec who choose to participate in the Employment Insurance program would be eligible to receive the same Employment Insurance sickness and compassionate care benefits as salaried employees:
- sickness benefits (15 weeks maximum), which may be paid to a person who
is unable to work because of sickness, injury or quarantine; and
- compassionate care benefits (6 weeks maximum), which may be paid to
persons who have to be away from work temporarily to provide care or
support to a family member who is gravely ill with a significant risk
With the exception of self-employed residents of Quebec, where the Quebec Parental Insurance Plan is in effect, this legislation would also extend EI maternity benefits (15 weeks maximum), parental or adoption benefits (35 weeks maximum), and sickness and compassionate care benefits to self-employed workers in Canada's other provinces and territories on a voluntary basis.
Self-employed residents of Quebec would continue to be required to contribute to the Quebec Parental Insurance Plan for maternity and parental benefits provided by the Government of Quebec. However, if they so desire, these workers would now also be able to access the sickness and compassionate care benefits being offered by the Government of Canada through the Employment Insurance program.
Should they decide to take advantage of the program, self-employed residents of Quebec would pay EI premiums at the same rates as salaried employees in Quebec, where the rates have already been decreased to take into account the existence of the Quebec Parental Insurance Plan. Self-employed residents would not be required to pay the portion that is usually paid by the employer since they would not be eligible to receive regular Employment Insurance benefits.
Under the proposed legislation, self-employed Canadians would be required to opt into the program at least one year prior to claiming benefits. They would also be responsible for making premium payments starting with the tax year in which they apply to the program. With a program start date of January 2010, claims could be made as early as January 1, 2011.
To access EI special benefits, self-employed individuals would need to have earned a minimum of $6,000 in self-employed earnings over the preceding calendar year.
Self-employed workers could opt out of the Employment Insurance program at the end of any taxation year as long as they have never received benefits. If they have, they would be required to pay premiums on their self-employment income for as long as they are self-employed.
Through the Economic Action Plan, the Government of Canada has also implemented measures to support all unemployed Canadians. These measures include providing 5 extra weeks of EI regular benefits, increasing the maximum duration of benefits from 45 to 50 weeks in regions of high unemployment, protecting jobs through the *Work-Sharing program [French *travail partagé], and freezing EI premiums for 2010 at the same rate as 2009 to provide economic stimulus. For more information on these measures, please visit *www.actionplan.gc.ca.
Most recently, the Government introduced legislation to extend EI regular benefits for unemployed long-tenured workers, who are individuals that have paid EI premiums for years and made limited use of the program, and who now need additional support while they look for jobs in a recovering economy. Further information on this proposed measure is available at www.hrsdc.gc.ca.
For further information: (media only): Michelle Bakos, Press Secretary, Office of Minister Finley, (819) 994-2482; Media Relations Office, Human Resources and Skills Development Canada, (819) 994-5559
- Wages Drop Despite Economic Recovery, by Lisa Schlein, Voice of America via voanews.com
GENEVA, Switzerland - The International Labor Organization reports global growth in real wages slowed dramatically in 2008 as a result of the economic crisis and wages are expected to drop even further this year, despite signs of a possible economic recovery. The ILO warns of worse times ahead. The agency has just issued an update of its Global Wage Report.
The report says the deterioration of real wages around the world calls into question the true extent of an economic recovery, especially if government rescue packages are phased out too early.
In a sample of 53 countries for which data are available, the International Labor Organization finds growth in real average wages had declined from 4.3 percent in 2007 to 1.4 percent in 2008.
The report warns the picture on wages is likely to get worse this year, despite indications of an economic rebound. ILO Specialist on the Conditions of Work and Employment, Patrick Belser, says declining wage rates are linked to the levels of unemployment.
"The quite dramatic unemployment figures, which we now see in some of the countries, this strongly suggests that there will be greater pressure on wages in the future as more people will be unemployed, more people will be looking for jobs and the pressure on employers to raise wages to attract workers will decline," he said. "So, we expect that the second part of the year will not be very good in terms of wage growth."
The report finds more than a quarter of the countries experienced flat or falling monthly wages in real terms. They include, the United States, Austria, Costa Rica, South Africa and Germany.
ILO Economists say some nations have come up with polices to lessen the impact of lower wages during the economic crisis. An example of these is work sharing with government subsidies.
Under this scheme, the number of individual working hours is reduced in an effort to avoid layoffs. For this scheme to work, the government must provide wage subsidies to compensate for lost pay due to the shorter hours.
Besler says a second important finding in the report is that both developed and developing countries have strengthened their minimum wages in recent years. He calls this good news.
"A large number of countries, including major economies such as the U.S., Brazil, Russia, and also Japan have increased minimum wages by more than inflation figures in 2008. And, these countries have also addressed their minimum wages further in 2009," said Belser. "The ILO considers, as you know that minimum wages are an important tool for social protection and that everyone should have access to decent minimum living wage."
The ILO also says the United States is reporting slightly higher rates of unemployment than Europe.
October figures show a 9.4 percent U.S. jobless rate compared to 8.8 percent in the European Union.
The report notes the link between productivity growth and wage increases is essential for economic and social sustainability.
It argues companies should be able to achieve competitiveness through rising productivity rather than by cutting labor costs. And, it says workers should have enough bargaining position to defend their wages.
11/01-02/2009 bits and pieces of the timesizing solution in the news, reinvented thousands of times every day in every recession by mainly mid- and small-size companies, organizations and governments despite being *dismissed out-of-hand by many economists and business schools - with excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Stimulus and Jobs: We Can Do Better, by Dean Baker, truthout.org
WASHINGTON, D.C. - The Obama administration came out with its first set of numbers on the jobs impact of its stimulus package. It's pretty much along the lines of what was predicted. To date, the package has created close to one million jobs. That is good news, but in an economy with more than 15 million unemployed workers, it is not nearly good enough. We need to do more, much more.
Fortunately, there is an easy and quick way to begin to get these unemployed workers back to work. It involves paying workers to work shorter hours. The mechanism can take the form of a tax credit to employers. The government can give them a tax credit of up to $3,000 in order to shorten their workers' hours while leaving their pay unchanged. The reduction in hours can take the form of paid sick days, paid family leave, shorter workweeks or longer vacations. The employer can choose the method that is best for her workers and the workplace.
If take-home pay is left unchanged as a result of the credit, then demand should be left unchanged. If workers are on average putting in fewer hours and demand is unchanged, then employers will need to hire more workers.
This logic is about as simple as it gets. The process is also quick and cheap. In principle, the government can go this route to save jobs at a cost of a bit more than $20,000 per job, far less than the estimates of the cost per job under the administration's stimulus package.
We don't even have to speculate about whether this sort of short-hours arrangement can work. Germany put a short-hours program in place at the start of its recession. Its unemployment rate today is 7.6 percent, about the same as the unemployment rate it had going into the recession. Imagine that workers in the United States, like workers in Germany, were dealing with the recession by putting in four-day weeks (while getting paid for five) or getting an extra two weeks a year of paid vacation. This sure beats being unemployed or being threatened with unemployment.
Seventeen states already have a "work-share" program in place that allows employers to use unemployment insurance money to cover a reduction in work hours, without a corresponding reduction in pay. More than 100,000 layoffs have been prevented as result of this program.
Sen. Jack Reed of Rhode Island has a bill that would increase funding for work-share programs and remove some of the bureaucracy that makes it difficult for employers to take full advantage of the programs that currently exist. The bill would also provide start-up money for the states that do not have work-share programs.
The Reed bill would be a big step towards following the Germany model, taking advantage of a program that is already in place. It could very quickly make a big dent in the unemployment rate, by preserving many of the jobs that are now being lost.
In this respect, it is important to clear up a common confusion about the economy. Every month, we get a figure from the Labor Department for the new jobs created or lost. However, this is a net figure. Approximately four million people leave their jobs every month, about half of these workers, or two million, lose their jobs involuntarily. If the economy creates more than four million new jobs, then we will have a positive jobs figure for the month. If the economy creates less than four million new jobs, then the Labor Department will report that the economy lost jobs in the month.
Suppose that this work-share program reduced the number of people who lose their jobs involuntarily by 20 percent, or 400,000 workers per month. This would have the same effect to our job count as adding 400,000 additional new jobs. If this rate could actually be maintained over a full year, then it would imply that the economy would generate nearly five million new jobs.
All the projections show that the unemployment rate is likely to continue to rising for the immediate future and remain high for years to come. The Congressional Budget Office projects that the unemployment rate will average 10.2 percent next year and even in 2011 it will average 9.1 percent. If this projection proves accurate, it would be a disastrous scenario for tens of millions of people.
There are quick and effective ways to increase employment, with shorter hours at the top of the list. Making tens of millions of people suffer for economic mismanagement and the greed of the bankers is not acceptable. We must do something.
- Aaon profits fall 8 pct, by Kirby Lee Davis, JournalRecord.com (subscription)
Aaon President and Chief Executive Norman H. Asbjornson demonstrates an automated sheet metal cutting and bending machine at the Tulsa location. (photo caption)
TULSA, Okla. – Aaon third-quarter earnings easily topped Wall Street expectations despite a 28-percent sales plunge.
Aaon President and Chief Executive Norman H. Asbjornson has attributed his firm’s lower sales to declining commercial construction under this national recession, which he warned Monday would continue “for the foreseeable future.”
But he also pointed to cost-cutting efforts that helped Aaon finish the third quarter with $17.9 million cash on hand, a record quarter-end amount for the Tulsa-based commercial heating and cooling unit manufacturer.
That should provide some cushion if the commercial real estate or HVAC sectors sustain another hit, said Tulsa securities analyst Fredric E. Russell – although it doesn’t substitute for renewed sales.
“You have to have sales sometime, but I’m sure they’ll get sales,” he said Monday.
“Companies have more cash than they’ve had in years,” said Russell. “They’re afraid to commit or they’re looking for good acquisition opportunities.”
For the three months ended Sept. 30, net income for Aaon fell 8 percent to $7.7 million, or 45 cents per share, from $8.3 million, or 47 cents, the prior year.
That beat the 38-cent consensus of analysts polled by Thomson Financial/First Call, and the 39-cent forecast by Zacks Investment Research analysts.
Russell downplayed the achievement.
“A lot of companies are surprising Wall Street expectations because the expectations are based on mountains of pessimism,” said the owner of Fredric E. Russell Investment Management of Tulsa.
Revenue dropped to $58.5 million from $79.27 million.
Aaon suffered a 4-percent slide in profits for the first nine months of 2009, to $21.6 million, or $1.25 per share, from $22.5 million, or $1.25, the prior year.
The per-share figures reflect a 3.8-percent drop in available stock over the year to 17.3 million diluted shares at Sept. 30.
Revenue dropped 13 percent to $191.1 million from $219.5 million.
After an initial 3-percent jump Monday, Aaon’s Nasdaq Exchange securities finished the day at $18.66, up 3.61 percent.
Asbjornson pinned the difference between Aaon’s third-quarter sales and income declines on copper hedges, which provided a $1 million reduction in cost of sales, as well as other cost-saving tips and production improvements.
Over the last year these included adopting a 35-hour workweek and consolidating Aaon’s Canadian operations into plants in Tulsa and Longview, Texas.
“It’s amazing what you can cut out when the pressure’s on,” Russell said Monday. “A lot of companies have had a second awakening. They’ve had a come-to-Jesus experience in the last year-and-a-half and they’ve cut a lot of expenses.”
[Cutting the workweek instead of the workforce is definitely a cometoJesus awakening, but the opposite is gotothedevil.]
- Bowling Green, Findlay eye income tax increases, by Jennifer Feehan, ToledoBlade.com
FINDLAY, Northwest Ohio - Findlay Mayor Pete Sehnert knows it's a tough time to ask voters for new taxes, but like leaders in other financially strapped communities, he's hoping they'll understand what's at stake.
In Findlay, it's a matter of public safety.
"We're at a pivotal point in this community: What are we going to do?" Mr. Sehnert said. "If we don't spend some money to try to invest in our own community, nobody else is going to want to invest in it."
Findlay voters are being asked to approve a three-year, 0.25 percent income tax that would bring the city's income tax rate to 1.25 percent. The 0.25 percent would generate an estimated $3.5 million a year - enough to keep all four fire stations open, prevent the layoffs of 18 firefighters, and restore services such as leaf pickup, which were eliminated this year.
"We're only asking for three years to get us out of this slump," the mayor said, adding that passage of the tax would not prevent the layoff of 16 other city employees effective Nov. 8.
"We've been very efficient with that 1 percent," Mr. Sehnert said. "Show me somebody who hasn't had a raise for 40 years - we haven't raised that income tax since 1967."
In Bowling Green, voters are asked to increase the municipal income tax from 1.92 percent to 2 percent for three years. The additional 0.08 percent would raise $600,000 annually.
"With all the cuts we've made, and they are numerous, we don't believe we'll have to lay anybody off whether it passes or fails so what we're talking about are services," Mayor John Quinn said. "What we're talking about are convenience services, not safety services or anything that's going to effect the health and welfare of the community."
If voters reject the tax increase, the city would close the drop-off for grass clippings, reduce the number of times it picks up heavy trash and brush, and cut fireworks funding, the mayor said. Its west- side fire station on Pearl Street likely would become an ambulance service only because there would not be enough staff for fire runs from there.
"This is a small increase that will allow people to have essentially all the same services in 2010 that they had in 2009," Mr. Quinn said.
Hancock County voters will decide whether to keep paying a 0.5 percent sales tax that county commissioners adopted last year to fund county operations and long-term flood mitigation.
Commissioner Phil Riegle emphasized that commissioners are not asking voters to keep a 0.25 percent sales tax adopted last year to pay for a new court building and other capital improvements.
"This is not a new tax. This is a retention and actually the county sales tax rate is going to go down a quarter percent Jan. 1 even with the passage of Issue 4," Mr. Riegle said. "That is something we've tried to get across to people."
Like Findlay's comparatively low income tax rate, Hancock County has enjoyed one of the lowest sales tax rates in the state. Mr. Riegle said it's been estimated that 30 percent to 40 percent of the people shopping in Findlay come from outside Hancock County, which means they help pay for the services they use while working or shopping in the county.
In Ottawa County, commissioners are seeking a five-year, 0.5-mill levy to operate and maintain the county-owned Riverview Nursing Home. If approved, it would generate about $800,000 a year and cost the owner of a $100,000 home $15.75 a year.
Kendra German, administrator at Riverview, said a 0.5-mill levy for the nursing home expired at the end of last year after voters rejected by a slim margin a request to replace and increase it.
"We tightened up our operations here, made some changes to the staffing structure," Ms. German said. "We have been able to break even, but we are not putting money into our building fund."
Proceeds from the levy would be earmarked for building upkeep at the campus in Oak Harbor, which also offers rehabilitation services, a memory care unit, and an adult day program.
Also in Ottawa County, the Ida Rupp Public Library in Port Clinton is making its first request for operating dollars. Like all public libraries that have been hit by state budget cuts, the library has slashed staff, hours, and material purchases to keep its doors open.
The five-year, 0.9-mill levy would bring in about $500,000 a year and cost the owner of a $100,000 home $28.35 per year.
Barbara Wenzinger, president of the library's board of trustees, said the levy would enable the library to restore the services and hours that have been cut.
"We've reduced our operating hours from 63 to 35 hours a week," she said. "We also eliminated six part-time positions and reduced all of our full-time staff hours. We've cut back on story hours and adult programming and held off on all purchases of new books."
Ms. Wenzinger said the library has operated for 100 years without a levy, but with a 40 percent cut in state funding, it needs help.
"We're trying to emphasize that for the cost of one hardback book, $28.35, voters can help us restore library services," she said.
Contact Jennifer Feehan at:
- New Zealand Wages Accelerate as Recession 'Ends' [our quotes], by Tracy Withers email@example.com, 11/02 Bloomberg.com
WELLINGTON, New Zealand -- New Zealand wages rose more than economists estimated in the third quarter as the nation emerged from a recession and companies began paying more to attract and retain workers.
Wages for non-government workers, excluding overtime, increased 0.4 percent from the second quarter when they gained 0.3 percent, according to Statistics New Zealand’s labor cost index released in Wellington today. The median estimate of 10 economists surveyed by Bloomberg was for a 0.3 percent gain.
New Zealand’s economy grew for the first time in six quarters in the three months to June, buoying business confidence and encouraging employers to expand production and retain workers. Wages are unlikely to accelerate rapidly because the jobless rate rose to a nine-year high in the second quarter and may increase further.
“We expect wage growth to remain reasonably soft for some time yet,” said Philip Borkin, an economist at ANZ National Bank Ltd. in Wellington. “The labor market remains weak and will continue to act as a drag on households.”
New Zealand’s dollar bought 71.86 U.S. cents at 11:50 a.m. in Wellington from 71.74 cents immediately before the report was released.
From a year earlier, wages rose 1.9 percent. That’s less than the 2.6 percent in the previous three months and was the smallest increase since the year ended June 30, 2001.
Including overtime, wages for non-government workers rose 0.4 percent from the second quarter when they increased 0.3 percent, today’s report showed. From a year earlier, wages including overtime gained 2 percent.
Wages for government workers rose 1.1 percent in the quarter, led by new pay deals for teachers and health workers.
A separate series based on reported salary and ordinary- time wage rates of non-government workers gained 0.8 percent in the third quarter from the previous three months. From a year earlier, reported wage rates rose 3.7 percent.
Business confidence rose to a 10-year high in September, according to a survey by ANZ National Bank Ltd. Reserve Bank Governor Alan Bollard said last week there are “welcome signs” the economy is growing again. He kept the official cash rate at a record-low 2.5 percent and said he is unlikely to raise borrowing costs until the second half of 2010.
As the economy recovers, filling vacancies isn’t as easy as it was three months earlier. A net 25 percent of companies said it was easier to find skilled workers in the third quarter, down from 42 percent in the second quarter, according to a survey by the New Zealand Institute of Economic Research Inc. Forty eight percent said it was easier to find unskilled employees.
Finance Minister Bill English said on Oct. 13 that signs of improving business confidence haven’t translated into increased jobs. He expects the unemployment rate will rise to about 7 percent by mid-2010, less than the 8 percent peak the government was forecasting earlier in the year.
Fisher & Paykel Appliances Holdings Ltd. returned its Auckland refrigerator plant to 40-hour-a-week production after scaling it back to 35 hours in April. The company took government subsidies to keep the factory operating on reduced hours, saving 60 jobs.
The jobless rate probably rose to 6.4 percent in the third quarter, the highest level since 2000, according to a Bloomberg survey of seven economists. The government will publish its employment report on Nov. 5 in Wellington.
Average ordinary time hourly earnings for non-government workers rose 1.7 percent in the quarter, the statistics agency said in its quarterly employment survey also published today. Economists expected a 0.5 percent increase.
Companies reduced demand for labor in the quarter, led by manufacturing, according to the survey.
Filled jobs fell 0.8 percent in the quarter and 2.6 percent from a year earlier, the report showed. The number of full-time equivalent employees declined 1 percent. Total paid hours rose 0.2 percent.
To contact the reporter on this story: Tracy Withers in Wellington at firstname.lastname@example.org.
- Unions balk at proposed flexi-work 12-hour cap, by Alicia Dunkley, JamaicaObserver.com
ROBERTS... The emphasis on productivity would break the vicious cycle of long hours and low pay. (photo caption)
KINGSTON, Jamaica - The Jamaica Confederation of Trade Unions (JCTU) is urging the Joint Select Committee of Parliament contemplating the flexi-work week arrangement to reconsider the proposed 12-hour cap on the daily number of work hours.
"We want the cap to be ten hours instead of 12. A 12-hour work day would represent a retrograde step in Jamaica's industrial relations development and would defeat the objectives of flexitime, which is designed to improve the country's competitiveness through greater levels of productivity and efficiency.
"We are urging them to reconsider the proposal to increase the number of working hours per day from eight hours to 12 hours," vice-president of the JCTU Danny Roberts told the Observer.
Roberts made the call after Labour and Social Security Minister Pearnel Charles last Wednesday announced that the committee that has been trying to settle on arrangements for a 40-hour work week, which has been under discussion since 2001, was now in the process of compiling its report with the recommendations for submission to Parliament.
Roberts said the unions would oppose an extension of the working day beyond ten hours because of the adverse effects this could have on the workers' health and family lives.
The JCTU vice-president further pointed out that a study conducted by the International Labour Organisation (ILO) shows that "shorter hours do have positive consequences for reduced accidents, greater productivity and gender equality".
According to Roberts, Parliament should consider the effects of a 12-hour work day on productivity improvement and the general welfare of the workers, and be guided by the discussions and debate at the level of the ILO about decent work and working time deficit.
"The idea of advancing decent work in the area of working time places emphasis on productivity efforts, not longer working hours. The emphasis on productivity would break the vicious cycle of long hours and low pay and result in a win-win situation for both workers and management," he said further.
Roberts said the Confederation would be prepared to make its case before the Joint Select Committee once a request is made.
Among the recommendations to be made to Parliament by the Committee in its report are that:
. all seven days of the week are to be regarded as normal work hours;
. that the work day consist of a maximum 12 hours; and
. that the work week is to consist of 40 hours and overtime is to be earned only after an employee has completed 40 hours of work within a week.
However, a cap will be imposed on the daily number of work hours - not exceeding 12 - in keeping with labour guidelines set by the Ministry of Labour.
Addressing the Committee last week, Charles, who also chairs the meeting, said workers and management would not be handcuffed in the system. He noted that employers and employees would have to come to an agreement as to how they will divide the work hours as the flexi-work arrangements are not 'law'.
- Avtovaz Bumps Up Against Kremlin - Barred From Layoffs, Car Maker Slashes Pay and Urges Retirements, by Will Bland, 11/02 Wall St Journal, B3.
Avtovaz, which employs 25% of the Togliatti, Russia, work force, wants to cut 27,000 jobs... (photo caption)
TOGLIATTI, Russia—With mass layoffs off limits politically, struggling auto giant OAO Avtovaz quietly is trimming its bloated payroll by cutting pay and pushing staff to retire, workers say.
"In our department, on average about a hundred people are leaving a week," says Vladimir Novikov, deputy head of personnel on the assembly lines where a quarter of the company's 96,000 employees work. "Some are finding new jobs, and of course, a lot of them are pensioners."
The situation at Avtovaz, controlled by a Russian state company and 25%-owned by Renault SA, is being repeated across industrial Russia as the need to slash costs in the economic crisis clashes with a Kremlin political imperative to limit layoffs in cities with few other jobs.
For Avtovaz, the country's largest auto maker and the main employer in this Volga River region, a 25 billion ruble, or roughly $860 million, government bailout this spring hasn't been enough to keep the company from the verge of bankruptcy.
Sales are down 44% from last year and top executives have said they need to cut 27,000 jobs, almost a third of the total work force, to become even marginally competitive.
[That's gonna clobber the local consumer base. Alternative: just cut hours by 33%, from 40 (or whatever) to 27 hrs, 40 mins. and keep everyone (and their dependents) employed, earning and spending. Otherwise, you might as well all drink hemlock.]
But government officials have rejected calls for extensive job cuts, insisting that layoffs be limited. After Chief Executive Igor Komarov in September mentioned the 27,000-jobs figure, Russian First Deputy Prime Minister Igor Shuvalov raced to Togliatti to reassure workers that any plans to cut that many jobs were "lies."
Nonetheless, the company is moving workers toward the exit, cutting typical monthly salaries to 8,000 rubles, roughly $275, from around 20,000 rubles a year ago, according to an Avtovaz executive.
"When pay is so low, many quit without being formally asked to leave," says Pyotr Zolotaryov, head of the car maker's independent union. He says the reduced compensation isn't enough to live on.
Avtovaz told workers they would receive larger pensions if they left before the end of October, but the company denies that it is pressuring people to leave.
It says staff will be paid more starting in December.
When Avtovaz ran out of cash in the spring, the government provided 25 billion rubles in interest-free loans, but those funds largely were used to pay suppliers.
The company now wants 50 billion rubles more to help repay state banks.
As part of its restructuring plan, Avtovaz aims to cut production next year to half last year's level.
It plans to add models in later years, including several based on Renault and Nissan Motor Co. designs and bearing those company's brands. But Avtovaz shareholders haven't agreed on who will pay for the new models.
Avtovaz employs a quarter of Togliatti's work force and the company's tax payments account for more than half the city's budget.
[Then this is a great city for timesizing on a weekly basis (short, flexible and responsive) instead of a worklife basis (too long and rigid).]
"Togliatti is one of several cities where the biggest employer has a liquidity problem and must either fire people or receive state support," says Dmitry Zharinov, a senior city official.
"There are no jobs for these people at the moment.…We need time to create them," says Sergei Andreev, who represents Togliatti in the regional assembly.
[He has no idea how right he is - we need the time dimension, specifically worktime per person, and we need to manipulate it into a balance by resuming our first 170-year history of trimming it continuing our last 70 years of straining to fill our pre-tech eight-hour day and freezing our 40-hour workweek regardless of how much worksaving technology we introduce.]
The government is paying underemployed workers to perform what it calls "social works," such as picking up trash and sweeping leaves.
[Hey, it's the Russian version of the WPA (Works Progress Administration) or the CCC of Depression-era USA. The CCC's motto (Civilian Conservation Corps) was "we can take it" - great motto for garbage collectors!]
Officially, Togliatti's unemployment rate is 2.8%, but that figure underestimates the number of people out of work, says Andrei Smirnov, a former Avtovaz worker who says many people "don't want to wait two or three days in a queue" to register as unemployed.
The latest idea is to create a "technopark" in Togliatti, buoyed by government subsidies and tax exemptions. Under the plan, some of Avtovaz's redundant workers could be re-employed to make toy cars, according to Russian media reports.
Write to Will Bland at email@example.com
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