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Timesizing News, December 2009 - from 12/31 back to 12/01
[Commentary] ©2004-09 Phil Hyde, Timesizing.com, Box 117, Harvard Sq PO, Cambridge MA 02238 USA 617-623-8080
12/31/2009 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 -
- Judge orders end of furloughs, governor to appeal ruling, MSN Money via news.moneycentral.msn.com
OAKLAND, Alameda County, Calif. - State workers who are members of Service Employees International Union, Local 1000, won the latest round in the furlough fight, after an Alameda County Superior Court judge late Thursday ordered the Schwarzenegger administration to stop the controversial but budget-saving practice.
Judge Frank Roesch said the governor’s actions under the Emergency Services Act to order furloughs was illegal, and should have stopped with the approval of the latest state budget.
SEIU attorneys argue that some of the employees in several agencies are “funded by special funds as to which internal borrowing is expressly prohibited.” With these agencies, “there are no General Fund savings and no benefits to the state ... only reductions in service to the public,” according to the lawsuit.” Roesch agreed in the ruling.
Governor spokesman Aaron McLear says the administration will appeal the decision, basically staying the order — and continuing furloughs, at least for now.
Roesch’s order was “not unexpected. We will appeal,” said McLear, adding the Schwarzenegger administration and state employee unions are facing each other in 24 furlough-related lawsuits. “This (the lawsuits) will ultimately be ruled by the State Supreme Court.”
The governor ordered two furlough days in February, and added a third so-called Furlough Friday in July in an effort to balance a $24 billion budget deficit. State officials say the effort to cut hours and pay to 200,000 employees will save the financially strapped state more than $2 billion this fiscal year.
- German Economy On Brink Of Radical Restructuring, By SPIEGEL Staff, Spiegel.de
Photo Gallery: German Economy Faces Deep Restructuring - A windpark near Malmö built with the help of Siemens: Germany is betting on future-oriented technologies, such as wind energy. (photo caption)
Outlook for 2010 - Part 1 - German Economy on Brink of Radical Restructuring
The German economy coped astonishingly well with the global crisis in 2009. But in 2010 it will need to lay the foundations for a radical restructuring if it wants to cope with chronic overcapacity in its aging industries and fend off powerful new competitors from China and India. Does the country need a new business model? SPIEGEL provides an outlook for 2010.
The ship-launching ceremony at the quayside of the German North Sea port of Emden was decidedly low-key. No one held a speech, and there was no orchestra as the container ship Frisia Cottbus slipped into the water shortly before Christmas. The mood was as somber as a funeral, which wasn't surprising because the launch marked the quiet end of a proud era -- it was the last container ship that will ever be launched by the Nordseewerke shipyard. Its 106-year history of shipbuilding is over.
The company survived the 1929 global depression, when it was temporarily closed for lack of orders, and the post-war era when the Allies initially forbade Germany to build new ships. Its output ranged from submarines during World War II to frigates for the modern German navy. It also built the cruise ship Pacific, which later became famous due to its appearances in the cult US TV series "The Love Boat."
But now the parent company, ThyssenKrupp, sees no future for shipbuilding in Emden, and the outlook isn't much better for the other German shipyards. Six of a total of 40 firms in the sector filed for insolvency in 2009. No other industry has been worse affected by the global economic crisis.
But the death of shipbuilding in Emden may herald the beginning of a new industry. The new owner of the yard, SIAG Schaaf Industrie AG, plans to convert it to building steel underwater foundations for wind farms. If the purchase agreement is signed and sealed in January, as planned, company owner Rüdiger Schaaf will invest €40 million ($58 million) in new equipment and transform Emden into a center for wind-power engineering. Under Schaaf's plan, a total of 720 out of 1,200 shipyard workers will keep their jobs.
Schaaf has likened the industrial transformation underway in Emden to that of the Ruhr coal and steel region of western Germany. The Ruhr is still struggling to cope with the loss of its former core industries in recent decades. And it's totally uncertain whether the industrial conversion in Emden will succeed. There's no doubt, however, that the change is necessary -- and painful. In Emden. In the Ruhr region. Everywhere in Germany, in the third year of the global crisis.
Germany is on the threshold of a tremendous upheaval, and 2010 will show how it will cope with the decline of old industries and the emergence of new ones. It will be a year of renewal for Germany, but also a year of uncertainty for companies and their employees. The foundations for the future of Germany are now being laid. Now is the time when German firms will find out which products remain globally competitive, and which ones won't. It's already been made clear that there's no world market anymore for container ships, mass-produced clothing, mobile phones or consumer electronics made in Germany. Others can produce those things more cheaply, and better.
This crisis is accelerating the pace of structural change. These days, an increasing number of foreign competitors are capable of producing things that had previously been the domain of German companies. The crisis is exacerbating the process because it has made customers focus even more heavily on price, thereby subjecting businesses to merciless scrutiny in terms of their cost efficiency and quality.
So far, Germany, which has long been the world's biggest exporter, has coped surprisingly well with the global downturn. Germany today is in a far better position than many had feared a year ago, when unemployment had been forecast to reach 5 million. The start of 2009 had been accompanied by gloomy predictions of mass layoffs and even social unrest. None of that happened. German consumers even carried on spending.
Other Industrial Nations Fared Worse Than Germany
The economy shrank by around 5 percent -- more than in any year since World War II. But unemployment rose by just 230,000 from 2008. France, Spain and many other industrial nations reported alarming increases in jobless rates; in the US, the unemployment rate has doubled since the start of the crisis (see graphic).
Until recently, many observers, especially Anglo-Saxon ones, had criticized the German economy as being too sluggish and unfit for the challenges of the 21st century. The welfare system, they said, was a major burden on Europe's largest economy. But Germany's "old economy" has so far performed well in this crisis, and its social safety net has helped to guarantee stability.
But the economic calm in Germany could be deceptive -- because it's financed by credit. The government has run up unprecedented debts to save the banking system and stimulate growth. New borrowing by the federal government alone will total almost €86 billion ($123 billion) in 2010. And the banks' balance sheets still contain risks of several hundred billion euros.
Germany's state finances will remain a problem for years. Finance Minister Wolfgang Schäuble will have to save €60 billion in the years 2011 through 2016 -- that's €10 billion a year -- to bring the budget back in line with the EU's deficit requirements and Germany's own self-imposed deficit limits. Chancellor Angela Merkel's new center-right government is worsening the budget problems with its plan to cut taxes by €20 billion beginning in 2011.
Part 2: A Race Against Time
At present, the government's stimulus packages are still helping to shore up the economy. And companies have been buying time by reducing working hours or applying for government assistance to cover short-time working -- a form of state benefit that is unique to Germany and is helping to keep 1.1 million workers in employment.
But this can't go on forever. "There's a race against time going on," says Henrik Enderlein, an economist at the Berlin-based Hertie School of Governance. Unless the economy soon starts growing so strongly that activity returns to normal -- which most economists don't expect -- companies will start laying off workers in the coming months. "We will start seeing the first negative effects on the labor market in the early summer," Enderlein says.
Even companies that have so far come through the crisis relatively unscathed could then find themselves in trouble. Martin Winterkorn, CEO of the car giant Volkswagen, describes the situation as "dramatic" and says 2010 will definitely be harder than 2009. "We will try to save ourselves with short-time working, if necessary," he adds.
The head of the IG Metall engineering trade union, Berthold Huber, says the core of the engineering industry is "acutely threatened." Output has shrunk by a quarter and won't reach the level of 2007 until 2012 or 2013, he said. Merkel herself has prepared Germans for a tough year. "The full force of the economic crisis will hit us next year," she said in a speech to parliament in November. "The problems will become bigger before things can get better." Germany, she said, faces a challenge "the likes of which it hasn't seen since reunification."
Strong Competition From Developing Economies
Until now, German firms managed to protect many expensive jobs in Germany by outsourcing production to low-cost countries in Asia or Eastern Europe. It worked because there was enough economic growth to absorb output. But that has changed with the crisis. Capacity utilization in German engineering plants, for example, has fallen to 70 percent from almost 90 percent a year ago. Economic growth has shifted to the markets of the future -- countries that have growing populations, young consumers willing to spend, enough skilled workers and low-cost labor. That means China, India and countries in Latin America -- but not Germany.
Global companies based in Germany, such as Daimler, ThyssenKrupp or Siemens, have so far afforded themselves the luxury of retaining a strong domestic manufacturing base. Siemens, for example, generates only around 14 percent of its revenue in Germany but employs around a third of its workforce there. More than 60 percent of Daimler's workforce is employed in Germany even though it sells three-quarters of its cars abroad. It is becoming increasingly difficult to maintain this imbalance.
Germany's strength in exports is becoming a burden. Economists such as Peter Bofinger, a professor at the University of Würzburg, argue that Germany has exported and saved too much and consumed and invested too little. German companies are still creating new jobs, but they are primarily doing so abroad. It's not just because the wages are lower there. German companies also want to lessen their exposure to exchange rate fluctuations and circumvent import duties in important markets, such as China, India and Russia.
German automakers are increasingly opening plants abroad, especially VW. The group invested €800 million in a plant in Kaluga, southwest of Moscow, which began assembling the sports utility vehicle Tiguan in October. Shortly before Christmas, VW started assembling its Polo model in the Indian city of Pune, where it plans to eventually reach an annual output of 110,000 cars. Sales in Russia, India or the United States will be covered by assembly plants in those countries, while the output from plants in Germany will go to Europe and other regions, where major sales increases are unlikely.
VW is unlikely to be able to keep employing 90,000 workers in Germany. The German auto sector is undergoing more upheaval than any other industry. For a long time Daimler, BMW and VW seemed safe when global overcapacity forced individual players out of the market.
'We've Got to Re-Invent the Car'
Industry observers weren't surprised when General Motors, Chrysler, Saab and Volvo had to fight for survival. But now Daimler and BMW, too, are deeply concerned about their futures. They face a dilemma: On the one hand, they need to save billions of euros to compete with new competitors in India and China. But, at the same time, they need to invest a lot of money to find alternatives to the combustion engine. "We've got to re-invent the car," said Daimler CEO Dieter Zetsche.
It's not certain whether the established manufacturers will be able to achieve that. Asian technology companies might develop the electric engines and batteries that will drive the cars of the future. The German car industry would then suffer the same fate as the German consumer electronics industry, where Grundig, Blaupunkt and Telefunken went out of business even though they were famous, well-established brands.
Much is at stake. If exports decline, the whole country will suffer. One in five German jobs depends on exports -- that's 8 million jobs. Exports account for 47 percent of GDP, compared with 20 percent at the start of the 1990s. Even China, the world's workshop, is far more balanced with an export share of 36 percent.
The world export leader has maneuvered itself into a trap, according to the most recent report by the German Council of Economic Experts. The proportion of German exports that were actually produced in Germany has fallen steadily in recent years, from 69 percent in 1995 to 56 percent in 2006. But the economy was able to more than offset this outsourcing abroad through a massive increase in the volume of exported goods, says the council. That calculation no longer applies now that the global economy has been hit by crisis. The council argues that this link between outsourcing and volume growth shows why Germany is so vulnerable to the crisis.
How should the country react? Should it switch its focus from exports to boosting domestic demand? A major debate has erupted on this subject. Merkel's position is clear. "I want this country to be able to remain export world champion," the chancellor declared stubbornly.
Part 3: Newcomers Dominating Old Industries
The global balance of economic power is shifting radically. Young, ambitious companies today dominate the global market for iron, steel and electrical appliances. Tomorrow they may be dominating the markets for automobiles, IT services or telecommunications. Their founders are now among the top global decision-makers. They run companies that hardly anyone had heard of just a few years ago, such as the Brazilian raw materials giant Vale, the Mexican construction materials group Cemex, Indian steelmaker ArcelorMittal or Chinese engine producer Johnson Electric.
The newcomers are competing with established Western companies for capital, labor, raw materials and know-how. They are expanding at an enormous pace through organic growth but, increasingly, through acquisitions as well. They are benefiting from low costs, an ample stock of employees hungry for advancement and home markets that have been growing at double-digit rates for years. They serve a new global middle class that is expanding by 80 million people a year and wants to savor the fruits of prosperity.
Now those companies even want to overtake the West in the field of high technology. They are pushing into sectors where German firms thought they were safely positioned as market leaders. They're even attacking companies in their home markets.
Take the Chinese solar power equipment firm Suntech, for example. Germany is one of its most important markets, accounting for almost a third of its annual sales of just under $2 billion. The secret of its success is easily explained: Its modules are a third cheaper than comparable products made by German manufacturers. It manufactures them in a business park in Wuxi, two hours by car northwest of Shanghai.
The roof and façade of the building are covered with around 4,400 solar panels that generate more than one megawatt of electricity. That's enough to provide the plant with 80 percent of its power needs. The dust-free factory hall looks nothing like the archaic workshops that China was known for in the past. Workers in white overalls push the thin solar cells into machines that resemble elongated ovens. Suntech employs 350 scientists who constantly try to boost the effectiveness of the silicon cells, and the firm now ranks among the world leaders in research.
Company founder Zhengrong Shi tirelessly repeats his vision of boosting his global market position by reducing the cost of solar power compared to that of coal-fired power generation. In 2010, Suntech might overtake German world market leader, Q-Cells.
Creeping Job Losses
Germany is being squeezed by both east and west. The US is launching an export drive aided by the weak dollar, while the Chinese are challenging German leadership in key world markets.
Chinese-made products accounted for 10.9 percent of the world market in 2007, up from 7.2 percent at the start of the century. The German share has fallen to 4.4 percent from 5.2 percent in the same period. So what does the future hold in store for German firms? And how can the country modernize its economy for the second decade of the 21st century?
Not much can be expected from auto manufacturing, the classic German industry, at least not in terms of employment. Even if VW, Daimler and BMW stand their ground in the face of fierce global competition, they will employ ever fewer people in Germany.
The country has to find something to offset creeping job losses in the auto sector, which still accounts for one in seven German jobs. Its chances of success aren't that bad, however, given that Germany has a comparatively broad industrial base that serves as a foundation for countless ancillary businesses, ranging from advertising agencies to security services. Whereas the UK's manufacturing sector accounts for just 13 percent of output, the figure in Germany is 23 percent. That includes industries that are building new factories and creating new jobs in Germany.
Specialist Firms Providing New Jobs
Medical technology company B. Braun Melsungen, founded in 1839, has increased its workforce in Germany by almost 20 percent in the last five years to 10,300. It is investing some €1.4 billion between 2008 and 2011, of which half will be spent in Germany. The family-owned firm is expanding its factory for knee and hip replacements, and it plans to enlarge two factories in the eastern state of Saxony.
Germany has some 1,250 firms in the medical products sector, most of them small and medium-sized businesses. They employ almost 100,000 people. That's not a lot compared with the auto sector, but the number of jobs in this field has risen continuously in recent years.
In these times of scarce energy, all industries that deal with fuel efficiency have a bright future as well. Companies that offer products ranging from efficient heating pumps to entire power plants are operating in a "gigantic growth market," says Manfred Wittenstein, president of the German Engineering Federation.
This opens up an array of new opportunities for an engineering company such as Siemens. These days, the Munich-based company sees itself as a supplier of environmental technology rather than an electrical engineering firm, and it wants to grow into one of the world leaders for wind power technology in the coming years. It has supplied 175 turbines for the London Array wind farm located some 20 kilometers off the coast of the British county of Kent. The farm will provide power for 750,000 British households.
German companies are among the global leaders in wind power, but several of them have encountered financing problems in the course of the crisis. High-tech firms are particularly under threat from the credit crunch because they have invested large sums in the future but often have relatively little capital of their own. Falling revenues and problems with debt repayments can quickly plunge them into ruin.
Berthold Huber, the head of engineering union IG Metall, has demanded that the government assume stakes in technologically important companies "to avoid losing important know-how in the technologies of the future." The stakes should only be held temporarily, he adds.
Government Aid Often Misdirected
But how should the government decide what is worth protecting and what isn't? So far, it has spent billions helping industries in trouble, for example, with the so-called "scrapping bonus," which boosted sales of small cars. The problem is that by helping some industries and companies, the government automatically hurts others that may have been better managed. It's also wrong for the state to subsidize industries without checking whether there's a sensible relationship between investment and return. In the photovoltaic industry, for example, every job is being subsidized to the tune of €150,000, but the return is meager, as solar power accounts for just half a percent of electricity generation in Germany.
Politicians presume to know which industries are worth subsidizing and which aren't, but they're often wrong. Instead of financing finished products, such as solar modules, the money would be better spent on developing new technologies in power generation, climate protection or environmental technology. Economists at the DIW economic institute have suggested that corporate spending on research and development should be fully tax-deductible, as is the case in most OECD states. "Innovation requires an economic push from the government," the DIW said in a recent study.
Meanwhile, the education system isn't doing enough to prepare Germans for the needs of an ever-changing labor market in which many people will have to retrain repeatedly. Germany is among the few OECD countries in which spending on higher education actually declined in recent years. OECD states on average invest 6.1 percent of GDP in education, while Germany spends less than 5 percent, according to the most recent available studies. Merkel has recognized the problem and wants to boost the share to 7 percent by 2015. That should be possible.
German Economy Adaptable
So far, the German economy has always proven itself to be able to overcome crises. A few years ago, when economists warned that German labor was too expensive and would force companies to relocate jobs abroad on a massive scale, managers and trade unions got together and successfully reduced costs.
The crisis has cast doubt on America's philosophy of shareholder value, held high as a model for Germany by executives and management consultants until a few years ago. The downturn has highlighted the advantages of the German model -- the long-term focus of businesses, the partnership between management and labor, and the social safety net, which offers instruments such as government-assisted short-time working schemes.
[and maintenance of the domestic consumer base, including a high-velocity circulation of the money supply instead of a decelerating, recession-inducing coagulation of the money supply in the topmost brackets.]
So there's justified hope that the German economy will be able to modernize itself once again. After all, crises offer the best basis for such renewal. Germany should seek inspiration in its economic heritage of a century ago, when science and business was more closely intertwined here than anywhere else in the world, when the country produced engineers like Alfried Krupp, Werner Siemens and the Mannesmann brothers who conquered world markets with their products.
So does Germany need a new business model? Werner Abelshauser, a specialist in economic history at the University of Bielefeld, doesn't think so. He says it would be foolish to abandon the focus on exports just because of a temporary slump in world trade. After all, he points out, "not many are capable of the things we can do."
By DIETMAR HAWRANEK, ALEXANDER JUNG, ALEXANDER NEUBACHER, THOMAS SCHULZ, WIELAND WAGNER
12/30/2009 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 (firstname.lastname@example.org) unless otherwise initialed -
- Innovation key to success for Santa Cruz County businesses, by JONDI GUMZ, SantaCruzSentinel.com
SANTA CRUZ, Calif. -- A year ago, experts predicted the recession would force small businesses to not only focus on controlling costs and retaining customers, but also to re-evaluate and refine their products to create new opportunities.
That's what four locally owned businesses did in 2009, finding ways to survive, and sometimes thrive, despite the poor economy when notable retailers like Gottschalks and Circuit City closed their doors.
Designer offers eco option
David Robles, owner of California Commercial Interiors in Santa Cruz, said "the spigot turned off" in January.
Bookings for the company, which designs and installs custom office furniture in Santa Cruz and Monterey counties, dropped 50 to 60 percent in the first six months of 2009.
"People were scared," said Robles, 66, of Soquel, noting the state took four-and-a-half months to pay for a job he billed at the end of 2008.
Robles, who bought the business 10 years ago, trimmed staff from 11 to seven and went to a four-day work week.
Like others, he put off purchases. Though he needed a computer and printer, he didn't buy, waiting for signs of recovery.
Now he's doing a modular lab at Salinas Valley Memorial Hospital, an installation at the Monterey Peninsula College Student Center, and one at Nordic Naturals' new headquarters in Watsonville with DIRTT "Doing It Right This Time" modular walls, a new environmentally friendly drywall alternative.
Smaller companies aren't calling yet but Robles optimistically noted the gross domestic product rose in the third quarter after dropping for a year.
"The thing we're banking on is an increase based on pent-up demand," he said.
Grill seeks local appeal
When the Center Street Grill opened three years ago, co-owner Marty Soliz wanted it to be a place for locals.
She just needs more people to discover the 150-seat restaurant, tucked into the building housing Actors' Theatre at 1001 Center St. near downtown Santa Cruz.
"We are true foodies," said Soliz, 52, of Scotts Valley, a former corporate caterer who is co-owner with her husband Danny Voutos and his brother Nick Voutos.
Their restaurant, open seven days a week serving breakfast, lunch and dinner, employs 10 people part time.
When dining out dropped in 2009, wait staff saw their hours curtailed. Now, Soliz is getting calls for parties of 50.
She created an events menu, rejuvenated the cozy patio that was closed off by the previous occupant, The Red Lantern, and this year secured a liquor license to add "happy hour" specials.
Soliz said the menu is varied, featuring food made from scratch, with local produce and fish from Stagnaro's.
"It's not that expensive," she said.
Two popular dinner choices are lamb shanks and skirt steak with blue cheese. Each is $17.95 including two side dishes. Breakfast, starting at $5.95, includes a free sampling of loukoumades, Greek honey-cinnamon dumplings.
Vitamin maker goes organic
Rainbow Light, a Santa Cruz nutritional supplement company, has enjoyed "a very good year," according to Sandy Klein, vice president of business development.
The privately held firm does not release sales figures but she said sales increased 17 percent in the fourth quarter. The company also donated nearly 4 million vitamins to Vitamin Angels, which is dedicated to providing nutrients to undernourished young children worldwide.
Klein..of Half Moon Bay, expects two environmental initiatives to boost sales in 2010.
In January, after a year in development, the company headed by Linda Kahler will switch from virgin plastic containers to 100 percent recycled plastic, which can be left in recycling bins rather than hauled to landfills.
"That's something customers are looking for," said Klein. "We will be the first."
The other is a new multivitamin certified organic by Quality Assurance International. The new line costs more, about $40 versus $20 for the original. Rainbow Light uses organic ingredients but previously hadn't sourced all the ingredients organically.
The company employs 45 people, about two-thirds in Santa Cruz, not counting the production staff in Florida. Four people were hired this year, and four new positions are slated to be posted in the first quarter.
Good move for rehab clinic
After Gerry Van Dyke moved COAST Rehabilitation Services from Aptos to a larger location on 41st Avenue across from Capitola Mall, business improved 25 percent, a welcome development in a down economy.
"We can see more people at one time," he said. "We haven't had one person in a year and a half say, It's too far away.'"
Most of his clients are people who are used to being active who have suffered an injury or had surgery.
"They want to be able to walk without a limp or go up and down stairs without pain," he said.
His main concern now is whether health care reform being negotiated in Congress will make health insurance more affordable, increasing his business, or less affordable, reducing business.
Van Dyke, who lives in La Selva Beach, employs three physical therapists, three massage therapists, and two front-office people. He expanded hours of his staff and staggers hours but no one works more than 30 hours a week.
"I don't think anybody should work over 30 hours a week in a beautiful area like this," he said. "It would be a shame to not take advantage of it."
- Prime Minister prorogues Parliament [AGAIN! - now an annual event], by Donna Hopper, [Sault Ste. Marie] SooToday.com
OTTAWA, Canada - The prime minister's office announced today that Parliament will be prorogued until the conclusion of the 2010 Vancouver Winter Olympics.
Originally scheduled to resume on January 25 following a holiday break, Parliament will reconvene with a throne speech on March 3, followed by the presentation of a budget the next day.
By suspending Parliament, Prime Minister Stephen Harper can sidestep any question period probing from opposition parties regarding the torture of Afghan detainees.
Liberal House Leader Ralph Goodale is calling the manoeuver "a shocking insult to democracy."
NDP House Leader Libby Davies says Harper has no legitimate reason to prorogue Parliament and called the move a "political scam."
The following is an abridged version of a statement issued today by the PMO:
OTTAWA – Prime Minister Stephen Harper today announced that the second and final phase of Canada’s economic action plan will be launched following the Olympic Games with a new throne speech on March 3 and a federal budget on March 4.
“Our priority in the new session of Parliament will continue to be rapid and effective implementation of Canada’s economic action plan to benefit communities, workers and businesses,” the prime minister said. “At the same time, we are already looking ahead to future challenges. These include restoring a balanced budget once our economy is fully recovered and building a strong foundation for our economic future.”
Almost a year ago – in the face of the deepest worldwide recession since the Second World War – the government of Canada responded to extraordinary times with extraordinary action.
It introduced Canada’s economic action plan, which included one of the most comprehensive stimulus packages in the industrialized world.
“While we see tentative, early signs that the economy is emerging from recession, the recovery is still fragile,” Prime Minister Harper said. “Now is no time to change course. In fact, we must press on with the second year of Canada’s economic action plan.”
Backgrounder: Strong secure leadership [ie: military dictatorship in Canada?] in uncertain times
Despite the extraordinary circumstances of worldwide recession, Canada’s government has continued to deliver real results on issues that most matter to Canadians.
The government’s priority was, and remains, economic action to protect existing jobs, stimulate new job creation and help families, workers and businesses cope during the downturn.
The government is also looking ahead to ensure Canada is well-positioned for a strong recovery by returning to balanced budgets once the economy has recovered and building a strong foundation for our economic future.
This past year was a difficult one for Canadians as our economy struggled in the face of the global recession.
The government responded quickly to the crisis by introducing Canada’s economic action plan – which included the largest stimulus plan in Canadian history.
The plan provides additional help for long-tenured workers, maintains essential jobs in key industries, preserves jobs through the work-sharing program, reduces taxes on individuals, families and businesses, stimulates the construction industry through a $4-billion infrastructure stimulus fund, provides help to homeowners and suppliers through the home renovation tax credit, and improves universities and colleges through the knowledge infrastructure program.
[The good news of Canada's worksharing program is overshadowed by the bad news of the Cheneyization of Canada's prime minister, and the hopeless incompetence of Canada's politically correct (Haïtienne) governess general, who keeps caving to PM Harper's mounting dictatorship. North America is gone, both sides of the border.]
The home renovation tax credit was a particular success.
Sixty-three per cent of Canadian homeowners plan to take advantage of the home renovation tax credit.
Further, building permits increased 18 per cent in October, and housing starts are continuing to improve, hitting their highest levels in almost a year in November.
Through enhanced employment insurance benefits, skills development and training, Canada’s economic action plan provided $7 billion of support for workers most affected by the global recession.
Almost 400,000 Canadian workers have benefited from an additional five weeks of regular employment insurance benefits.
As well, the number of workers benefiting from work-sharing has increased more than sixfold since the beginning of the year.
Enhanced employment insurance training programs are helping to retrain those who are out of work.
Consumer confidence is rebounding and unemployment is an impressive 1.5 percentage points lower in Canada than in the United States.
Moreover, Canada’s fiscal position continues to be the strongest among the G-7 nations.
Despite early signs of stabilization, the recovery remains fragile.
Implementing the second phase of Canada’s economic action plan will remain the government’s priority in the next year.
The government introduced legislation designed to tackle violent crime, to fight white collar crime, to cap the amount of credit for time served in pre-sentencing custody, to combat gang and organized crime, and to strengthen sentences imposed on those who prey on children.
The stability of Canada’s financial and regulatory system was recognized around the world.
While many industrialized countries were forced to bail out their largest financial institutions, Canada was not.
Canada served as co-chair of the G-20 committee on banking and financial regulation and Jim Flaherty, minister of finance, was named Finance Minister of the Year by Euromoney Magazine.
And in June, 2010, Canada will host both the G-8 and G-20 summits.
It is unprecedented for any country to host back-to-back summits.
Canada’s government has strengthened bilateral relationships with emerging powers such as South Korea, India and China, while maintaining a balanced and principled approach that respects human rights.
Since 2006, the government has concluded trade agreements with eight countries and discussions have begun with the European Union and India.
Canada opened new trade offices in India and China, in addition to receiving approved destination status from China, making it easier for Chinese tourists to visit Canada.
During their mission in Afghanistan, Canadian troops have helped local Afghans to assume control over the safety and security of their communities.
While the government welcomes the additional troop commitment recently made by U.S. President Obama as well by as other NATO members, the Canadian military mission will end in 2011.
Canada will continue to have a diplomatic and development role in Afghanistan.
As part of Canada's economic action plan, the government is investing more than $2 billion to protect the environment, strengthen the economy and transform Canadian technologies.
Initiatives consist of $1 billion over five years for clean energy research and demonstration projects as well as $1 billion for a green infrastructure fund, which will support modern energy transmission lines and sustainable energy projects.
Through the clean energy dialogue initiated by the prime minister and President Obama, Canada is working closely with the Obama Administration to reduce greenhouse gases and combat climate change.
- Germany's Massive Job-Saving Program Could Still Fail - Betting on an Upswing in 2010, by Markus Dettmer and Janko Tietz, spiegel.de
Germany's short-time working program has helped prevent massive unemployment during the current recession. Although the model has been admired internationally, its biggest test is still ahead. The hugely expensive scheme is a risky bet that the economy will turn around in 2010.
If there was any proof that the phenomenon of government-funded short-time working programs, known in German as Kurzarbeit, had become established at the center of German society, it had to be a call made by an ice hockey club in the western state of North Rhine-Westphalia.
The club had been eliminated before the play-offs, which translated into reduced revenues. The team's manager, who treats his club as an ordinary business enterprise, put in a call to Christian Rauch, an expert with Germany's Federal Employment Agency (BA). He asked Rauch whether his players would qualify for the short time work program, and whether the employment agency would pay their salaries under the scheme.
Rauch is sitting in his office on the fifth floor of the Federal Employment Agency in the southern city of Nuremberg. Hardly anyone in Germany is more familiar with the short-time working program than he is. Ironically, the issue has been keeping Rauch so busy that he is in very little danger of being put on short time himself.
Rauch, who is in his mid-40s, heads a department that specializes in the short-time working initiative, among other social security programs. He has been in his current position for about two years, and has worked for the agency for more than 20 years. He says he has never experienced such interest in a social security program as he is seeing today.
Spending More Time at Home
Sharp declines in orders have already prompted close to 60,000 companies to reduce their employees' working hours under the program. This year, millions of people in Germany were confronted with the phenomenon of having to spend less time in their offices or workshops and more time at home.
Some have seen their working hours reduced by about 30 percent, while others have been faced with no work at all. Under the short time working program, the Federal Employment Agency pays workers about two-thirds of their net lost wages. It also generally pays half of employers' social insurance contributions, and it even pays the full employers' contributions after workers have been on the program for six months, or if they are taking part in training programs.
The program embodies the German idea of the social welfare state more than almost any other initiative: Instead of letting some of their workers go immediately, companies reduce the working hours of large numbers of employees for a set period of time, and the government offsets the costs.
Normally, the short time working program plays a relatively insignificant role compared to the dozens of other methods that the German state uses to influence the labor market. In September 2008, only 39,000 people were taking advantage of the scheme. A year later, that number had shot up to 1.056 million workers.
In 2009, short time work and the so-called "scrapping premium" for used cars (similar to the US's "cash for clunkers" program) were Germany's most important tools in combatting the economic crisis. Each program cost the government about €5 billion ($7.15 billion). But it will only be in 2010 that it becomes clear whether these massive efforts have in fact protected the country from real social disruptions.
A Buffer and a Narcotic
It is already clear that the short-time working program has simultaneously been a lifesaver, a buffer and a narcotic. Frank-Jürgen Weise, head of the Federal Employment Agency, is already warning that the worst is yet to come for some industrial sectors, especially the machine-tool and auto industries. "Hundreds of thousands are currently still on short time, but that won't be sustainable in the long run," he says.
Former Labor Minister Olaf Scholz repeatedly modified the rules for the program to prevent waves of layoffs. As recently as the summer, there were fears that unemployment in Germany would exceed the 4 million mark this year. But even though the German economy declined more sharply than in almost any other industrialized nation, unemployment has only increased moderately to date. In most countries, like the United States and Spain, the economic downturn went hand-in-hand with devastating declines in the employment market. For this reason, rarely has an initiative found so much support across ideological lines in Germany as the short-time working program.
In past crises, companies often laid off their workers and then rehired them later on. Today, however, there is a shortage of specialized workers, a trend that is expected to continue into the future. Every year, the number of older workers leaving the labor market exceeds the number of young workers replacing them, a gap that will amount to 140,000 people both in 2009 and 2010. "We are trying to retain our core workforce," says Franz Fehrenbach, CEO of auto parts supplier Bosch. "We are taking advantage of the short-time working program or reducing working hours, and we are not repeating the mistakes of the 1990s."
"The instrument has proven to be effective," says Dieter Hundt, president of the Confederation of German Employers' Associations (BDA). Trade unions are also praising the program. "Thanks to the short-time working program, a rapid rise in unemployment was averted," says Ingrid Sehrbrock, deputy chairwoman of the Confederation of German Trade Unions (DGB).
The Organization for Economic Cooperation and Development admires the German model, and countries like Austria and Spain are emulating it. Even US economists are applauding the strategy. The German system of short-time working "works better in the recession," American economist George Akerlof told the Frankfurter Allgemeine Zeitung in an interview, adding that the program also "stabilizes the economy."
But what happens next? What happens if the German economy fails to maintain more than the status quo? Only recently, the federal cabinet decided to reduce the maximum benefits period for new applications from 24 to 18 months. Social insurance contributions will only be reimbursed until the end of 2010, at which point, if not earlier, the short-time working program will become more costly for companies. So what happens if business doesn't return to normal by then?
The tool can only help businesses bridge economic downturns. It cannot prevent, only delay, essential structural adjustments in sectors like the automobile industry, which is plagued by excess capacity.
Part 2: The Beginning of the End
Detlef Fendt, 57, works as a toolmaker for Daimler in Berlin's Marienfelde district, where the company produces large engines for its Maybach and Mercedes Benz brands. Nowadays Fendt, who has been working at the Marienfelde plant for the past 40 years, sometimes has two or even three days off every week. But the change means little hardship for him. He and his fellow workers are protected by a framework of regulations that rule out business-related layoffs until 2011 and fund up to 90 percent of their pay under the short-time working program. Fendt's monthly take-home pay is now €2,000 instead of €2,200.
But it isn't the money that has him worried. Fendt knows that the short-time working program "will only delay the ultimate demise," at least for his employer. "It's the beginning of the end," he says. In times of climate change, he notes, who wants to buy cars with powerful engines any more?
Fendt is convinced that Daimler faces structural changes that will cost jobs. "Ultimately, the short-time working program merely clouds our view of current conditions," he says. "Plant management is constantly claiming that short time will be phased out when new orders start coming in. But those orders won't happen."
"All the companies that deal with sheet metal are the worst affected by the crisis," says Herbert Rössle, a man in his mid-50s who heads the short-time working program team at the employment agency in Stuttgart, where Daimler is headquartered. In the last 15 years, taking advantage of the short-time working program was very uncommon in Stuttgart. That has now changed.
In the summer, one out of three workers in the German metal industry was on short time. The southwestern state of Baden-Württemberg has the highest percentage of employees in the program.
Companies that have traditionally relied heavily on exports, like Daimler and Porsche, have been the hardest hit by the crisis. In Stuttgart, home to both automakers, 60 percent of jobs depend on exports.
Up to 90 percent of companies in the area have already inquired how they can extend their eligibility for the short-time working program. Most had initially signed up for only six months of the program.
'A Blow to Your Self-Esteem'
Frank Hollweg..also expected the reduced working hours to last only half a year. As an employee of a company that manufactures the principal raw material for the auto industry, steel, he was acutely aware of the beginnings of the crisis at Daimler.
Hollweg is the senior smelter working on the blast furnace at the Hennigsdorf Electric Steelworks near Berlin, which is now owned by Italy's Riva Group. He will celebrate 40 years of working at the plant next year -- or at least he hopes to.
When the economic downturn began, the management at Hennigsdorf initially got workers to use up the overtime they had accrued in their "working-time accounts" -- an instrument used by German companies to buffer the effects of a downturn whereby workers can accumulate surplus working hours during busy times and then take time off when business is slow -- and sent the whole workforce home for a week. After that, production was completely switched to the nighttime, to take advantage of lower electricity prices. But when these measures failed to offset the decline in orders, Riva put all the 670 workers in Hennigsdorf on the short-time working program.
"It's certainly a blow to your self-esteem," says Hollweg, "because steel workers are a proud lot." His plant has already gone through its biggest structural adjustment. When Hennigsdorf was still part of communist East Germany, the steelworks employed a workforce of about 10,000. Hollweg survived that first wave of cutbacks. "It isn't easy to find senior smelters when business picks up again," he says.
But the crisis continues to eat its way through the German economy. And the order in which companies apply to put workers on short time reveals just how industries are interconnected.
The automobile companies were first. Then came their suppliers and machine-tool manufacturers. After that, the crisis hit service providers, ranging from temporary employment agencies to cleaning businesses. After all, demand for cleaning services goes down in companies where working hours have been cut back.
The hope that Germany's massive economic machine will eventually start up again, as well as the fear of losing valuable specialized workers in the crisis, has even prompted industries once known for simply trimming their workforce when business went south to take advantage of the short-time working program. One of these industries, advertising, is even more severely affected than most. According to a survey, more than 10 percent of employees in the advertising industry are now on short time, compared with 4 percent of employees across all industries.
'We Were in Shock'
Silvia Pieske, who has worked for WOB, an ad agency in Viernheim near the southwestern city of Mannheim, for the last 14 years, is one of those affected. "In January, we suddenly couldn't reach any of our usual clients. We were in shock," she says.
WOB develops ad campaigns for brands like Mercedes-Benz, Hyundai and consumer goods manufacturer Henkel. Some advertising budgets were cut by up to 80 percent at the beginning of the year. "We couldn't ignore that," says agency founder Frank Merkel. In April, he applied to the employment agency in nearby Darmstadt to put his 116 employees on short time.
So far he has managed to retain his entire staff -- by necessity, as he says. "If I let people go, I'll never get employees, some of who have been working here for years, to return to Viernheim," says Merkel.
The example WOB reveals how much German society has changed. "In the past, service providers were not eligible to apply for the short-time working program," says Federal Employment Agency official Christian Rauch. But the service sector has since matured into an engine for employment, a fact that no politician can afford to ignore.
This shift has resulted in "temporary employment agencies, a previously exotic sector, qualifying for the short-time working program," says Rauch. In the boom years, temporary employment was a large growth market, but it has been one of the hardest-hit sectors in the current crisis. When companies try to hold on to their core workforce, the first workers to be sent home are temporary employees.
Part 3: A Shortage of Skilled Workers
IKS Engineering, a temporary agency, employs 600 temporary workers nationwide. The Stuttgart-based business provides technicians and engineers for short-term contracts ranging from a few weeks to several years. But no matter where they work, they remain IKS employees.
At the beginning of the year, IKS also experienced a 40 percent decline in revenues. "We want to keep our people, because we too suffer from a shortage of skilled workers," says Peter Weber, the chief partner and managing director of IKS.
The German short-time model is an attempt to buy firms time. But it makes little sense for a company that already stands little chance of surviving the crisis.
[The more companies you sacrifice to a frozen, arbitrarily long workweek, the less economy you have.
And jobs are not separate from the economy, as these 'gurus' seem to imply. Jobs ARE the economy. Let jobs vanish and disemploy employees, and you deactivate consumers. Deactivate consumers and you slow the circulation of economic energy = money. Once the consumer base goes, everything built on top of it goes, meaning the business markets and the financial markets. Investors are NOT the foundation and base of the economy. The consumer base is, and below it, even more important, is the "employment basement."]
For the 370 employees of Paulmann & Crone, an auto parts supplier in the western city of Lüdenscheid, short-time working program benefits temporarily provided them with more income than regular unemployment benefits would have done. Nevertheless, most of the employees will end up having to register as unemployed after all. The company filed for bankruptcy in July.
The sharp downturn in the auto industry inevitably led to a reduction in orders for Paulmann & Crone. A healthy company stands the chance of offsetting such declines by drawing down its capital resources. But Paulmann & Crone has been ailing for a long time. For years, the company was sold from one owner to the next.
Klaus Peter Ahl..has been the company's personnel director for many years. He has experienced all the different owners coming and going. He now hopes that the bankruptcy administrator will find a new investor, but the prospects are dim. The company is in debt, and its main customer, Volkswagen, owns much of its machinery. "I'm happy that I didn't lose my job," he says. "But the truth is that it didn't make sense for me to qualify for benefits under the short-time working program. An economic recovery was not to be expected in our case."
Even if Crone & Paulmann did not formally abuse the short-time working program, the company was enticed by subsidies which were not really intended for firms in its position. Nevertheless, there are growing suspicions that the system is being abused.
The Federal Employment Agency has already uncovered close to 600 suspicious cases, in which public prosecutor's offices, customs agencies and the Federal Employment Agency itself believe that actual fraud was perpetrated, including falsification of working hours, sales figures and purchases of materials. Seventy of these cases have already been investigated, but in none of the cases were the accusations, most of them anonymous, confirmed.
"Abuse is not an issue for us," says Rauch. But what does worry him is the fact that union officials and employer representatives in the metal industry are already working on their own model in parallel to the state short-time working program.
[This should encourage him! The German unions are a lot smarter than the English-speaking unions, which have failed to unite behind their power issue, shorter hours (and less labor surplus), ever since the 40-40-40 Plan (40 hours maximum workweek, 40 cents minimum wage, in 1940 - if they'd shortened the workweek enough to soak up enough of the surplus labor, market forces would have flexibly raised wages and they'd never have need the stifling and socialistic wage controls).]
They are determined not to be left empty-handed if companies' eligibility for [the] short-time working program [Kurzarbeit] expires before the economy has turned around. For weeks, they have been pushing for industry-wide agreements between employers and unions that would involve reduced working hours subsidized by the government.
Going Their Own Way
As it happens, many companies are already resorting to their own collective labor agreements in a bid to save jobs because the official short-time working program is not feasible for them. At Bosch, for example, employees in some departments now work 30 hours a week or less, instead of the standard 35-hour workweek. But unlike workers who qualify for the state short-time working program, their wages are reduced in proportion to the reduction in their hours.
[This will change by market forces once the 30-hour workweek spreads and absorbs the persistent labor surplus that has been holding down wages and weakening domestic consumption.]
The model foresees the working week being reduced to as little as 26 hours during the period of the crisis. Workers would continue to receive 25 percent of the wages they would have earned for the hours that are cut.
[Sounds like Germany is independently inventing Walter Reuther's "fluctuating adjustment of the workweek," embodied in Timesizing's Phase Four.]
In return, the government would not levy taxes on, or deduct social security contributions from, the 25-percent payments. The project would be limited in time, although it could expand into a form of long-term government support.
Not surprisingly, the plan has been received with reservation by government officials and economists. Why should a single industry be able to solve its labor problems at the expense of the entire economy? The model "cannot be allowed to catch on," says Rauch.
[So nationalize it, and get the money from a confiscatory tax on overtime profits, with a complete exemption for overtime-targeted training and hiring.]
Betting on 2010
One thing is clear: If the German economy does not recover in 2010, the official short-time working program and the similar collective bargaining schemes will run up against their limits. Short-time working can save jobs in the short term, but it cannot invalidate the laws of economics.
[A frozen-forever workweek is NOT a "law of economics" - read your economic history! Short-time working certainly can save jobs in the long term. It did so from 1840 to 1940 in the USA, particularly between 1 938 and 1940, and it did so in France between 1997 and 2001, and it's doing so today in South Korea. Wake up to your own bizarre fixation with 35-40 hours as a Sacred Cow.]
The crisis is entering a new phase. If layoffs are imminent because a company no longer has enough work for its employees and must modify its business to cope with new conditions, one option is to shift employees to so-called "transfer" companies with the help of government support. These transfer companies provide professional training or job placement services. "Before the crisis, we had five to eight of these companies, but now we have about 60," says Herbert Rössle from the Stuttgart employment agency. And, once again, the metal industry is the first to take advantage of the programs.
In the end, the short-time working program is, more than anything, a bet that there will be an economic upturn in 2010. But no one knows how the wager will turn out.
[No, the short-time working program or Kurzarbeit is the prototype design for permanent and sustainable timesizing that gets government out of the insane roles of employer and lender and charity of last/first resort merely to maintain a rigid and arbitrary 35- or 40-hour workweek forever. Worktime per person is fluid and infinitely divisible - why is this so hard for so many otherwise intelligent people to grasp? And wages do not vary with either productivity or hours, but like everything else, with supply and demand. And as long as we respond to worksaving technology by downsizing to preserve a frozen workweek, we will get a deeper and deeper labor surplus, lower and lower wages, and never again get growth, because growth means UPsizing, not downsizing.]
"If the economy does not pick up steam, it will catch up with us," says Burkhard Schwenker, CEO of the management consulting firm Roland Berger Strategy Consultants. "But if the economy does recover, Germany, as an export-oriented country with strong companies, will benefit in particular."
[Burkhard Schwenker must believe in magic, Santa Claus and the tooth fairy if he thinks this is going to happen with leaching the money out of the top brackets by engineering a perceived labor shortage with shorter hours, absorbing the labor surplus, and raising wages and spending by market forces.
Translated from the German by Christopher Sultan
12/29/2009 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 -
- Mesilla, NM reduces work week for employees, AP via KVIA.com
MESILLA, N.M. - Mesilla's Board of Trustees has voted to reduce the work week for 10 employees to save money.
By reducing the work week from 35 hours to 32 hours, the southern New Mexico town expects to save more than $11,000 in salaries and benefits that would have been owed to the employees.
The shorter work week will take effect Jan. 11 and will continue through June.
Mayor Michael Cadena says the reduction could be shortened if Mesilla merchants are able to bring in more gross receipts taxes in the coming months.
The reduction will affect five employees in town administration and five of the town government's department directors.
Trustees also trimmed $6,000 in salaries and stipends paid to three trustees and three members of the town's planning and zoning commission.
Information from: Las Cruces Sun-News, http://www.lcsun-news.com
- Peace, Order and Goodies from the Government, by William Bedford, (12/28) CanadaFreePress.com
OTTAWA, Canada - Politicians, no matter which party they hide out in, are forever taking polls to find out just what they have to give us to insure their continued life of privilege at the bottomless public trough.
They don’t seem to get it, that the reason for widespread disgust with all politicians is they promise us the gold mine in order to get elected but once ensconced in office they give us the shaft.
All the polls on what the public expects of government add up to the same basic thing, we want the government to make us happy. Where politicians fall down on the job is their abject failure to provide this service.
I’ve thrown all the polls I could find into the blender, and here in simple language is the sum of all our wants.
1) Cut income taxes by 20%, and abolish the GST.
[Abolishing taxes on what you want is good, so if you want sales, get rid of sales taxes liike the Goods & Services Tax (GST*. Cutting income taxes on the rich is ridiculous, because as you go up the income brackets, a smaller and smaller percentage of income is spent. So if you want more spending and more marketable productivity throughout the economy, make up lost revenues from abolished sales taxes from steeply graduated income taxes. Get that money back into circulation now that the top brackets have concentrated so much of the money supply in their own few pockets, they can't even find sustainable investments in marketable productivity on the scale they need - they've effectively cannibalized their own consumer base. This of course is of only transitional necessity until you get the shorter workweeks mentioned in #12 going. Since 75% of modern governments are makework - making up for not adjusting the workweek downward as our levels of worksaving technology adjust upward, you wouldn't need nearly as many taxes once you held the private sector's feet to the fire of employing its own markets - however short a workweek that may require in the age of robotization.]
2) Bring our hospitals up to par and add dental care and prescription drugs to the health care system.
3) Hire thousands of new police officers, and overhaul the whole judicial system.
4) Give us efficient public transit with lower fares.
5) Double the size of the military and provide it with state-of-the-art weaponry.
6) Build enough affordable housing for all low-income people, and provide shelter, food and clothing for the homeless.
7) Build bigger prisons and hire enough guards to ensure that are run crime free.
8) Give enough money to our athletes so they can win big-time in the Olympics.
9) Bigger, tax breaks and subsidies for opera, ballet, symphonies, museums and art galleries.
10) Instruct all places of entertainment, sports and education to sell good nourishing food.
11) Cut automobile and house insurance rates by 50%.
12) Introduce a 35-hour workweek and make the first Monday of every month a statutory holiday.
13) Double employment Insurance benefits and extend payments to two years.
14) Abolish the mandatory retirement age, and allow optional retirement with full benefits at 50.
15) Allow farmers to produce all the food they can and send the surplus to the third world in lieu of foreign aid cash.
16) Give every new mother or father two years paid maternity/paternity leave.
17) Hire all the teachers we need and limit class sizes to ten students.
18) Elect or abolish the Senate.
19) Restrict a prime minister’s term to four years.
20) Spread the various federal departments around the country as follows:
Indian Affairs and Northern Development: Iqaluit.
The official residence of the Governor General:
Victoria. Citizenship and Immigration: Calgary. Agriculture:
Regina. Canada Post:
Toronto. National Health and Welfare:
Montreal. (Veterans Affairs is already based in Charlottetown.)
The Supreme Court: Saint John.
Foreign Affairs: Halifax.
Oceans and Fisheries: St.John’s.
Leave the House of Commons and the Defence Department in Ottawa.
As you can see, there’s no need to waste any more money on stupid polls.
So, don’t just stand there like a bump on a log, Mr. Prime Minister, do the right Canadian thing and form a committee to study these suggestions.
- Charities count the cost of caring in a recession, Stoke&Staffordshire,UK via thesentinel.co.uk via thisisstaffordshire.co.uk
NORTH STAFFORDSHIRE, England - Together they care for more than 2,500 sick and dying children and adults in North Staffordshire each year.
Without their services, already stretched NHS services would be put under even further pressure to deliver the £14 million of care and equipment which they annually provide.
But Caudwell Children, the Donna Louise Children's Hospice Trust and the Douglas Macmillan Hospice have all been faced with a challenge.
How do you meet increasing demand for your services as funds – both from the public, and the public sector – become harder to come by?
Figures from the Charity Commission show 69 per cent of charities had seen falling levels of incomes from investments, 31 per cent reported a drop in income from grants and 26 per cent experienced a decrease in fund-raising income.
Against that, almost one-fifth of charities reported an increased demand.
The differing size and scope of each charity means there is no one-size-fits-all solution.
Caudwell Children has a small, focused team which concentrates on raising cash which it spends on equipment and treatment for the 1,100 children it has supported nationwide.
At the other end of the spectrum, the Douglas Macmillan Hospice employs 200 people who handle everything from collections to making 1,700 residents comfortable during their last weeks and months at the Blurton hospice.
The Donna Louise Children's Hospice Trust is the smallest – in terms of funds raised – but plays a crucial role in caring for around 150 seriously-ill children at its hospice in Trentham.
Either way, the crunch has forced some tough decisions to be made.
Both Caudwell Children and the Douglas Macmillan were forced to make redundancies, while staff at the Donna Louise Children's Hospice Trust agreed to take a pay cut.
Nuala O'Kane, pictured right, chief executive at Donna Louise Children's Hospice Trust, which has a team of 56 at its Trentham Lakes hospice, said: "Over 80 per cent of our costs are staffing. We can't operate without people and we must employ qualified healthcare professionals to provide care for children with high-dependency needs.
"At the beginning of 2009 we could see there was a £150,000 shortfall in our budget. We had three options. Make redundancies, cut services, or cut costs."
The hospice board consulted with staff who unanimously agreed to reduce their working week to 35 hours – down from 37.5 – although most continued to work the full number of hours, effectively taking a pay cut.
That followed a decision to condense the opening of its six overnight care beds at the Treetops Hospice into four instead of six days a week.
The move allowed the charity to cut back on running costs such as heating, lighting and catering, while still caring for the same number of children.
Both initiatives have helped save the charity around £100,000, which along with the success of its fund-raising, means it returned a surplus of £93,111 in the nine months to March.
It is a position the organisation has maintained with a series of high-profile events including the Save Our Services campaign, which drew support from Jonathan Wilkes, Nick Hancock, Jo Brand, Rory Delap, Phil Taylor and patron Robbie Williams, and its 10th anniversary ball at Keele Hall in September.
Ms O'Kane said: "Our profile has never been higher and that is due in part to the role of the celebrities who support us.
"All our Celebrity Champions are genuinely committed to our cause and they support us in many different ways, often coming in privately, away from the cameras and spending time with the children and families."
Caudwell Children has continued to grow, although it has had to make radical changes to ride out the recession.
Despite the economic uncertainty, the charity continued its traditional high profile events.
These include the annual Caudwell Ball, which starred Rod Stewart and raised £1.7 million from celebrities including Elizabeth Hurley, Bruce Forsyth, Frank Lampard and Boyzone.
Latest filed accounts with the Charity Commission end before the recession hit the UK, although chief executive Trudi Beswick revealed the squeeze put on the nationwide charity.
In the summer, the charity reported a £1 million shortfall in its £3 million target for national fund-raising. At the same time, demand rose by 55 per cent.
Mrs Beswick, who heads up the organisation from its base at Minton Hollins House in Stoke, said: "Traditionally, our most successful area has been running events, corporate sponsorship and high net worth value individuals. All these sources have dried up or dwindled.
"We're now looking at what other charities are doing and trying it ourselves. We're not doing anything revolutionary, but we're doing things which we've never done before."
This includes efforts to gain regular donations from face-to-face collection on city centre streets, rather than large, single, donations.
This change in focus has led to a cut in the fund-raising team to 14 staff from 22.
She explained most of the posts affected were home-working fund-raisers, who concentrated on high-value donations.
The recession failed to affect any of the charity's work including the £200,000 annual Destination Dreams event where 25 children and their families were flown out to Florida for a week-long holiday.
Mrs Beswick said: "To take children on events such as the trip to Florida is extremely pleasurable, but it can be very hard work. On average, you're working 16-hour days. The first day at the airport was 22 hours, and no sleep.
"It is hard work, but you're doing it for the smile. Or when you get the letter from one of the families which says, 'I really enjoyed the trip, I got a chance to just walk and hold my husband's hand."
Meanwhile, the Douglas Macmillan Hospice has faced pressures to reduce services, although it was forced to make nine non-clinical staff redundant.
Karen Rose, the Dougie Mac's fund-raising director, explained the difficult balance the trust has to strike.
She said: "In terms of priorities, we would not reduce any care service unless there was absolutely no other option.
"We couldn't introduce a pay freeze because the majority of people we employ are clinically trained to the standards of the NHS. We have to pay NHS rates otherwise people would not work for us.
"And you can't cut fund-raising too much because you risk not being able to get the money to provide the services."
She added: "People express surprise when we say we have two palliative care consultants, but we need that skill to be a centre of excellence as we are."
The hospice has redoubled efforts to ensure public events such as the Midnight to Sunrise Walk, which drew in 1,500 women this year, continue to generate vitally-needed funds.
The hospice in October highlighted a £250,000 shortfall in income, a position which has stabilised.
Mrs Rose said: "We are still working our way through the recession. Halfway figures we are still down in income. People have supported us a little more so our shortfall has not got any deeper.
"Our worry is still ahead in 2010. We are not optimistic things will get better."
The position is echoed by the Donna Louise children's Hospice Trust. Ms O'Kane said: "We're not looking to cut back services, but we're not able to increase services dramatically, either.
"We will try to add services, but we won't be able to do that without the support of the public."
- Ireland Calling - The first budget cut is the deepest for the Irish public, by John Spain, (12/16) IrishCentral.com
Given the cutbacks in last week's budget in Ireland, the reaction so far has been surprisingly muted.
It was the toughest budget ever here, with welfare payments cut, the earnings of everyone on the state payroll cut for the second time in a year, and other reductions in state spending that will have a negative impact on the standard of living of almost every citizen.
It was the kind of budget that should have caused uproar. But it didn't.
Why? Well, there are several reasons.
The main reason is that the government had conditioned people to the bad news over the past two weeks. Almost all the cutbacks in the budget had been leaked to the papers in advance, drip-fed to the media in a deliberate softening up process. So when the full details were revealed on budget day the shocking news was no surprise, and not much of a shock either.
The other reason people accepted the cutbacks so calmly was that by now everyone here understands that our budget deficit has to be fixed or else the country will go bankrupt. It's been explained so often in the past few months that everyone here gets it.
We're spending $78.5) billion this year and only taking in $46.5 billion in taxes. No business or household can have a gap like that between spending and income and hope to survive more than a few years. And a country is no different.
Our problem stems from the massive expansion in state spending here during the boom years. The Irish state is still spending at that level even though tax revenue has collapsed over the past two years.
That means state spending now has to be cut back severely, and that was what this budget was all about. The government has not run out of compassion. It has run out of money. And it is a tribute to the good sense of most people in Ireland that they understand that, even though the cutbacks are distressing for some.
As I have explained in this column already, since our property bubble burst in 2008 and our tax revenue started to collapse, we have been paying half our bills with money borrowed from the European Central Bank. To keep the support of the EU we had to agree a program to reduce our budget deficit, and the first step was a €4($5.8) billion cut in the deficit in this budget, to be followed by more billions in cuts each year over the next three or four years.
This program was agreed by our government, but the main opposition parties also accepted it because there is no alternative. We can argue about the detail of how to reduce the deficit, but the need to cut it right back is accepted by everyone, even the Labor Party and Sinn Fein.
In headline terms this year's budget made $5.8 billion worth of savings as follows (in round figures) -- $1.5 billion each from the state payroll, welfare, capital programs and departmental spending.
As predicted here last week, the state payroll cuts were led by Taoiseach (Prime Minister) Brian Cowen and his ministers, with pay cuts of 20% and 15% respectively, although this included the previous 10% voluntary pay cut they took a year ago.
In spite of this example, the loudest immediate reaction was from state workers (teachers, nurses, police, army, civil servants, etc.), some of whom are already threatening to strike.
One can understand that they feel sore since they have already been hit with a 7% cut within the past year. Their pay will now be cut as follows – 5% on the first $43,600, 7.5% on the next $58,000 and 10% on the next $80,000 with a top rate of 15% on those earning in excess of $291,000.
It's a substantial further cut, and it will be hard for the 40% of state workers who are low earners, a lot of whom would be young and would include those who bought into the property market during the boom and are now in negative equity.
But overall there is little public sympathy for them because they have what workers in the rest of the economy don't have -- secure jobs and guaranteed pensions.
And there is also the inconvenient fact that pay for state workers was on average 20% higher than pay for workers in the rest of the economy, and also that most state workers had a 35-hour week, whereas private sector workers were on average doing a 38 hour week.
In spite of this, there is a good chance of strikes by state sector workers in 2010 as the cuts start to bite. A lot of them are in cloud cuckoo land because the rest of the country will be enraged if they shut down services. So the government has a difficult few months ahead.
The other part of the budget which caused the most grief was the cut in welfare. Again, one can have sympathy with those at the sharp end. But the exaggeration of the size and effect of the cuts by the usual lefty commentators was hard to take.
The fact is that Ireland has a generous and extensive social welfare system. The cuts are relatively modest and are only a little ahead of the fall in the cost of living.
Let's look at some examples. The payment to those out of work (what Americans call welfare, we used to call the dole and now call jobseekers allowance) was $297 and is now $285 a week. That's a cut of $12, or about 4% -- hardly enough to warrant the cries of outrage and despair that were heard last week.
There were also cuts in child benefit which is paid for every child in the country and is not taxed or means tested. The payment was cut by $23 a month (down from $241 to $218 for the first child).
A family with three children was getting $778 a month and will now get $708. Again, difficult for some families but manageable for most. But the reaction from some lefty commentators was off the scale.
The media here lapped it up, featuring examples of single mothers with four or five children and calculating how much they will lose. Of course no one dares ask politically incorrect questions like why a single mum has four or five kids or where the father(s) are, and why they are not paying maintenance.
The fact is that a single mum with no job and four kids will (even after this budget) be getting a one parent family payment of 196 euros a week, plus child benefit of $999 a month and will also probably be getting other payments like rent allowance (typically around $1,308 a month), fuel allowance (to pay for heating in winter), back to school allowance (for clothes and books for the kids at the start of the school year) plus other payments as well if she can show she needs them. It would be usual for a family like this to be getting $3,634 - $4,361 a month in state handouts.
No one is saying it should not be like this, but some of the reaction to the cuts in welfare in the Budget -- averaging 4% -- were so hysterical that you would think we had no welfare system left at all.
That said, there are some sections of the public (like those who care full time for a disabled relative and get a carer's allowance) where even a cut of 4% is very hard. It would have been better to tax the child benefit going to well off people than do that, but there are complex administrative and legal reasons why this is difficult to do in the short term.
Another cut that attracted a lot of comment was the change in payments for the young jobless. Those aged 18 and 19 get $150 a week. Those aged 20 and 21 used to get $296 a week, but that has now been chopped to the same $150 a week, unless they take part in retraining schemes run by the state.
It has been pointed out that there is a long waiting list for some of these training schemes, and that the cut is forcing these young adults back to live with their parents or else into emigration.
There is some truth in this. But it is also true that some of the young adults in question were making little attempt either to get retrained or to find a job, either in Ireland or abroad. They were choosing not to take low paid jobs (the kind now being filled by foreigners) because they preferred to live on their $296 a week handout.
It is important for the state not to encourage this mindset, which can all too easily translate into a long-term attitude. All through the boom there were thousands of long term unemployed here.
We could afford it then. We can't afford it now.
A wider argument about the budget was that in general it hit those on low incomes and reduced benefits to those with no incomes instead of taking much more from the high earners. But marginal taxes for middle and high earners here are already over 50%, and pushing them much higher will drive key people out.
Putting very high taxes on a few people was never going to solve our problem. Action had to be taken on the spending side and that meant cuts. And by spreading the cuts across all benefits, it was possible to keep the reduction to an average 4%.
In a country where welfare benefits only ever went one way -- up -- it has been a shock. But it's not nearly as bad as you might think reading the headlines here.
12/27-28/2009 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 (firstname.lastname@example.org) unless otherwise initialed -
- A Dutch Formula Holds Down Joblessness - Nation's 'Short-Work' Programs Since Global Crisis Appear a Success, but Some Say Previous Austerity Moves Are the Real Key...
[Austerity means belt-tightening meaning downsizing spending meaning recession and unemployment. How do you get out of unemployment and recession without downsizing spending? By reactivating all the money trapped in the topmost income and wealth brackets where they have far far more than they can possibly spend. How? Engineer a labor shortage as as during war or plague, without the war or plague. How? CUT THE WORKWEEK. Redefine "full time" down to where it should be in the age of robotization.]
BY ADAM COHEN, 12/28 Wall Street Journal,A10.
[Whoa, NY Times on Nov.13 - Wall St Journal on Dec.28 - worksharing is finally entering the mainstream discussion!]
EINDHOVEN, The Netherlands -- Production at DAF Trucks NV here has dropped by more than half in the past year, but the truck maker has kept nearly 80% of its full-time staff with state help.
"It beats being unemployed," says..Theo Witkamp, who operates computer-controlled cutting machines at DAF Trucks, a unit of Bellevue, Wash.-based Paccar Inc. Although his hours have been cut, he is making 85% of his regular wages through a combination of state and company contributions.
The Netherlands, Germany and Austria have all relied heavily on so-called short-work programs to keep people in their jobs in the wake of the financial crisis. All three have managed to keep unemployment from soaring, but the Dutch have been particularly effective. At 3.7% in October, according to the European Union statistics office, the country's jobless rate is one of the lowest among the world's wealthy nations.
"A lot of countries are using measures to support employment, but the Dutch might be the most successful," says Stefano Scarpetta, head of the employment-policy division at the Organization for Economic Cooperation and Development in Paris.
Norway, which has a lower jobless rate than the Netherlands, has used its oil wealth to bolster employment.
[Sounds like oil-funded makework.]
In the U.S., persistently high unemployment rates and the reluctance of employers to hire even though the economy is growing again has sparked interest, particularly on the left, on fashioning government subsidies like those common in Europe to discourage layoffs and encourage hiring. Paul Krugman, the Princeton University Nobel Prize-winning economist, has written [11/13/2009 #1], "These measures didn't prevent a nasty recession, but Germany got through the recession with remarkably few job losses."
[Worksharing measures could have prevented recession if they had been redesigned from temporary bandaids to sustainable economic stimulants àa la Timesizing.]
The Netherlands has poured roughly €2 billion ($2.9 billion) into its jobs programs over the past year.
[Better than the $700 billion stolen from US taxpayers by the banksters with no additional jobs on the horizon.]
But some say the country's low unemployment owes more to conservative practices before the financial crisis than to the programs put in place later. And they worry that the spending strain on the country's budget -- expected to swing to a deficit of 4.7% of gross domestic product this year from a 0.7% surplus in 2008 -- undercuts a strength that has helped it weather the downturn.
[Compared to the US's ??percent of GDP?]
Short-work measures were written into Dutch law during the Nazi occupation and retained after World War II, but have been used only sparingly. The Dutch avoided subsidizing employment when the economy was expanding. Temporary work -- hiring workers on limited contracts -- was encouraged, increasing firms' ability to hire and fire.
Germany and France -- countries that have resisted temporary work contracts and have used short-hours programs regularly -- have never managed to rival the Netherlands' low unemployment rates even during economic upswings. In Germany, the frequent use of short work, or kurzarbeit, in the 1990s also didn't prevent companies from eventually laying off workers they couldn't afford, Mr. Scarpetta says.
In recent years, the Netherlands weaned people from unemployment benefits with sometimes controversial measures such as tougher screening that cut disability claims to 20,000 last year -- a fifth of what they were in 2002. Before the downturn, the Dutch jobless rate was around 2.7%, and companies brought in workers from Eastern Europe to fill vacancies.
[Oops, sounds like Dutch CEOs are getting soft and shortsighted same as the rest. And Netherlands really doesn't have the Lebensraum for the longer-term-suicidal immigration "solution."]
After the crisis hit, the Dutch government, labor unions and employers quickly reached an agreement to begin payroll subsidies. Some likened the cooperation to the "polder model" that some historians say has origins in the Middle Ages, when people from rival Dutch cities and different social classes banded together to shore up dikes when floods threatened.
Piet Hein Donner, Dutch Minister for Social Affairs and Employment [infoline +31-77-465-6767], says the jobs measures aimed to prevent companies from having an "overreaction" to the financial crisis, laying off skilled workers they would have to rehire when the economy picked up.
Some critics slam the short-work measures. Rick Van der Ploeg, an economics professor at Oxford University and a former Dutch politician, calls them a form of "creeping communism." He adds, "This is sharing poverty, pure and simple."
[Prof. Rick Van der Ploeg is another Oxford economist who can't seem to understand Keynes' multiplier effect - the fact that as you redistribute the money supply up the income scale to fewer and fewer, richer and richer people, spending and circulation sink exponentially, but as you redistribute the money supply down the income scale to more and more, poorer and poorer people, spending and circulation expand exponentially. (But then Keynes was from Cambridge.) In short, as you share "poverty," you lessen it because as you share even a little money, you exponentially increase its transfer rate, its velocity of circulation, and thus its efficiency and functionality and usefulness. Sharing the lack of money is the whole idea behind insurance - a connection totally lost on this in-the-box thinker as he grasps his big, tenured salary. But what do you expect from a secure, academic economist and politician? The physicians of Italy were the last to accept Vessalius' Anatomy and the economics profession will be the last to accept the temporary economic first-aid of worksharing or the permanent sustainability of timesizing.]
Even some who backed the programs have doubts. Dutch Finance Minister Wouter Bos worries about the effect of state aid. "It makes it harder for the market to determine which companies should survive and which should be allowed to fail," he says.
[That's why switching to overtime-tax-funded training&hiring is so much better - it makes use of the market-determined incidence of overtime throughout the economy.]
But it is worth the risk if the program keeps employees in jobs long enough for a recovery to take hold, Mr. Bos says. "You put in some extra money at an early stage, but then you save some money later because people don't have to go for unemployment [benefits]," he says.
To qualify for the first short-work program that started last November, a company had to show a 30% drop in revenue over a two-month period. The government paid workers all the wages they lost due to the reduction of their hours. More than 2,000 companies applied, and the state paid for more than 2.4 million hours of work at a cost of around €200 million. The subsidy, limited to a six-month period, was available until the end of April.
At the same time, the government set up a network of advisers to work with companies. The companies, from large corporations to family-owned businesses, get help deciding whether to use state-funded programs to avoid job cuts. When layoffs can't be avoided, the team helps workers find new jobs.
In late April, another program known as "part-time unemployment" kicked in, which didn't require companies to show a big revenue drop.
Under this €1 billion plan, employers can reduce workers' hours and salaries by as much as half, and the state makes up 70% of the lost wages.
At first this second phase was perhaps too attractive: After some companies began using it for all their workers, sending the state a hefty bill for wage subsidies, Mr. Donner this summer put stricter limits on the number of working hours it covers and the duration of the aid.
[Here we see companies blundering towards an independent collective invention of permanently sustainable worksharing - which will wind up looking very much like the five-phase Timesizing program.]
More than 1,500 companies are enrolled in the program, which runs from nine to 15 months. At DAF Trucks, companies and unions agreed to provide more pay than the government required.
Eindhoven-based ASML Holding NV, which makes photolithography devices for the semiconductor industry, used the short-work option for 1,100 workers until it expired in mid-June. The company's orders picked up in the second half of the year, and it didn't seek further state support.
"We now have enough work to keep our people going," says company spokeswoman Jojanneke Strijbos.
Write to Adam Cohen at email@example.com
- What's Wrong with a 30-Hour Work Week? by Don Fitz, (12/16) MRZine via MonthlyReview.org
With millions of jobs lost during the first part of 2009, who is calling for a shorter work week to spread the work around? Not the Republicans. Not even the Democrats. But why is there nary a peep from unions?
In the U.S., auto sets the pace for organized labor. The only discussion at the top levels of the UAW (United Auto Workers) is how quickly the gains won during the last 50 years can be given back. Does the UAW have no memory of the 1930s and 40s when a shorter work week was at the center of organizing demands?
The gross domestic product (GDP) is plummeting at the same time that jobs are disappearing. Why should there be any connection between the two? If society produces 10% less, why don't we all just work 10% less? Didn't things work like that for hundreds of thousands of years of human existence? When people figured out easier ways to get what they needed, they spent less time doing it.
It's called "leisure." Leisure is essential for a democratic society involving people in all aspects of self-government. Instead of working frenetically to produce "stuff" that we don't have the time to enjoy, wouldn't we be better off with less "stuff" and more time of our own? Research repeatedly shows that, once important needs are met, additional belongings bring no additional happiness.(1) Yet work is strongly related to stress.(2)
A Labor-Environment Connection?
It's more than stress to the human nervous system. Manufacturing too much stuff stresses every aspect of the environment. The voracious appetite of corporate growth destroys homes of the wolf and bear in North America. Swiftly disappearing are the last refuges of chimpanzees in Africa and orangutans in Borneo and Sumatra. Mangrove forests give way to beach resorts as long-line-fishing kills 100 sea animals for every fish eaten by a human.
Vastly more creatures fall prey to the 80-100,000 chemicals spewed into the air, water, and land. Countless molecules of chlorine and fluorine go into pesticides and plastics that destroy immune and reproductive systems. Elemental structures of lead, mercury, and, of course, radioactive particles are Thanatos to living systems.
The most frequent building block of toxins is oil. With more than 40 hours of labor contained in each gallon, oil is the closest thing to free energy that humanity has ever discovered.(3) A substance that should be used sparingly so that many future generations could use it for medical and other essential products, oil is being squandered at an exponential rate by a corporate culture determined that its descendants will despise it.
The only way that corporate America knows to shield itself from loathing by its progeny is by working overtime to prevent those generations from existing. As climate change changes from "if/when" to "How rapidly is it increasing?" corporations befuddle our senses with a dazzling array of green gadgets, each of which pumps more CO2 into the atmosphere during its manufacture and distribution.
Nevertheless, corporate media propagandizes non-stop that we must be unhappy from the economic downturn and pray for a quick return to the normal rate of planetary extermination. So it's time to ask why another set of voices is not demanding a shorter work week: Why do the Nature Conservancy, World Wildlife Federation, and a host of other Washington lobby groups fail to point out that an economic slowdown with a fair distribution of jobs would be the treatment of choice for a sick environment?
Centuries of Struggle for the Working Day
Some of the most insightful writing on hours of labor is in Karl Marx's Capital. While most of it reflects the analytical style of 19th century economic writing, Chapter X on "The Working-Day" reveals Marx's passionate outrage at what long hours do to workers' health. The problem started as infant capitalism found the hours of labor under feudalism to be insufficient to satisfy its urges for expansion.
In response to a shortage of labor due to the plague, England's 1349 "Statute of Laborers" sought to ensure that the working day was sufficiently long. An Elizabethan statute of 1562 lengthened the working day by reducing the time for meals. Emphasizing that it took capitalism centuries to lengthen the working day to 12 hours, Marx noted that one of the milestones was the elimination of church holidays by Protestantism.(4)
By the 19th century, some had work weeks of 15 hours per day for 6 days per week plus 8-10 hours on Sunday.(5) At the same time that many were organizing to reduce their hours to 12 per day, the Chartist movement made the 10-hour day "their political, election cry."(6)
The high point of U.S. labor organizing during the 19th century was on May 1, 1886, when 300,000 workers went on strike for the 8-hour day. The brutal repression that came down in Chicago with the Haymarket arrests and executions sparked the international celebration of May Day.(7)
In his classic description of the fervor for an eight hour day that began in 1884 and increased in pitch through 1886, Jeremy Brecher made observations that are still relevant.
First, the leadership of the dominant labor organization of the day, the Knights of Labor, attempted to put brakes on the 8-hour movement. It was often the grassroots that pushed forward, dragging the leaders behind them in city after city.
Second, the 1886 strike wave, far more than previous labor actions, "became above all strikes for power."(8) The 1886 demands were for control over work hours, hiring and firing, and the organization of work.
Third, and most important, the struggle for the 8-hour day did not wait until the 10-hour day had been won. Unbelievably long hours were still common. Successful strikes meant that, in many industries, workers "of all kinds have reduced their hours of labor from 15 to 12 and 10."(9) Workers who only a few years earlier had 12-15 hour per day jobs were now demanding the 8-hour day. Marx similarly wrote that the Chartist movement for the 10-hour day was popular amongst those with a work week of up to 100 hours.
Does Anyone Work for Less than 40 Hours?
While interviewing Spanish longshoremen in 1989, I spent hours talking to Juan Madrid in Barcelona. Every summer he and his wife had the problem of making sure that they had the same month for vacation. "Do American workers really get off less than a month?" he asked me incredulously.
"Two weeks is the most common; some only get one week; and many get no paid vacation at all," I let him know. Factoring in longer vacations, he had an average work week considerably shorter than the typical U.S. worker. This is the rule, and not the exception, in Europe.
Reducing the work week below 40 hours has preoccupied many labor organizations. In the 1930s, the American Federation of Labor lobbied for a six-hour day.(10) In 1990, BMWs plant in Regensburg adopted a 36-hour week. German Volkswagen employees accepted a 10% pay cut to achieve a 28.8-hour work week. The Digital Corporation had 530 employees who opted for a 4-day week with a 7% pay cut so that 90 jobs could be saved.(11)
Victories for shorter work weeks may only be temporary. Tim Kaminski told me that he loved the extra free time he gained from winning a 7-hour day (with no loss in pay) at the St. Louis Chrysler minivan plant in 1992. But the contract stipulated that it would last only until another plant reopened, which happened two years later.(12)
It is not unknown for politicians to champion the cause of fewer hours. Before joining the Supreme Court, as a U.S. Senator Hugo Black introduced legislation for a 30-hour work week in 1933.(13) More recently, the French Senate looked into a 33-hour week.(14)
One of the least known flirtations with the 30-hour work week was by the cereal giant W.K. Kellogg Company. In 1930, the company announced that most of its 1500 employees would go from an 8-hour to a 6-hour work day, which would provide 300 new jobs in Battle Creek. Though the shorter work week involved a pay cut, the overwhelming majority of workers preferred having increased leisure time to spend with their families and community.(15)
New managers who began running Kellogg had no enthusiasm for the shorter work day. They polled workers in 1946 and found that 77% of men and 87% of women would choose a 30-hour week even if it meant lower wages. Disappointed, management began examining which work groups liked money more than leisure and began offering the 40-hour week on a department-by-department basis.
How long did it take them to get rid of the 30-hour week? Almost 40 years! The desire to have more time to themselves was so strong that it was not until 1985 that Kellogg was able to eliminate the 30-hour work week in the last department.
The experience at Kellogg indicates that it is absolutely false to say that all workers all of the time crave more stuff and will sacrifice anything to get it. Karl Marx made a similar observation when writing about "The Working-Day." Quoting results of a poll of those who had labored excruciating hours at a Lancashire factory, "They would much prefer working 10 hours for less wages."(16)
Why Would Any Progressive Criticize a 30-hour Work Week?
Despite all of this, there is something problematic with advocating a 30-hour work week at the beginning of the 21st century: a 30-hour week is not short enough! There is mushrooming unemployment amidst mountains of useless products. An hour of labor now produces more goods than has ever been the case in the history of humanity. Combining these means that there is no reason for anyone to work more than 20 hours per week.
Every year, clever folks figure out how to churn out more stuff with fewer hours of labor. Jeffrey Kaplan observed that, "By 1991, the amount of goods and services produced for each hour of labor was double what it had been in 1948."(17) This was a doubling of labor productivity in only 43 years. Jon Bekken calculates a more rapid rate: "Automation and other innovations result in our productivity (output per work hour) doubling every 25 years or so."(18)
In other words, the amount that people produce during an hour of labor doubles every 33 years [give or take 10 years]. We have the ability to produce twice as much during the work day or cut the work day in half and produce the same amount.
Arthur Dahlberg, a consultant to both the Hoover and Roosevelt administrations, wrote that capitalism was already capable of satisfying basic human needs with a 4-hour work day.(19) He maintained that such a drastic cut in working hours "was necessary to prevent society from becoming disastrously materialistic."(20)
The issue was revisited in 1991 by Harvard economist Juliet Schor, who concluded that it would be possible to have a 4-hour work day with no decline in the standard of living.(21) Similarly, J.W. Smith argued that "over 50% of our industrial capacity has nothing to do with producing for consumer needs."(22) Years before issues of climate change and peak oil grabbed the public, Smith forecast:
We're facing an ecological nightmare as we push to the brink the earth's ability to support us. We could eliminate much industrial pollution and conserve our precious, dwindling resources by eliminating the 50% of industry that is producing nothing useful for society.(23)
[except 40-hour workweek jobs...]
In a more recent analysis, Smith sifts through the U.S. economy sector by sector to conclude that "we could all work 2.3 days per week with no drop in our living standard."(24)
It's a rare economist who is capable of realizing that there is no reason to constantly scramble for the possession of more objects that fall apart more rapidly. British philosopher Bertrand Russell also thought that four hours of work per day should be plenty to supply the necessities of life.(25)
Russell was thinking similarly to Benjamin Franklin, who wrote over 200 years ago:
. . . if every Man and Woman would work for four Hours each Day on something useful, that Labour would produce sufficient to procure all the Necessities and Comforts of Life, Want and Misery would be banished out of the World, and the rest of the 24 hours might be Leisure and Pleasure.(26)
Labor has become vastly more productive since Ben Franklin contemplated the work day. However, total output grows even faster than labor productivity. By including population growth and people seeking to live the lifestyle of the English-speaking rich, Ted Trainer ciphers that "by 2070, given 3% economic growth, total world economic output every year would then be 60 times as great as it is now."(27)
This would be a 6000% increase in stuff in 63 years -- not exactly healthy for forests, oceans, wildlife, and humans. If we want our children to be able to live on this planet, the single most important environmental legislation may be restricting people from working more than 20 hours per week.
What's Stopping a Shorter Work Week?
One factor which is not standing in the way of fewer work hours is "human nature." Marshall Sahlins estimated that hunter and gatherer societies probably spent 15-20 hours per week obtaining the necessities to survive.(28) Each of us can look inside of ourselves to see the real obstacles to cutting the work week in half: fear that we will lose medical care, pensions, and related survival necessities.
Virtually every working family in America is one medical catastrophe away from bankruptcy. Countless Americans would gleefully shift to a 20-hour work week if it would not cause them to lose their health insurance.
Pensions pose a similar roadblock. As they approach retirement, millions of Americans become acutely aware that pensions are based on factors like the average salary of the last three years. Working part time would cut pension payments during uncertain years.
It is not a well kept secret that employers often give workers less than 40 hours to deny them benefits. A similar effect occurs from forced overtime. Even though there may be a higher rate of pay for overtime, a company may save money if it does not pay for the health care and pensions that putting more people on the payroll would require.
Every environmentalist who wants to stop coal companies from blowing the top off of sacred mountains should be on those mountains screaming that private health insurance and pension plans must be replaced by single payer health care and a social security system with at least a four-fold expansion of payments. In case the environmental significance is not clear.
1. Halting the cancerous growth of useless fall-apart junk production requires a drastic shortening of the work week; and,
2. Cutting the work week can only happen if people are not terrified that fewer hours means they will lose health insurance and pension plans.
These are called "social wages." Social wages also include mass transportation, clean water, breathable air, uncontaminated land, and something which is becoming increasingly rare: the right to quality free public education which is coordinated by representatives directly elected by citizens. These social wages are as important environmentally as medical care and pensions.
The right to a home with electricity and heat is part of the same pattern. People who are not fearful of being thrown out of their home or losing their utilities have much less incentive to work long hours.
There remains an enormous problem that permeates every other barrier to shortening the working day. As long as production is based on the maximization of profit, each corporation is pushed to extend working hours as long as possible for fear the competition will do it first. As Marx described with Lugosian clarity:
The prolongation of the working-day, beyond the limits of the natural day, into the night . . . quenches only in a slight degree the vampire thirst for the living blood of labour. To appropriate labour during all 24 hours of the day is, therefore, the inherent tendency of capitalist production.(29)
[or not, since that's unsustainable...]
In the 21st century, we should update this to say that capital feeds with two fangs: one to suck the blood of labor and the other fang to drain life from Mother Earth. Can the 20-hour work week become a wooden stake held by the environmental movement as it is pounded by labor? Maybe; but not necessarily. A stake that is driven too shallow will allow the demon to awaken with renewed strength.
When U.S. workers struck for the 8-hour day in 1886, they were going beyond pay issues and demanding that labor have a role in controlling the process of production. Today, we need a progressive alliance to challenge not only how many hours we work, but the quality, durability, and even the necessity of goods we produce. Drastically cutting the hours we work will help save the Earth's ecology, only if it is part of an overarching goal to improve the quality of our lives while reducing the grand mass of manufactured objects.
1 Diener, E., & Seligman, M.E.P. (2004). "Beyond Money: Toward an Economy of Well-being." Psychological Science in the Public Interest 5.1: 1-31.
2 Holmes, T.H., & Rahe, R.H. (1967).
"The Social Readjustment Rating Scale." Journal of Psychosomatic Research 11.2: 213-218.
3 Heinberg, R. (2003). The Party's Over: Oil, War and the Fate of Industrial Societies. Gabriola Island, BC: New Society Publishers, 272.
4 Marx, K. (1974). Capital: A Critical Analysis of Capitalist Production, Volume 1. Moscow: Progress Publishers (first published in 1887), 264.
5 Capital, 252.
6 Capital, 267. According to labor activist David Macaray, parallel efforts happened in the U.S., with an 1835 textile strike to shorten the work week to six days of 11 hours and a Boston carpenters' strike for a 10-hour day. Personal communication. April 25, 2009.
7 Roediger, D. (1998). "Haymarket incident." In M.J. Buhle, P. Buhle & D Georgakas (Eds.) Encyclopedia of the American Left (296-297). New York: Oxford University Press.
8 Brecher, J. (1972). Strike! Boston: South End Press, 32.
9 Strike! 42.
10 Jon Bekken (2000, "Arguments for a Four-hour Day") also notes that New York City electricians won a 25-hour work week (with obligatory overtime) in 1962; in the 1980s German metal workers struck for a 35-hour week; and Danish "private sector" workers went on strike in 1998 for a 6-hour day.
11 Bush, K. (1994). "Work Less and Everyone Works." In Context: A Journal of Humane Sustainable Culture 37: 42.
12 Kaminski, T. Personal communication. May 16, 2009.
13 Kaplan, J. (May/June, 2008).
"The Gospel of Consumption: And the Better Future We Left Behind." Orion Magazine.
14 Bush, 42.
15 Kaplan's description of the Kellogg experience is based on Benjamin Kline Hunnicutt's (1996). Kellogg's Six-hour Day. Philadelphia: Temple University Press.
16 Capital, 270. This was in response to owners violating a 10-hour statute by forcing a 12 to 15-hour day with higher pay.
17 Kaplan, 4.
19 "A.O. Dahlberg, 91, Economist and Inventor." New York Times (October 2, 1989): D12.
20 Kaplan, 3.
21 Schor, J.B. (1991). The Overworked American: The Unexpected Decline of Leisure. New York: Basic Books.
22 Smith, J.W. (1989). The World's Wasted Wealth. Kalispell, MT: New Worlds Press, xv.
23 Smith (1989) Book jacket.
24 Smith, J.W. (1994). "Wasted Time, Wasted Wealth." In Context: A Journal of Humane Sustainable Culture 37: 18.
25 Russell, B. (1959). The Prospects of Industrial Civilization, 2nd edition. London: George Allen & Unwin Ltd., 40.
26 Benjamin Franklin, Quoted in Campbell, J. (1999). Recovering Benjamin Franklin. Chicago: Open Court Publishing Company, 228.
27 Trainer, T. (2007). Renewable Energy Cannot Sustain a Consumer Society. The Netherlands: Springer, 2.
28 Sahlins, M. (1974). Stone Age Economics. London: Tavistock Publications.
29 Capital, 245.
Don Fitz has been surviving on less than 20 hours work per week since he was forced to retire in 2006. He is editor of Synthesis/Regeneration: A Magazine of Green Social Thought, and can be reached by email at . This article was published in Synthesis/Regeneration 50 (Fall 2009); it is reproduced here for non-profit educational purposes.
- The best good deals of 2009, by Charles Bonenti, 12/27 The Berkshire Eagle - McClatchy-Tribune Information Services via COMTEX via TMCnet.com
[Nice to see worksharing first on the list. Still no realization that it is the ink & paper of the list itself and for that matter, ALL lists.]
THE BERKSHIRES (hill region in western Mass.) -- Year's end brings a moment to reflect on the best bargains of the year as seen through this column. My choices:
\ The Massachusetts Worksharing Program administered by the state's Division of Unemployment Assistance allows employers to avert layoffs by temporarily reducing workforce hours 10 to 60 percent. It allows affected workers to collect unemployment benefits to make up for some of their lost pay.
Call the Division of Unemployment Assistance at (617) 626 5510.
\ The free AARP-sponsored tax-return preparation service offered to low-income seniors 60 and above. Call Elder Services of Berkshire County at (413) 499-0524. \ The Circuit Breaker Tax Credits on property taxes for Massachusetts seniors 65 and older who own or rent property. They can claim a state tax credit in amount by which their property tax exceeds 10 percent of income.
Call..Elder Services at (413) 499-0524 or visit or www.mass.gov/dor and search under circuit breaker.
\ Free cell phones and service to low-income Massachusetts through SafeLink Wireless. SafeLink is a subsidiary of TracPhone Wireless, a provider of prepaid cell phones and services.
Eligibility rules apply. Call (800) 977-3768 or visit www.safelink.com
\ The Aid and Attendance Special Pension available through the Veterans Administration pays up to $1,632 per month for veterans and surviving spouses for care at home or in a nursing home.
You have to qualify medically and financially. Consult your local veterans agent.
\ The nonprofit Seattle-based Missing Pet Partnership -- www.missingpetpartnership. org -- applies the search-and-rescue techniques used to locate humans to find lost pets They have trained searchers who can help in person or by phone.
\ Free health care offered by Volunteers in Medicine in Great Barrington to Berkshire residents over 18, who don't qualify for Medicare or Medicaid and are uninsured or underinsured.
Call (413) 528-4014 or visit www.vimberkshires.org
\ Free bus rides -- if you book early enough -- from Albany to New York City and back via megabus.com. Fares go up the closer you get to departure.
To reach Charles Bonenti: firstname.lastname@example.org
- It's 2010 - Ready to communicate with dolphins? Take a spin in your flying car? Unfortunately, the future doesn't always turn out as predicted, by Paul Milo, 12/27 Boston Sunday Globe (BSG), K1.
[On this list, shorter hours is held up to number two online, or number four in the hardcopy if you read above the fold first instead of down the first column ("The three-day workweek" is in the first column below the fold).]
With just days left in the year, you might be trying out a few cool things you expect to use in 2010 - an e-reader, a talking GPS system, mittens wired to run your iPod. But it’s a fair bet that there are some things you won’t have. You won’t have an electric butler to rouse you on New Year’s Day. You won’t climb into your flying car that morning. You won’t be chowing down on your food pill for a recuperative breakfast. It’s likely to be chilly - miserable, even - thanks to the lack of a climate-controlled geodesic dome over your town. And while you may be planning a Vermont ski trip for February, you’re not going to be jetting to a Malaysian beach for the day, or relaxing at an orbiting space hotel.
If you had told this to an audience in 1930, or even 1970, they would have been shocked. Decades ago, it was virtually taken for granted that average people would regularly be traveling to space, robots would be doing all the household chores, and our steaks would be in capsule form. Even the most pessimistic folks would have guessed that by now we would be able to fly from Los Angeles to Tokyo in two hours.
The world we’re about to enter, in 2010, may be radically more advanced, technologically, than a generation ago - just this month, a British firm began selling the first prosthetic bionic fingers, for instance - but it is still a far cry from the future as it was once imagined. And the reasons why we didn’t get that future - why we have pocket phones that hold a thousand books, but can’t buy a simple jetpack no matter how hard we look - suggest some important insights about why we predict the things we do and why when we try to predict tomorrow, we sometimes get things so laughably wrong.
Decades ago, when scientists learned to split the atom, the feat brought not only the threat of nuclear apocalypse but also the promise of boundless energy - a new, golden age where electricity would be “too cheap to meter,” as the phrase went. In the ’50s, not surprisingly, the US government undertook a plan to emphasize the upside. Its nuclear development program, “Atoms for Peace,” included the ultimately successful attempt to create nuclear power plants. It also included the less well known “Project Plowshare,” an effort to use atomic explosions in titanic construction projects. If dynamite was good for demolition, the thinking went, wouldn’t nukes be better?
The Nevada desert today is peppered with 50-year-old craters that were created in testing the feasibility of using A-bombs as giant earth movers. There was a plan to carve out a bay in Alaska, as well as to widen the Panama and other canals. The Russians, who had their own equivalent of Plowshare, were particularly interested in using atomic bombs for oil and gas mining.
The effort eventually foundered, pretty much for the reasons you would expect - engineers were never able to guarantee the public’s safety from radioactive fallout. But Project Plowshare had another, implied goal, too. The United States - with thousands of warheads, and the only country that had ever actually dropped a nuclear bomb - was trying to show the world that nuclear weapons could improve human lives and not just claim them. Whether that was accomplished is an open question.
The three-day workweek
By the 1960s, America had achieved unprecedented wealth and had created the largest middle class in history. At the same time, entire categories of employment were vanishing, as more and more functions in offices and factories became automated and computerized. Meanwhile, the public sector was becoming an ever-larger part of the economy. Throw all of these trends into the hopper and what came out was a big prediction about work: that by now, we would all need to labor a lot less.
The 40-hour workweek, mandated during the Great Depression, was supposed to have been winnowed down to 30 hours, or even 20.
[That "winnowing" has never happened by itself. It has always resulted from pressure. And until we remount that pressure, we'll be going into a greater and greater depression of pay-shrinking labor surplus, powerless to stop the flight of jobs offshore and of foreign products and unemployed onshore.]
We were all supposed to be retiring just around the time the first flecks of gray began to appear in the mirror.
A study dating from the mid-1960s estimated that by the early 21st century all of the nation’s work could be performed by just 2 percent of the population. A city planner named William Wheaton predicted in 1968 that by now, thanks to incredibly generous wages, we would be able to earn a lifetime’s worth of salary in just 10 years, and proceed to enjoy a comfortable retirement that lasted for decades. A Wall Street Journal article declared that marriages would be stronger as husbands spent less time at work and more time at home with their wives. Some experts assumed that America would grow so wealthy it would disburse “living wages,” salaries awarded simply because you were drawing a level breath.
In one sense, the average American of 2009 is wealthier than his equivalent from 1969: Technological improvements have bestowed upon us a much greater variety of entertainment, far more reliable cars, cheaper and more plentiful food. More of us are working in relatively pleasant offices instead of on noisy, fuming assembly lines. Other of life’s pleasures, like air travel, are less expensive, too.
But that all has to be weighed against the fact that our working lives, if anything, are getting longer. A husband coming home early today would likely find his wife still at work. The nation’s Social Security system will collapse unless there are additional increases in the retirement age. A thriving economy, it turns out, means more - not less - work for everyone. And as for the government taking care of us all - well, let’s just say that living wage check is still in the mail.
Chatting with dolphins
As scientists realized that the break between humans and other animals wasn’t nearly as distinct as once believed, they became more and more curious about animal behavior, even animal psychology. One of those researchers, John Lilly, speculated that if we could only figure out the lingo, human beings should be able to one day talk to dolphins and whales.
By the early 1960s, Lilly was regarded as a brilliant conventional scientist; he would later gain notoriety for developing the isolation tank and championing the use of LSD. Fascinated by the clicks and wails of dolphin communication, Lilly built a partly submerged laboratory in the Virgin Islands where his assistant, Margaret Howe, spent months living with the animals virtually round the clock, trying to discern the basics of cetacean-ese. Lilly’s books describing his research were bestsellers, and a ’60s TV show, “Flipper” - about a dolphin who befriends a family living on the shores of a Florida lagoon - clearly was inspired at least in part by Lilly.
The results of his experiments, as Lilly himself admitted, were inconclusive. But the spirit survived in others’ efforts to teach chimps and gorillas to talk, or at least to sign a basic vocabulary. Today, many believe that only humans possess a grammar sophisticated enough to express abstract queries like “what if?” But other researchers have noted that the brains of cetaceans, primates, and even some birds are far more complex than previously imagined, and are withholding judgment, for now, about the limits of nonhuman intelligence.
Lilly had bigger goals, though - he wanted to convince the public that animals live in civilizations as flawed and grand as our own, and that slaughtering them amounts to massacring a more primitive culture. Back in the ’60s, Lilly was at the vanguard. Today, though, if you eschew fur and your cosmetics are cruelty-free, you are, in a sense, indebted to a man who once tried to converse with the dolphins.
The flying car
Nothing says “future” quite like the flying car. Since the earliest years of the 20th century, the flying car has seemed the next logical step for a nation captivated by the romance of unfettered mobility, a machine that would let us zip above the rooftops just to go to the grocery store or the dry cleaner.
A 1909 article in Harper’s Weekly described a very near future in which thousands would be heading to the opera in their sky cars, the traffic directed by a hovering sky cop. In the 1950s, a Popular Mechanics cover featured a suburban dad in a fedora soaring above his tidy suburban home, the little woman looking up and waving him off to work. Even as recently as the 1990s, marketing guru Faith Popcorn predicted that a flying car “in every driveway” was “just around the corner.”
So where are our flying cars? The stumbling block hasn’t been technological. Good prototypes have been around for decades, and one contemporary entrepreneur, Paul Moller, is making considerable progress towards an affordable “sky car.” But it will take a lot more than a lone visionary to usher in the era of mass, personal airborne transportation.
We tend to forget it now, but building the nation’s conventional roads took decades and trillions of dollars, and it would require an effort nearly as great to build “sky highways” - we’d need thousands more highly trained air-traffic controllers, for starters. The cars themselves would have to be built to a much higher, and therefore much more expensive, standard - if my poky Dodge breaks down, I can pull over to the side of the road, but if the same thing happened in my flying Dodge, I would be the road. Could millions of people really earn a pilot’s license? The lesson of the flying car is that scale matters. The technology can certainly be made to work, but making it work for everybody is a very different problem.
Marriage a trois (or more)
Marriage as we know it now is not the timeless, immutable institution it has often been made out to be. For much of human history, wedded unions were matters of commerce as much as anything; the modern idea that people should pair off with romantic partners is only a few centuries old, and even today isn’t universal.
Forty years ago, however, many believed that by now, there would be a lot more choices on the Western matrimony menu, starting with polygamy. In a 1962 novel by Robert Rimmer, “The Harrad Experiment,” college students practice free love and open relationships; later in the decade he expanded upon this idea, championing plural unions as the perfect antidote to the “stifling” monogamous relationship. If this sounds fantastic, consider the context: The then-new birth control pill had changed family life forever, and the Playboy-lifestyle “swinger” was just emerging. For a time, Rimmer had millions of mostly young adherents.
Other thinkers expected that by now, wedding vows would no longer include “till do death us part.” Instead, serial matrimony would be the norm, with young people entering into legal but short-term “trial marriages.” And child rearing, too, would become more flexible - the psychologist and author B.F. Skinner believed that biological parents weren’t necessarily the people best suited to rearing their offspring. Instead, Skinner believed, parents and children should seek each other out based on their compatibility.
That none of these has really taken hold doesn’t mean that the evolution of family life has stopped. There are same-sex unions now, and far more unmarried couples with children - an arrangement not long ago derided as “living in sin.” Yet at the same time, there has been a considerable backlash against the free-love movement. Many adults today were the children of divorce, and do not look back on the experience fondly. These people have, in a sense, recommitted themselves to the idea of “traditional” marriage that was near universal back in the Ozzie and Harriet 1950s. There’s a lesson here for prospective futurists: Sometimes, when the culture sees the next wave on the horizon, it runs the other way.
Today the Amazon rain forest is considered a natural resource almost unequaled on the planet, but in the 1960s, many experts merely saw an overgrown wilderness waiting to be exploited.
In the late 1960s, a think tank, the Hudson Institute, aired a proposal to create an ocean the size of Germany smack in the middle of the fat, upper half of South America. The plan would have included six additional bodies of water, each about the size of Lake Ontario, all strung together by waterways to accommodate shipping. The idea was to create a massive transport link that connected the Atlantic and Pacific and gave easy access to the mineral wealth of the continent. As a side benefit, Colombia, Brazil, and the other neighboring nations could get cheap, reliable hydroelectric power from dozens of new waterfalls.
Interestingly, this exercise in planetary remodeling would have been achieved using fairly cheap, low-tech methods: simple earthen dams to stop up the Amazon and other rivers, letting the area - a large natural depression - simply fill up with water. Around the same time, the Russians were also thinking of building their own sea, by damming the Ob and Yenisey rivers.
But as these ambitions took hold, something else did, too: an appreciation that man’s actions could have serious and unplanned consequences for the natural world. Ohio’s Cuyahoga River, where flammable chemicals had been dumped for decades, caught fire one day in June 1969. A short time later, the United States would create the Environmental Protection Agency. Soon, massive engineering projects were vetted not just for their feasibility but for their potential impact on the planet. In the face of such considerations, the South American ocean was doomed: Aside from its environmental effects, a French scientist estimated that the weight of so much water so close to the equator could actually slow the rotation of the earth itself.
Paul Milo is the author of ”Your Flying Car Awaits: Robot Butlers, Lunar Vacations, And other Dead-Wrong Predictions of the Twentieth Century.”
- Verbal confirmation for Doepker Industries work-share program, by Rebecca Lawrence, 12/28 Moose Jaw Times-Herald,SK via mjtimes.sk.ca
MOOSE JAW, Saskatchewan, Canada - A work-sharing program for Doepker Industries in Moose Jaw has been verbally approved, says president Gurcan Kocdag.
Kocdag told the Times-Herald it was good news for everybody involved.
Earlier this month, 48 notices were issued by the company as a precaution.
The company, which makes highway semitrailers and grain haulers, is shut down until Jan. 4 when Kocdag hopes to have written confirmation from the Human Resources and Skills Development Canada in place.
“It means any time there is not enough work, we are covered under the work-share,” he said, “Given the circumstances now, I do not think there will be any layoffs.”
Kocdag said he had not yet seen any time frame for the work-sharing program but he expected it to be in place for six months to a year.
He estimated the work-share would be used for 40 to 50 per cent of the week.
- Moving on from a year to forget, by Nick Servini, BBC Wales business correspondent, BBC News via bbc.co.uk
WALES, U.K. - There was an ominous start to 2009.
It began with a jobs ultimatum from Anglesey Aluminium, pay cuts for Corus staff and a dire warning from the British Chambers of Commerce about the state of the economy.
We now know that aluminium smelting has come to an end on Anglesey with the loss of nearly 400 jobs, Corus shed 1,000 jobs in Wales and the chamber was spot on with its prediction.
There were other cuts, of course. Another glimpse at my notes shows 1,200 manufacturing losses were announced in one 48-hour period alone in March.
The latest unemployment figures show that Wales lost 30,000 jobs over the past year.
That increase in joblessness has been the dominant theme of the year. There is now more competition than ever for work.
More than 100 applications for single job vacancies have not been uncommon. In a throwback to earlier recessions, we've seen the re-emergence of job clubs and what's called the Future Jobs Fund, which could be seen as a modern-day version of the Youth Training Scheme.
The figures show this is the worst recession since the war, but when I'm out and about many people ask whether things are as bad now as they were in the 1980s, when a recession was combined with mass closures in the coal and steel industries.
People have different views on this but most tend to think that the unemployed faced a bleaker time then. As bad as unemployment is now, official figures show it was far higher in the 1980s.
'Test for devolution'
One other difference with previous recessions is the degree of co-operation between workers and management on issues like short-time working and pay cuts.
There's no doubt that agreements like this have prevented unemployment in Wales going beyond the present figure of 125,000.
It's been the first big economic test for devolution in Wales. The jury is still out on the success of the assembly government's headline-grabbing wage subsidy scheme called Proact.
The aim is to help firms keep hold of their workforce in readiness for the upturn. Despite claims that it has kept 7,000 people in work, I don't think we can make a full judgement on Proact until we've see the shape of the economic recovery in the New Year.
The other huge issue for business has been access to finance. I've lost count of the times that small and medium sized company directors have complained, off the record, about how they feel let down by a perceived lack of support from their banks.
Job Centre Plus
Around 125,000 people are currently unemployed in Wales
Naturally, they are reluctant to go on the record because most have been unable to switch accounts so the last thing they want to do is annoy their account managers even further.
One man who did go on the record was Simon Williams, the owner of Storage Giant in Cardiff and Newport. He was in talks with Barclays last year over funding for a new premises, but the deal fell through after five months.
He successfully struck a deal with another bank and the company is now doing well, but for him the collapse of the deal was typical of what was going on with commercial lending throughout Wales.
Barclays says it acted in good faith and remains very keen to lend responsibly to viable Welsh businesses.
To be fair to the banks, that message was echoed by Colyn Gardner, a former investment banker and now professor of banking at Bangor University.
He carried out the only assessment of lending to companies in Wales and came to the conclusion that while there is still a gap in funding the situation is improving with banks looking to reduce charges wherever possible.
Despite his findings, I suspect it will take a long time for trust levels to be rebuilt.
We are likely to find out towards the end of January that the country is coming out of recession, but what kind of legacy has it left Wales?
There will be all sorts of social consequences in places like Anglesey and towns like Maesteg and Merthyr Tydfil, where big employers have stopped production.
There could also be the longer lasting changes to employment with a much bigger emphasis on temporary and part-time working.
The lack of well-paid, full-time jobs on people's doorsteps has been an issue for communities in Wales for many years, but after the past year it became a much bigger one.
For far too many people, 2009 was a year to forget.
- Short-time work carries long-term consequences, by Stanley Pignal in Brussels and Daniel Schäfer in Frankfurt, 12/28 Financial Times via ft.com
BELGIUM, E.U. - As human resources manager at Jaga, a radiator manufacturer in northern Belgium, Veronicque Debondt prides herself on not having made any redundancies during the downturn.
Instead, she pushed the company's entire workforce - from the shopfloor to the boardroom, and including herself - to a four-day week, with workers receiving compensation from a *government fund for about half their lost income.
Jaga's 135 employees joined an estimated 2.4m workers on a variety of short-time work schemes across a dozen European Union countries.
Although the details of the schemes differ widely country to country, the aim is consistent: subsidise employers to hold on to their labour and keep temporarily redundant staff off unemployment rolls.
Early indications support the approach. Joblessness in the eurozone has risen only 2.5 per cent since the economy slowed, in spite of a 4 per cent contraction in gross domestic product. That favourable ratio is mostly down to Germany, where up to 1.4m workers took part in Kurzarbeit, the German variant, which has been an enduring feature of the postwar landscape.
But as the schemes mature - national statistics suggest the overall numbers are on their way down - concerns are rising about the side-effects of short-time work.
For Ms Debondt, one emerging problem is the number of Jaga employees who will opt to stay part-time even after state subsidies are withdrawn in June. "A lot of workers got a taste of working four days a week," she says. "Now 25 or maybe 30 per cent are saying they'd like to stay part-time even when our scheme ends. That's probably too many for us."
The small rise in costs associated with more part-time staff is a minor headache for Jaga, but the wider impact on Europe's economies could be more serious, economists warn.
"The longer these schemes run, the more they distort the underlying labour market," says Paul Swaim, an economist at the Organisation for Economic Co-operation and Development. "The obvious risk is that you start protecting jobs that are not viable even when the economy recovers."
One feature of this downturn is that the schemes have run for far longer than the original design. In Germany, Kurzarbeit was in the past limited to six-month bursts. The current scheme has recently been extended for up to two years in some companies.
The biggest impacthas been reduced productivity. In Germany, unit labour costs shot up 6 per cent year on year in the first quarter of 2009, according to the German statistics office. "This is the price for the shortening of the working week," says Albrecht Ritschl, an economic historian at the London School of Economics, pointing to similar, unsuccessful US schemes during the 1930s.
But, while the moves have shielded industries from restructuring for two years, the worry is that the natural flow from marginal to high-productivity jobs has been interrupted, crystallising productivity losses. "How many people are still working in construction or carmaking jobs, whereas a freer labour market might have pushed [them] towards green economy jobs?" asks one European Commission official.
German industrialists are staunch defenders of the programme, which they say enables companies to come through the crisis without losing highly skilled staff and engineers.
But Leif Östling, head of Scania, the Swedish truck maker, thinks the solution is palliative at best: "We [Swedes] have tried out similar measures in the 1970s and 1980s but found out that it just postpones the necessary job cuts."
[Leif Östling, head of Scania, the Swedish truck maker is suicidal. Job cuts equal consumer-base cuts and GDP cuts. All that is necessary is hours cuts - and the consumer-base retention and GDP sustainability that hours cuts allow.]
This also raises the question of what happens when the schemes end.
[Easy. Change the funding from temporary to permanent. How? Change the funding source from the unemployment insurance fund to a high tax on overtime with an exemption for OT-targeted hiring - and training if needed. Then cut the workweek to levels it should be in the Age of Robotics to provide more taxable overtime. This is the future - the ONLY future. Just watch. Strait is the gate and narrow the path that leads to sustainability. These situations happen from time to time in human evolution and this is the one during our lifetime.]
John Monks, general secretary of the European Trades Union Congress, says: "If you're not careful, you end up with an artificial spike in unemployment at that point." He also warns of a "jobless recovery" where companies with a store of unused labour delay the hiring of more staff.
Economists and policy officials concur that it will take several years to establish the long-term impact of the schemes. Some question whether the low rise in unemployment may be due to other factors, or whether there could be cheaper ways of protecting jobs.
All are waiting to see how labour markets fare in countries that used short-time work heavily - Germany, France and the Netherlands - compared with those that did not, including the UK and US.
Back in Belgium, Ms Debondt paints a glowing picture of her scheme. Though she worries about the potentially awkward structure of her workforce once the recovery takes hold, keeping labour costs down until that recovery arrives is still the priority.
- Quantifying Eurozone Imbalances and the Internal Devaluation of Greece and Spain, By Claus Vistesen: Copenhagen, 12/28 Emerginvest.com
Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.
* The extent, so far, of the internal devaluation process depends on the time period used for analysis. Using Q3-2007 as the beginning of the economic crisis suggest that Greece and Spain have not corrected relative to Germany as a benchmark. However, if we look entirely at the world in a post-Lehmann context the picture is different with Greece and Spain having observed excess deflation relative to Germany to the tune of -1.7% and -4.5% respectively for unit labour costs and -5.4% and -1.7% respectively for the PPI.
* The correction observed in the context of unit labour costs appears technical as German unit labour costs have increased sharply since Q4-2008 due to a large reduction in working hours and an increase in short time work. In comparison, the relative correction in the PPI looks more solid.
* The internal devaluation has not yet trickled down into the overall price level represented by the CPI. Both using the period Q3-07 to Q3-09 and Q4-08 to Q3-09 as the relevant time horizon reveals that there has been no meaningful internal devaluation in Greece and Spain measured on the CPI.
* While the analysis presented here may go some way to quantify the intra-Eurozone imbalances and the course of the internal devaluation so far it is impossible to say precisely how far (and for how long) Greece and Spain (and indeed Latvia, Hungary etc) have to go here. More importantly, it is impossible to say exactly which measures that must be taken albeit that they have to be severe in the context of reigning in public spending and, ultimately, the public debt and ongoing deficit. Likewise, it is difficult to quantity just how high unemployment should drift and for how long it should stay there in order to grind down past excess.
SPAIN and GREECE, Eurozone - As 2009 is fast approaching an end it is worth asking whether this also means an end to the financial and economic crisis. Even if 2009 will be a year thoroughly marked by a global recession it could still seem as if the worst is behind us. Most of the advanced world swung into positive growth rates in H02 2009, risky assets have rallied, volatility has declined to pre-crisis levels, and interest rates and fiscal stimulus have been adeptly deployed to avert catastrophe. However and precisely because the last part has been a crucial prerequisite for the first three and as policy makers are now adamant that emergency measures must be scaled back or abandoned either because of necessity or a balanced assessment, it appears as if Churchill's well known paraphrase is an adequate portrait of the situation at hand. In this way, what is really left in the way of global growth once we subtract the boost from fiscal and monetary stimuli and what is the underlying trend growth absent the crutches of extraordinary policy measures?
This question is likely to be a key theme for 2010.
Nowhere is this more relevant than in Greece and Spain who, together with Eastern Europe, have slowly but decisively taken center stage as focal points of the economic crisis. With this change of focus a whole new set of issues have emerged in the context of just how efficiently (or not) the institutional setup of the Eurozone and EU will transmit and indeed endure the crisis.
I won't go into detail on this here mainly because I would simply be playing second fiddle to what Edward has already said again (and again) in the context of his ongoing analysis of the Spanish and Greek economy to which I can subscribe without reservations. It will consequently suffice to reiterate two overall points in the context of Spain and Greece.
Firstly, the main source of these economies' difficulties, while certainly very much present in the here and now, essentially has its roots in population ageing and a period, too long, of below replacement fertility that has now put their respective economic models to the wall. It is interesting here to note that while it is intuitively easy to explain why economic growth and dynamism should decline as economies experience ongoing population ageing, it is through the interaction with public spending and debt that the issue becomes a real problem for the modern market economy. Contributions are plentiful here but Deckle (2002) on Japan and Börsh-Supan and Wilke (2004) on Germany are good examples of how simple forward extrapolation of public debt in light of unchanged social and institutional structures clearly indicate how something, at some point, has to give. Whether Spain and Greece have indeed reached an inflection point is difficult to say for certain. However, as Edward rightfully has pointed out, this situation is first and foremost about a broken economic model than merely a question of staging a correction on the back of a crisis.
Secondly and although it could seem as stating the obvious, Greece and Spain are members of the Eurozone and while this has certainly engendered positive economic (side)effects, it has also allowed them to build up massive external imbalances without no clear mechanism of correction. Thus, as the demographic situation has simply continued to deteriorate so have these two economies reached the end of the road. In this way, being a member of the EU and the Eurozone clearly means that you may expect to enjoy protection if faced with difficulty, but it also means that the measures needed to regain lost competitiveness and economic dynamism can be very tough. Specially and while no-one with but the faintest of economic intuition would disagree that the growth path taken by Greece and Spain during the past decade should have led to intense pressure on their domestic currencies, it is exactly this which the institutional setup of the Eurozone has prevented. I have long been critical of this exact mismatch between the potential to build internal imbalances and the inability to correct them, but we are beyond this discussion I think. Especially, we can safely assume that the economists roaming the corridors in Frankfurt and Brussels are not stupid and that they have known full well what kind of path Greece and Spain (and Italy) invariably were moving towards.
Essentially, what Greece and Spain now face (alongside Ireland, Hungary, Latvia etc) is an internal devaluation which has to serve as the only means of adjustment since, as is evidently clearly, the nominal exchange rate is bound by the gravitional laws of the Eurozone. Now, I am not making an argument about the virtues of devaluation versus a domestic structural correction since it will often be a combination of the two (i.e. as in Hungary). What I am trying to emphasize is simply two things; firstly, the danger of imposing internal devaluations in economies whose demographic structure resemble that of Greece and Spain and secondly, whether it can actually be done within the confines of the current political and economic setup in the Eurozone.
On the last question I personally adamant that it has to since failure would mean the end of the Eurozone as we know it but this is also why I am quite worried, and intrigued as an economist, on the first question. Specifically and as Edward and myself have been at pains to point out (and to test and verify) this medicine while certainly viable in theory has three principal problems. Firstly, it takes time and may thus amount to too little too late in the face of an immediate threat of economic collapse. Secondly, an ageing population spiralling into deflation may have great problems escaping its claws, and thirdly, because of the pains associated with the medicine the patient may be very reluctant to acccept the treatment. Especially, the last point is very important to note from a policy perspective and was made abundantly clear recently in the context of Latvia where The Constitutional Court ruled that the very reforms demanded in the context of the IMF program to reign in costs through cutting pensions would violate the Latvian constitution. And as Edward further points out, the situation is the same in Hungary where voters recently (and quite understandably one could say) decided to reject a set of health charges that were exactly proposed as part of a reform program designed to reign in public spending. We are about to see just how willing Spain and Greece are in the context of accepting the austerity measures that must come, but similar dynamics are not alltogther impossible.
Consequently, and while I agree with Edward as he turns his focus on the inadequacy of the political system in Spain and Greece to realize the severity of the mess; it remains an inbuilt feature of imposition of internal devaluations through sharp expenditure cuts that they are very difficult to sustain given the political dynamics. This is then a question of a careful calibration of the stick and carrot where the former especially in the initial phases of an internal devaluation process is wielded with great force.
Internal Devaluation, What is it All About Then?
If the technical aspects of an internal devaluation have so far escaped you it is actually quite simple Absent, a nominal exchange depreciation to help restore competitiveness the entire burden of adjustment must now fall on the real effective exchange rate and thus the domestic economy. The only way that this can happen is through price deflation and, going back to my point above, the only way this can meaningfully happen is through a sharp correction in public expenditure accompanied with painful reforms to dismantle or change some of the most expensive social security schemes. This is naturally all the more presicient and controversial as both Spain and Greece are stoking large budget deficits to help combat the very crisis from which they must now try to escape. Positive productivity shocks here à la Solow's mana that fall from the sky may indeed help , but in the middle of the worst crisis since the 1930s it is difficult to see where this should come from. Moreover, with a rapidly ageing population it becomes more difficult to foster such productivity shocks through what we could call "endogenous" growth (or so at least I would argue).
With this point in mind, let us look at some empirical evidence for the process of internal devaluation so far.
In order to establish some kind of reference point for analysis I am going to compare Greece and Spain with Germany. This is not because Germany, in any sense of the words, stands out as an example of solid economic performance as the burden of demographics is clearly visible here too. However, for Spain and Greece to recover they must claw back some of the lost ground on competitiveness relative to Germany. This highlights another and very important part of the internal devaluation process. Spain, Greece etc will not only be fighting their own imbalances; they will also fight a moving target since they may not be the only economies who face deflation or near zero inflation as we move forward.
Beginning with the simple overall inflation rate measured by the CPI we see that the level of prices (100=2005) has risen much faster in Greece and Spain than in Germany. Compared to 2005 the price level in Germany stood 7.1% higher in Q3-09 which compares to corresponding figures for Spain and Greece at 11.5% and 10.3% respectively. However, this does not tell the whole story about the build up of imbalances since the inception of the Eurozone. Consequently, since Q1-00 the price index has increased some 15% in Germany whereas it has increased a healthy 29.3% and 27.2% in Greece and Spain respectively.
Turning to the bottom chart which plots the annual quarterly inflation rate a similar picture reveals itself with a high degree of cross-correlation between the yearly CPI prints, but where the German inflation rate has been persistently lower than that of Greece and Spain. The average inflation rate in Germany from Q1-1997 to Q3-2009 was 1.6% and 3.5% and 2.8% for Greece and Spain respectively. It is important to understand the cumulative nature of the consistent divergence in inflation rate since it is exactly this feature that contributes to the build-up of the external debt imbalance. From 2000-2009(Q3) the accumulated annual increases in the CPI was 57% for Germany versus 109.4% and 104% for Greece and Spain respectively. Assuming that Germany remains on its historic path of annual CPI readings (which is highly dubious in fact), this gives a very clear image of the kind of correction Greece and Spain needs to undertake in order to move the net external borrowing back on a sustainable path which in this case means that these two economies are now effectively dependent on exports to grow.
If the divergence in Eurozone CPI represents a general measure of the built-up of external imbalances and the need for an internal devaluation through price deflation two other measures provide more direct proxies. These two are unit labour costs and the producer price index (PPI) which are both key determinants for the competitiveness of domestic companies on international markets. Intuitively one would expect unit labour costs as an important input cost to drive the PPI which measures the price companies receive for their output. Yet this is only going to be the case if the companies in question have market power on the domestic market. Consequently, if you regress the quarterly change of the PPI on the quarterly change on unit labour costs you get a negative coefficient in Germany and a positive coefficient in Greece and Spain (highly significant for Spain and not so for Greece). This is exactly what one would expect since German companies are highly exposed to the external environment (where they enjoy no market power) and thus has to suffer any increase in the cost of labour input through a decline in their output price. Conversely in Spain, the connection between an increase in unit labour costs and the PPI is strongly positive which suggest that Spanish companies has enjoyed considerable market power due to a vibrant domestic economy . It is exactly this that must now change.
If we look at unit labour costs and abstract for a minute from the increase in German unit labour costs from Q2-08 to Q2-09 in Germany , both Greece and Spain have seen their labour cost surge relative to Germany since the inception of the Eurozone. Since Q1-00 the accumulated change in the German index has consequently been 15.2% which compares to 97.7% and 105.6% for Greece and Spain respectively. More demonstratively however is the fact that since the second half of 2006 the labour cost index of Spain and Greece have been above the Germany relative to 2005 which is the base year. Consider consequently that the labour cost index in Greece and Spain was 13.3% and 16.4% below the German ditto in Q1-2000 and now (even with the recent surge in German labour costs), the Greek and Spanish labour cost index stands 7.2% and 5.2% above the German index.
Turning finally to producer prices the similarity between the three countries in question are somewhat restored which goes some way to support the notion of persistent lower labour cost growth relative to fellow Eurozone members as the main source of the build-up of Germany's "competitive advantage" and in some way the build-up of intra Eurozone imbalances.
Essentially, and while definitely noticeable the divergence between Greece/Spain and German on the PPI is less wide than in the context of unit labour costs and the CPI. Consequently, and if we look at the index, the divergence which saw Spanish and Greek producer prices increase beyond those of Germany came very late in the end of 2007. Moreover, the correction so far has been quite sharp in both Greece and Spain relative to Germany with the PPI falling 14.8%, 5.7% and 2.8% (yoy) in Q2-09 and Q3-09 in Greece, Spain and Germany. The accumulated increase however, in the PPI, from 2000 to Q3-09 has been 85% in Germany and 136% and 101.7% in the Greece and Spain respectively.
If the numbers above indicates the extent to which intra Eurozone imbalances have manifested themselves in divergent price levels and rates of inflation, the concept of internal devaluation concerns the net effect on the prices in Greece and Spain relative to, in this case, Germany. On this account, and if we put the beginning of the financial crisis as Q3-07 (i.e. when BNP Paribas posted sub-prime related losses) the butcher's bill look as follows.
From Q3-07 to Q3-09 and in relation to the CPI the average quarterly inflation rate in Greece in Spain has been 1% and 0.66% higher than in Germany. The accumulated excess inflation rate over the German inflation has been 8% in Greece and 5.29% in Spain. Only in the context of Spain do we observe some indication of the initial phases of a relative internal devaluation as Spain has seen an accumulated inflation rate lower than that of Germany to the tune of 1.28%.
Turning to unit labour costs the picture changes quite a lot depending on the time horizon. Using the same period as above, the average quarterly excess increase in unit labour costs of Greece and Spain relative to Germany has been 1.75% and 0.3% in Greece and Spain respectively. The accumulated increase in unit labour costs has consequently been a full 14% and 2.8% higher in Greece and Spain relative to Germany. However, if we focus the attention on the period from Q4-08 to Q2-09 and due to the fact that labour hours in Germany have gone down further than in Greece and Spain, labour costs have corrected sharply in Greece and Spain relative to in Germany to the tune of -5.2% and 13.7% (accumulated) and -1.7% and -4.6% respectively. The fact that German producers have so far cut down sharply on labour hours could mean that Germany should claw back some of the lost ground vis-a-vis Greece and Spain if and when these two economies follow suit.
Finally, in relation to producer prices the picture is very much the same as in the context of unit labour costs with the notable qualifier that the relative excess deflation observed in Greece and Spain from Q4-08 and onwards is likely to be less "technical" and thus more "real" than in the case of labour costs. In this way the period Q3-07 to Q3-09 saw the excess rate of produce price inflation reach 14.8% and 6.8% (accumulated) and 1.8% and 0.8% (quarterly average) in Greece and Spain respectively. However, if we focus the attention on Q4-08 to Q3-09 the picture reverses and reveals a substantial degree of excess deflation over the Germany PPI in Greece and Spain to the tune of 16.1% and 5.2% (accumulated) and 5.4% and 1.7% (quarterly average) for Greece and Spain respectively.
The End of the Beginning
As we exit 2009 it is quite unlikely that we will also be able to leave behind the effects of the economic and financial crisis and this is not about me being persistently negative or even a perma-bear. Things have definitely improve and much of this improvement owes itself to rapid, bold, and efficient policy measures. However, some economies are in a tighter spot than others and this most decisively goes for Spain and Greece who now have to correct to the fundamentals of their economies with rapidly ageing populations.
As this correction largely has to come in the form of an internal devaluation the following conclusions are possible going into 2010.
* The extent, so far, of the internal devaluation process depends on the time period used for analysis. Using Q3-2007 as the beginning of the economic crisis suggest that Greece and Spain have not corrected relative to Germany as a benchmark. However, if we look entirely at the worldin a post-Lehmann context the picture is different with Greece and Spain having observed excess deflation relative to Germany to the tune of -1.7% and -4.5% respectively for unit labour costs and -5.4% and -1.7% respectively for the PPI.
* The correction observed in the context of unit labour costs appears technical as German unit labour costs have increased sharply since Q4-2008 due to a large reduction in working hours and an increase in short time work. In comparison, the relative correction in the PPI looks more solid.
* The internal devaluation has not yet trickled down into the overall price level represented by the CPI. Both using the period Q3-07 to Q3-09 and Q4-08 to Q3-09 as the relevant time horizon reveals that there has been no meaningful internal devaluation in Greece and Spain measured on the CPI.
* While the analysis presented here may go some way to quantify the intra-Eurozone imbalances and the course of the internal devaluation so far it is impossible to say precisely how far (and for how long) Greece and Spain (and indeed Latvia, Hungary etc) have to go here. More importantly, it is impossible to say exactly which measures that must be taken albeit that they have to be severe in the context of reigning in public spending and, ultimately, the public debt and ongoing deficit. Likewise, it is difficult to quantity just how high unemployment should drift and for how long it should stay there in order to grind down past excess.
In this sense, 2009 will not go down as the end in any sense of the word, but more likely as the end of the beginning.
 - Naturally, this argument assumes non-sticky prices and thus a 1-to-1 relationship in time between a change in input costs and output prices of companies. Since contractual arrangements are likely to make both sticky in the short run and likely with divergent time paths too, the quantitative results are not robust. The results for Germany are significant at 10% whereas those for Spain are significant at 1%. Mail me for the estimated equations if you really want to see the results.
 - The index rose 7.8% over the course of the year ending Q2-2009 which is way above 3 standard deviations of the "normal" annual change in the index from 1997 to 2009. The explanation is really quite simple and relates to the fact that German manufactures (in particular) has sharply cut overtime work and short time work has been rapidly extended (see e.g. this from Q2-09) which is obviously not the case in Greece and Spain. The fact that German producers have so far cut down sharply on labour hours means that Germany should claw back some of the lost ground vis-a-vis Greece and Spain if and when these two economies follow suit.
12/26/2009 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 (email@example.com) unless otherwise initialed -
- West Palm prepares to crunch numbers, and maybe jobs, in 2010-2011 budget - City will consider $10 million in cuts, by Andrew Abramson, Palm Beach Post,FL via South Florida Sun Sentinel via Sun-Sentinel.com
After facing unprecedented cuts to its budget this year, the city is preparing for an even bleaker 2010-2011 budget that may require layoffs.
"We're going to have a fiscal crisis," Commissioner Ike Robinson said.
The commission had to decide how to cut $20 million from the city's $183 million budget for the 2009-2010 year, and will begin discussions in January on how to cut another $10 million to close the gap between expected revenue and spending in the 2010-2011 year that will begin Oct. 1.
City jobs were largely spared for the 2009-2010 fiscal year, because the city eliminated many vacant positions. But layoffs look likely for 2010-11, Commissioner Kimberly Mitchell said.
"Looking at the picture as I see it today, I don't see any way around that," Mitchell said.
Mayor Lois Frankel, however, said categorically that there would be no layoffs in the current budget year, except in the case of unforeseen circumstances, and they are not part of the plan for 2010-2011 either. She said a lot could change in the economy by Oct. 1, although she acknowledged it appears about $9 million will have to be cut from that budget.
Commissioner Bill Moss sent a memo to Frankel last month, asking the city to evaluate nine budget-cutting scenarios including a shortened work week, aggressively selling city land and even charging fees for library use. "We have to explore every way we can cut the budget without having to lay people off," Moss said.
While Frankel said every scenario is on the table, she was skeptical of some of Moss' ideas.
A four-day, 40-hour work week that Moss suggested wouldn't slash the cost of salaries, and would only save the city the cost of electricity for offices that aren't open on Fridays.
The construction department already works a four-day week, but on a reduced, 32-hour schedule, instituted because of a drop in demand for construction services. But Frankel said there are a limited number of departments that can run that way. Some, like customer service, need to be open five days a week, she said.
Another Moss suggestion was to put the Helen Wilkes Hotel site back on the market, even if the price the city would get now is much lower than it might be several years from now.
"Absolutely not," Frankel said to the concept of selling the property at a loss. "That's probably the most valuable spot in downtown."
The city's Community Redevelopment Agency just bought the site, now a vacant lot on Flagler Drive, for $6 million in September. This provided the city with valuable land to package with the old City Hall site that the city planned to sell eventually.
Frankel ideally wants to turn the Helen Wilkes site into a park and sell the old City Hall site for a hotel location, but acknowledges the city may need to sell the Helen Wilkes site.
"I agree we should put the site on the market but because of its location I believe we can still get top value," she said.
Robinson, who's on a committee with the Florida League of Cities, said nearly every municipality in the state will face fiscal crisis in 2010-11. Local governments statewide expect further reductions in income from property taxes, as real estate values have continued to slide.
"This is just the tip of the iceberg," Robinson said.
- PATH needs weekend workers, volunteers with trade skills, by Steve Lynn, Farmington,NM Daily Times via DailyTimes.com
Editor's note: This story is part of an ongoing series intended to promote volunteerism in our community. There are more than 100 programs in need of volunteers. For more information, see the Volunteer! link at daily-times.com.
FARMINGTON, N.M. — Retired teachers Marjorie Smith and Alma Bruce have worked the lunch shift at soup kitchen The Daily Bread a combined total of 30 years.
Bruce and Smith volunteer twice monthly for the soup kitchen, operated by People Assisting the Homeless.
"It's just a fun thing to do," said Smith, who has volunteered for 18 years. "You feel like you're doing something worthy. There's certainly a need."
Bruce has volunteered for 12 years at The Daily Bread. The soup kitchen and a nearby homeless shelter rely on volunteers such as Smith and Bruce, and employees say more help is needed.
In addition to its daily meals, The Daily Bread began serving on weekends last July.
"We saw the need for it with all the people unemployed," said Barbara Toward, the soup kitchen manager.
The soup kitchen needs people who consistently can volunteer to help serve meals on the weekends from 11:30 a.m. to 12:30 p.m.
The homeless shelter needs volunteers who have skills such as plumbing and household repair, said Jonna Sharpe, executive director of PATH. Volunteers also are needed to sort clothing donated to the shelter, paint, clean and tutor homeless people on how to use computers.
The shelter recently cut hours of three full-time staffers to trim its budget. PATH has 14 employees working at the shelter and soup kitchen, but only two people work full time.
"We always need volunteers," Sharpe said.
Vernon Smoker, who was staying at the shelter, was vacuuming last week. Residents are assigned chores.
"There's certainly things to be done," Smoker said.
Smoker, who became homeless after leaving a construction job that provided little work, lived in the shelter about a month, he said. He usually looks for work during the day.
The shelter has bedrooms with bunk beds, a TV room and an outdoor recreation area. Men sleep in one part of the building and women sleep nearby in other dorm rooms.
Residents typically stay as long as 90 days, though some stay longer. PATH employees work with several organizations to help find housing, jobs and health care for residents.
Residents must leave the shelter and search for jobs from 8:30 a.m. to 4 p.m. Monday through Saturday.
They also can search for jobs on the Internet at the shelter and are required to make contacts with three new potential employers daily.
Many of the residents are recovering from some kind of substance abuse, Sharpe said.
Residents have had trouble finding jobs because of the high unemployment rate. Service sector jobs traditionally worked by homeless people are being filled by laid-off oil and gas workers, Sharpe said.
People often move in with little clothing, so donations of clean clothing are accepted. Food, soap, shampoo, disposable razors and deodorant are needed.
The San Juan United Way, the state, city, county, private donations and grants fund PATH.
"People send in a check for $5, $10, whatever and that will really add up," Sharpe said.
Steve Lynn: firstname.lastname@example.org
12/25/2009 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 -
- Walnut Creek library may come up short in cash, hours, by Elisabeth Nardi, ContraCostaTimes.com
WALNUT CREEK, Calif. - Some look at the new Downtown Walnut Creek Library as a sign of hope, a promise by local leaders of a community mecca. Others see it as a luxury Walnut Creek can't afford.
Either way, the 42,000-square-foot library and 121-space underground parking garage that fronts Broadway is almost finished and will soon open.
Construction is expected to finish in the spring, with opening tentatively set for the end of June or beginning of July — right around the time a parcel tax that funds extra hours at the city's two libraries will expire.
[What the hey is a parcel tax? A tax on land parcels?]
The project will likely come in under its $41.5 million price tag, though officials won't say by how much.
Also unknown is how the new library will stay open the 56 hours a week residents have come to expect. Both libraries are staffed and operated by the Contra Costa County Library, but because of budget cuts over the past few years cities have stepped up to pay for more library hours and build new facilities. The county pays for the libraries to be open 35 hours a week.
Walnut Creek's libraries are open for more hours because of Measure Q, the $22-per-parcel tax passed in 2002 generating more than $900,000 to fund extra hours at the city's two libraries.
There is no coordinated effort to extend Measure Q, set to expire July 1.
"We were thinking of the economy; it's not the time right now to ask the taxpayers and residents for more funding," said Lorie Tinfow, assistant city manager.
Walnut Creek estimates a $1.5 million price tag to keep both libraries open the extra hours. That is a 2008 projection, and the numbers could change this spring, she said.
In the past, the $900,000 a year the tax generates was more than enough to fund additional hours. That extra money, and savings from not having the downtown library in operation for the last two years, is set to pay for operations at the new library starting this summer.
"I think of it as a trust fund for the building," Tinfow said. "So we expect to have $4 million (once it opens) and we can operate for a couple of years."
Even if the parcel tax were renewed at its current rate of $22 per household, it wouldn't be enough to fund the additional hours of the new library. In the past, city leaders considered extending the tax area to unincorporated parts of Walnut Creek, but no action has ever been taken.
Hardy Miller, a vocal opponent of the size of the library, said there may be a one- to two-year cushion to cover expenses. But the city should have planned out longer than that for a library four times the size of the one it is replacing, he said.
"Structurally there is not the cash flow to cover the expenses," he said. "Therefore police services "... and flood control are apt to suffer. I think they will try to operate as cheaply as possible a 42,000-square-foot building. But it has costs that are unavoidable."
The City Council will ultimately decide how, or if, it wants to pay for 56 hours of operation. Any new parcel tax would need two-thirds voter approval to pass. Tinfow expects discussions about how to pay for operations to begin next fall.
"It will give people a chance to see what the library has given to the community," she said.
Last summer, when the City Council made budget cuts, it slashed $500,000 from the library budget as a show of good faith to the community that every program was affected. It was not done to balance the budget, Tinfow said.
But because of that cutback, the Walnut Creek Library Foundation and Friends of the Library have had to step up. The money was earmarked for furnishing different rooms and new books for the opening day collection. The groups collectively have raised about half of the money, including a $70,000 anonymous donation to outfit the technology center, said Kristin Anderson, executive director of the foundation.
Overall, the foundation will meet its $5 million pledge and may exceed it, she said.
"We had more than half our money raised before the recession hit, and so far we have not had people come forward and say they can't do it," she said.
Reach Elisabeth Nardi at 925-952-2617.
- Service with a smile - Tenured Johnston Automotive staff ready to move, by Kris Todd, (12/26) SpencerDailyReporter.com
SPENCER, Iowa - The dedicated worker mold was broken with Kathryn Johnston and Chuck Elliott. Together, the two have accumulated 88 years serving customers at the Johnston Automotive store in downtown Spencer.
While Johnston Autostores employs a number of long-term employees, a company co-owner said Johnston and Elliott rank "right at the top" of their dedicated employees list.
"Chuck is still our main counterman and store manager. And, Kathryn, she's just part of the business," Tim Beachem said with a smile.
"If you counted both their sick days, it wouldn't fill both hands. I don't think either one has ever been late to work ever. And, I've never seen either one of them upset," Johnston Autostores co-owner Mark Lykke added of the two tenured workers. "When you talk about the fundamental things they do correctly every day of the week, it's really about serving an employer and their customers. They truly offer something that the world needs more of today."
"They're so dependable and reliable," he continued, "that it's just something they do every day. It's really something to see. We have a lot of employees like that. We have some employees that have 10, 20, 30 years in, and they have a lot of the same (qualities). But, Chuck and Kathryn seem to excel in that."
Taking orders with a No. 2 lead pencil to processing them on a sophisticated mainframe connecting the 12 Johnston Autostores locations are among the changes both have encountered over the last six decades. Johnston and Elliott have also witnessed vehicles progress from mechanical points and sparks systems to the more computerized sparking systems of today. Their customers from the 1960s are now considered grandparents and great-grandparents, with children and grandchildren who now come into the retail store.
Elliott and Johnston, meanwhile, credit their longevity in the local auto parts and industrial supply distributing business with the grateful customers they serve on a daily basis, as well as the camaraderie and positive working atmosphere Beachem and Lykke have created within the Johnston Autostores company.
A long-standing commitment to service
Johnston began learning the business in 1941 as a parts counter person at Nelson Automotive in Atlantic. When Spencer's former downtown Central Auto Parts location became available in 1952, she and her husband, Bruce Johnston, purchased and renamed it Johnston Automotive.
"The man that had owned it was from Fort Dodge. He had three or four, and this was the last store to be sold," Johnston said. "What they had leftover that the new owner wouldn't buy was what we brought here. So, we didn't have a real good inventory to start with."
The Johnstons spent many hours working to rebuild the store. The woman who's had customers enter the Spencer business over the last 57 years to ask specifically for assistance from her, recalled initially having to prove her abilities as a parts counter person.
"I always remember Nick Milleman, who lived north of Spencer. He came in for a bearing one day, and that was when it was brand new on bearings to build the seal onto the bearing. I showed it to him and said, 'This is going to be so much better,'" she said. "He told me, 'Well, you may think it's better, and I'm going to buy it, but I'll tell you one thing: If this doesn't last as long as the other did, I will be back in to tell you about it and ask for a refund.'"
Johnston smiled as she revealed Milleman remained a loyal Johnston Automotive customer for years after.
"That was kind of the way we built our business, on service," she said.
When Lykke and Beachem purchased the Spencer store in 1978, they knew they'd acquired an established business with a good reputation. Lykke, who's been in the industry since 1967, worked for Sidg Company, a local competitor at the time. Beachem, an industry insider since 1971, was employed with General Motors' AC spark plug division and called on Lykke and Elliott in Spencer's former Sidg store.
The two new business owners, who have since expanded to 12 Johnston Autostores locations throughout Iowa and Minnesota, asked Johnston to stay on at their parts counter.
"She helped us out immensely," Beachem said.
"When we came, she was probably one of the best parts women around. She knew everything," Elliott, who worked his first day as the Spencer business' store manager Feb. 10, 1978, recalled of Johnston.
2010, meanwhile, will mark Elliott's 50th year selling parts. The 72-year-old man's first 18 years in the industry were spent with Sidg Company, the last 32 have been at Johnston Automotive.
"I've been doing this one week longer than I've been married to my wife, Jeri," Elliott revealed earlier this week inside the downtown business.
Known for his pleasant personality by coworkers and customers alike, Johnston said working with Elliott is a treat.
"Even when things are a little stressful, he doesn't say much about it. He just goes along with what he has to do, does his portion of it, and never complains," she said of her friend.
Elliott, who decided to work part-time in 2002, continues to serve as the Spencer store manager. While he still puts in around 30 hours a week, Johnston also decided to cut back on her work hours recently. The 87-year-old woman continues to enter the retail store located at 7 Grand Ave. at 7:30 a.m. every morning, visit with her co-employees briefly, accomplish paperwork and then reconcile the business' accounts before departing at 9:30 a.m. Over the years, she's also helped train a number of other Johnston Automotive employees.
Relocating to the warehouse
Although it was years in the making, a purchase agreement was signed this fall between the owners of Johnston Automotive and representatives of Parker Historical Society. The long hoped-for agreement signals major changes currently occurring within the downtown building.
Beachem, Lykke and Johnston Autostores employees have worked diligently the past several weeks to move items from their Grand Avenue retail location to the company's warehouse at 500 37th Ave. W.
"They're both transitioning with absolutely no issues," Lykke said specifically of Johnston and Elliott. "It's fun to work with people like that."
"It's going to be alright," added Elliott about their upcoming move. "People know we're out there. They want to do business with us, and they're going to be there to do it with us."
While plans are for Johnston Autostores to be fully operational in its new Spencer site by Jan. 4, 2010, Parker Museum board members and staff are also excited about the opportunity presented, and eager to transform the retail space into a museum and educational center.
12/24/2009 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 -
- Onondaga County's central library in downtown Syracuse to cut hours, five jobs, by Maureen Nolan, (11/23) Syracuse Post-Standard via Syracuse.com
Syracuse, NY -- Patrons of the Onondaga County Central Library will see reduced hours and services come Jan. 4.
Budget cuts from the county and the state forced the library to make cuts, too, Executive Director Elizabeth Dailey said. The library eliminated five positions, although no one will lose a job, she said. Three of the positions are vacant and the people in the other two jobs were moved to vacant positions in branch libraries, Dailey said.
The library hated to make the cuts, she said. Its budget was reduced 7.7 percent, she said. “I think they are in proportion to the resources that we lost and that we have tried to match up the greatest needs with the resources that we have,” Dailey said.
The full library will be now open 11 a.m. to 5 p.m. Monday, Thursday, Friday and Saturday. The big change is that the library will close the third, fourth and fifth floors of the library from 9 a.m. to 11 a.m. Monday through Saturday. Those floors include the library’s main book collection, public access computers, children’s section, media, adult literacy services and local history.
The “Browse About” section on the main floor will still be open during those hours. Six computers with 15-minute internet access will be available. Librarians will be able to retrieve specific items for patrons from the third- and fourth floors, Dailey said. The library’s evening hours will be cut back by one hour. The library will be open from 11 a.m. to 7:30 p.m. Tuesday and Wednesday, instead of until 8:30 p.m.
“It’s going to be inconvenience for people to have to adjust when they come to the library, and we understand that,” Dailey said. “And people are interested in how they can help us, and the best way really is to let me know what they couldn’t do that they needed to do because I’m very interested in the story from the community of how they use our library because pretty soon we’ll be building the 2011 budget.”
The library’s full time staff will be reduced from 60 to 55. Its budget will decrease by 7.7 percent or by $556,148 in 2010, Dailey said. The new budget is about $6.66 million. The cuts include an 11 percent or $61,721 cut in money to buy materials. In 2010, the library will receive $4.4 million from the county, and $1.15 million from the state, plus $1.1 million in grants and other revenues, Dailey said.
Maureen Nolan can be reached at 470-2185 or email@example.com.
- A good deal of giving, by MARIANN MARTIN, 425-9782,firstname.lastname@example.org, JacksonSun.com
When Donna Steadman heard that the local Salvation Army needed volunteer bell ringers, she pulled out her mittens, scarf and gloves. Saturday afternoon she stood outside the Old Hickory Mall, cheerfully greeting holiday shoppers in near-freezing temperatures.
"I've never volunteered as a bell ringer before, but it's been a wonderful experience," said Steadman, who volunteered her time through her employer. "I absolutely plan to do it again. What has surprised me is all the children who tug at their parents' sleeve, asking them to give money."
Local nonprofit agencies say it is people like Steadman who have made it possible to meet the increased need they have seen in a holiday season of high unemployment and additional requests for services.
The Salvation Army had around 500 angels on their angel tree this year, more than double the number from last year.
Thirty percent of the people requesting assistance from the The Regional Inter-Faith Association are asking for help from the agency for the first time. Both agencies have seen increased requests for help with utilities and groceries.
"I've been doing this for seven years, and the community always comes together," said Sgt. Stan Robison, the core administrator for the local Salvation Army, which serves eight West Tennessee counties. "We had 100 angels left on the tree the first of this week, but they've all been adopted now."
"The community has always been very supportive of RIFA," said Lisa Tillman, executive director of RIFA. "We've had a lot of food come in, but it is going back out the door just as fast."
The Salvation Army depends on the holiday season and money donated in their red buckets to get them through the rest of the year, Robison said.
This year, the season started out slowly, with donations down significantly from last year. But in the last several weeks, donations have passed the total for last year.
"Right now, we are about 9 percent above last year's total, and I'm looking forward to a record year," Robison said on Friday. "Christmas is our biggest giving season, so this is my budget for the rest of the year."
The Salvation Army has bell ringers at 18 stores in the eight-county area, Robison said.
"We just have a few days left, and right now I'm focusing on keeping volunteers at all the locations," Robison said.
RIFA has seen an increase in requests from their food bank, Tillman said.
"People have lost their jobs or had their hours cut," she said. "If you are struggling to get by on 35 hours (a week) and have that cut to 20 hours, you can't make it."
The American Red Cross in Jackson deals primarily with disaster relief, according to executive director Wanda Stanfill.
But a high number of fires this year has put a strain on their funds and their volunteers, Stanfill said.
"Our donations have decreased from last year," Stanfill said.
From July 2008 to June 2009, the agency helped 521 people affected by fires, Stanfill said, and the numbers for the last part of 2009 are about the same as the previous year.
"We haven't had any major disasters, like hurricanes, which is a good thing," Stanfill said. "But we depend on local donations for our funding. We always need volunteers and monetary donations."
Worries for next year
Although the local agencies say they are thankful for the continued community support, the directors also worry about the coming months, when donations drop off and the needs continue.
"I have to make it from Christmas to Christmas," Robison said. "We appreciate all the help we get, but lots of folks have lost their jobs and are going to need help."
"It has been hard to stockpile food for the rest of the year because of the increased need," Tillman said.
12/23/2009 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 (email@example.com) unless otherwise initialed -
- SEIU's Andy Stern On Improving Health Care Bill: 'It's Now Or Never', by Christina Bellantoni, TPMDC (blog) via tpmdc.talkingpointsmemo.com
Service Employees International Union president Andy Stern sharply criticized politicking and lack of subsidies for lower middle class families in the Senate health care bill but isn't threatening action against lawmakers he says have let voters down.
Stern told TPMDC in an interview that SEIU members will use the holidays for a last-chance pressure campaign through phone calls and grassroots efforts in members' home districts. The broader game plan will shape up in the first two weeks of January.
"We've really said to people this is your last chance to improve this bill, at least at this moment in history," Stern said. "It's now or never."
He asked why should progressives and union members who were major players in forcing health care to be part of the campaign discussion in 2007 and 2008 should settle for a bill that's less-than.
"When there is more that can be done that's reasonable and responsibile you don't stop fighting," he said.
But without a clear threat, it's a continued softening of the critique last week as House Democrats signal they are mostly willing to accept the Senate version of the bill with little more than a surface fight so they can move on.
While acknowledging the dramatic reform that is included in the measure, Stern said it can be improved and left it up to members to decide how to approach a bill they think is not good enough once the final plan is drafted. Last week they outlined the differences between the House and Senate bills in a 20,000-member conference call and particularly criticized the affordability provisions in the Senate version.
Stern stopped short of saying SEIU would campaign against a final health care bill or seek political repercussions for being let down, but he repeated what he's been saying about 2008 election that President Obama and Democratic leaders have "squandered" the gift voters handed to them of a mantra for change.
"Rather than do what they promised we've sort of turned the Senate into the 'Price is Right,'" Stern said, adding that the American people didn't want to allow senators to be "an army of one."
"They have not risen to the occasion," he said.
Improvements SEIU wants to see focus on affordability.
For example, the House measure includes larger subsidies for lower middle class families. A family of 3 that earns $41,000 a year will pay an average of $7,000 a year for health care, or 17% of their income under the Senate bill, $2,134 more than they would pay under the provisions in the House bill, SEIU estimates.
A family of 3 that earns $70,500 a year will pay an average of $12,166 a year in the Senate plan - a figure $1,339 more than the family would pay under the House bill.
SEIU members also believe the Senate version unfairly taxes people who have high cost plans, something that isn't their fault since they live in places with no competition between insurance companies.
"If people can't afford the insurance they are being offered this bill, it is not maximizing its possibilities," Stern said.
Still, Stern, one of the most frequent visitors to the Obama White House this year, said the underlying bill is "a leap forward" and rattled off the administration's talking points for how it improves the system. Progressives all week have said they will keep fighting, though Congressional leadership believes they will accept the Senate's more conservative plan.
SEIU provided this background on provisions for part-time workers they want to see included:
Health reform will provide new options for Head Start agencies and employees, but the Senate bill could result in harm to Head Start workers if some critical flaws are not addressed. The Senate "employer responsibility" provisions create an enormous incentive for Head Start agencies and other employers to cut workers' hours to 29 hours per week, end health insurance coverage, and steer workers to the exchange for coverage, because they will pay nothing for part-time workers and their families who receive coverage in the exchange.
[We could probably have full employment in the USA with a 29-hour workweek, not so radical considering the US Senate passed a 30-hour workweek bill on April 6, 1933.]
While some workers and their families may find affordable, good coverage in the exchange, Head Start agencies will pay little or nothing towards that coverage, and many workers could be worse off.
SEIU strongly recommends the House approach to employer responsibility because it is a "win-win" for both Head Start agencies and workers. Agencies can choose to "play or pay", paying 8% of average wages for workers to enroll in coverage in the exchange. This is a fair and predictable contribution and will not create an incentive for agencies to cut hours. Head Start agencies and other nonprofit and for-profit employers can choose to continue to offer coverage to full-time workers, while also choosing to pay 8% of average wages for part-time workers to get their coverage in the exchange. This is a fair and workable approach, in contrast to the Senate approach, with its administratively burdensome and complex rules regarding employer responsibility.
- Fulton Public Library slated to cut hours and staffing, by Andrew Henderson, Fulton Valley News,NY (subscription) via valleynewsonline.com
The Fulton Public Library is planning to reduce hours and layoff one staff member.
“Continued under-funding of the library by the City of Fulton has compelled the trustees reluctantly to reduce open hours and layoff one staff member,” said Marian Stanton, president of the library’s board of trustees.
Ms. Stanton said the moves are being made in response to Mayor Ron Woodward and the Fulton Common Council’s decision not to increase funding to the library by $20,000.
The city has provided $180,000 to the library for the past three years. Library officials asked for an additional $20,000.
“We have received flat city funding for the last three years,” Ms. Stanton said, “but this year we can’t make those dollars go any further. These cut-backs, however, much as we resist making them, are now unavoidable. Mayor (Ron) Woodward and the council members said they were unable to provide us with an additional $20,000 in funding.”
At a special trustees’ meeting last Thursday, action was taken to reduce hours from 54 to 42 weekly at the Fulton main branch on South First Street, and to reduce them from 15 to 12 at the West First Street, Vayner branch, she said.
Ms. Stanton also said the trustees voted to layoff one staff member.
Beginning Jan. 4, the library’s main branch will be open Mondays, Tuesdays, Thursdays, and Fridays from 9 a.m. to 5 p.m. and Wednesdays from 9 a.m. to 7 p.m. The library will be closed Saturdays and Sundays.
The Vayner branch will be open Tuesdays through Fridays from 2 to 5 p.m.
“The trustees tried very hard to accommodate the needs of Fulton students,” Ms. Stanton said. She noted that computer use at the main and Vayner branches by students and other members of the community has hovered at 88 to 90 percent of available hours.
Ms. Stanton said the board intends to revisit the schedule in May to see if open hours need to be adjusted.
“We’ll be keeping a log of comments and usage in these difficult times to serve the public to the best of our abilities as resources allow,” she said. “Our hourly rates for library aides range from $8.20 to $11.07, so asking employees to work for less money was obviously not an option.”
She added, “We will also pursue any grant opportunities that would allow us to reverse this decision. It’s ironic that this comes as use of the library by the community is expanding,”
Ms. Stanton said that the number of registered borrowers tripled since 2002 when there were 2,594 registered borrowers. In 2008, there are more than 10,000.
“Our circulation has increased over 8 percent annually since 2002,” noted Ms. Stanton. “Inter-library loan numbers—the number of books loaned to us for our patrons by other member libraries—has more than doubled since 2003.”
The Fulton Public Library is a member of the 65-member North Country Library System and through its inter-library loan program can request any books, CDs, DVDs, or other materials for its patrons.
In addition to city funding, the library receives $90,000 through residents of the Fulton City School District.
The school district had already been collecting $40,000 from residents of the school district until 2008 when district residents barely approved an increase of $50,000 per year. In essence, the school district acts only as a collection agency. The money is collected through the district’s tax bills and given to the library.
12/22/2009 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 -
- Yahoo imposes weeklong shutdown, WSJ, B7 expanded from online version by JESSICA E. VASCELLARO via online.wsj.com.
Yahoo Inc. is shutting down its offices, except for "essential functions," from Dec. 25 through Jan. 1, as the Internet company searches for new ways to cut costs during the recession.
Yahoo spokeswoman Dana Lengkeek said the move is the Sunnyvale, Calif., company's first mandatory world-wide shutdown, although Yahoo has encouraged U.S. employees to take the week off in the past.
Shutting down "during a traditionally slow week allows employees to recharge, and the company to reduce operating costs for the week," said Ms. Lengkeek. U.S. employees can use vacation time or take unpaid leave for the days not covered in the holiday schedule, she added. Outside the U.S., "time off will be paid consistent with local standards and laws."
Other Silicon Valley companies routinely close during the holiday season. As in previous years, Adobe Systems Inc. plans to this year shut down from Dec. 24 to Jan 1., said Donna Morris, senior vice president for human resources at Adobe, in a statement. Employees will be asked to use paid vacation days for three days during the break, the statement said. A spokesman for Apple Inc. said the company plans to close from Dec. 24 to Jan. 1.—as it has in the past—with employees affected receiving paid days off; Apple's retail stores and customer-support services will remain "fully staffed."
Executives at Yahoo have been on an aggressive cost-cutting campaign since the start of the year, laying off nearly 700 employees in the spring and shutting down duplicative products. Yahoo ended the third quarter of 2009 with 13,200 employees.
Ms. Lengkeek said "essential functions" like customer support, will be working during the shutdown and that the company told employees about the shutdown this summer.
Write to Jessica E. Vascellaro at email@example.com
[Note opposite direction of suicidal car company -]
In risky move, GM to run plants around clock - Obama auto team [braindead?] urged the change; Experts say maintenance, restocking could cut into efficiency, WSJ, B1.
[And in another sign that Obama is getting destructively interventionist -]
The White House said it would begin levying hefty fines against airlines, WSJ, A1 pointer to A4.
..for tarmac delays of over three hours.
[Like the airlines don't have enough troubles. Obama should quit flailing around and just CUT THE WORKWEEK and CONVERT OVERTIME INTO JOBS till unemployment comes back down and markets come back up.]
- US town halls find fresh angles to meet recession, by Nicole Bullock, Financial Times via ft.com
"Other duties as assigned," reads the job description for municipal workers in Siloam Springs, Arkansas.
Like the rest of the US, this town of 14,000 in the north-west of the state near the Oklahoma border is grappling with the fallout from a national recession. In response to plummeting revenue, David Cameron, the city administrator, has redrawn the roles of many employees.
"Our [revenues from] sales taxes are down 11 per cent but we still need to pick up the trash," Mr Cameron says. "I pay more money to less people and maximise their use with more tasks."
[and by paying less people and loading them up, I downsize employees, consumers and my own markets. Brilliant!]
The court clerk now does all the marketing and handles the website. Firefighters do ambulance work and workers at the water treatment plant are paid extra to stand in for truck drivers, if needed.
Mr Cameron hopes the strategy will help withstand any more shortfalls and an uncertain outlook for growth.
Across the country, the financial crisis is redefining local government as officials face the reality of having much less money to deliver services, from public safety and libraries to rubbish collection.
About two-thirds of the 2,214 cities and counties that participated in a survey, to be released shortly, believe the changes implemented to deal with the downturn represent a different way of doing business that will endure beyond the financial crisis, according to the International City/County Management Association, a group for local government officials.
"That the recession has changed the way governments operate at the local level is not surprising," said Ron Carlee, ICMA's director of domestic initiatives. "However, the widespread belief that coping strategies represent a new normal is a significant development, with big implications for local governance."
Unlike the situation for companies, demand for public services rises as revenue falls. For example, library attendance has risen as the unemployed use the facilities to research, write and send CVs. But local officials are being forced to cut hours to save money, Mr Carlee said.
Americans will this year begin to feel the consequences as their cities and towns make deep and more permanent cuts.
"We took this rollercoaster ride down to the bottom, but no one believes that we are going to go right back up to where we were," said Jon Johnson, a former budget official for Jefferson County in Colorado, who works with ICMA to help local governments budget. "A new level of government and spending needs to be established."
Facing drops in sales and income tax receipts of 12-15 per cent, Patrick Urich, the manager in Peoria County, Illinois, sought advice from Caterpillar, the maker of construction and farm equipment, whose headquarters is across the street from the county seat.
Like Caterpillar, which had cut its workforce by 20,000, the county knew it had to shrink. Advised by Caterpillar's human resources department, the county crafted incentives for people to leave their jobs voluntarily, including financial buy-outs and offers to continue health insurance. As a result, it cut 7 per cent of the workforce - 70 people - without any forced redundancies.
Walnut Creek, California, which must close a $20m (€14m, £12.5m) deficit for the 2010 financial year, is polling citizens on what services they value most, so it can make targeted cuts. Lorie Tinfow, assistant city manager, also expects the expansion of volunteer programmes such as checking on the elderly at home.
"We are rethinking what services the city provides, what we are paying for them and what we are expecting as American taxpayers to get for that dollar," Ms Tinfow said.
The US economy grew slower than previously thought in the third quarter on softer consumer spending and weaker non-residential investment, raising questions about the strength of the recovery.
Gross domestic product grew at an adjusted annual rate of 2.2 per cent, the commerce department said yesterday.
12/20-21/2009 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 (firstname.lastname@example.org) unless otherwise initialed -
- 70 Iowa companies participate in “Shared Work” program, by O. Kay Henderson, 12/21 RadioIowa.com
Iowa is one of 17 states participating in a federal program [ah no, not federal yet!] that lets businesses keep workers on part-time and the workers qualify for unemployment benefits, too. Kerry Koonce at the Iowa Workforce Development agency says before this year, only a handful of Iowa companies signed up for the “Shared Work” program.
“But with this current recession that we are in, we actually have 70 (Iowa) companies using it in 2009,” Koonce says. Under the “Shared Work” program, workers still get a steady, if smaller, paycheck from their employer. They keep their benefits, like their health insurance, and they cannot be laid off.
Initially, a company could use the program for 26 weeks. This past spring, state lawmakers increased that to 52 weeks at the urging of companies like Vermeer Manufacturing in Pella. Vermeer used the “Shared Work” program in 2001 — during the last recession — but they had to lay off workers when that 26 week period was over.
Vermeer vice president Vince Newendorp says when orders start coming back in, he’ll have everyone on board to meet demand.
“We could be better positioned than maybe some of our competitors, going forward, to take advantage of that rebound,” Newendorp says.
Vermeer plans to go off the “Shared Work” program after the first of the year, as Newendorp says demand has picked up for the company’s heavy machinery.
While the companies that participate in the program have to pay some additional unemployment taxes, participants say it’s far less than they’d pay if workers were laid off. Plus, Koonce — the spokeswoman for the Iowa Workforce Development agency — says there’s the expense of hiring and retraining new workers once orders for company goods increase.
“It allows companies to keep access to their training workforce, since they’re expecting to come back to full employment,” she says.
At Vermeer, employees who are working part-time now are getting unemployment benefits that amount to roughly a hundred dollars a week. Danny Egbert, a machinist at the Vermeer plant just outside Pella, welcomes that extra money.
“You know, it ain’t a whole lot, but every little bit helps,” Egbert says. “I was down to 28 hours a week…It’s put a strain on everything.”
State officials say most of the 70 Iowa businesses that are participating in the “Shared Work” program are manufacturing companies like Vermeer.
- Subsidy assistance sought by 2000 firms, by Ian Kehoe, 12/20 Sunday Business Post via sbpost.ie
Up to 2,000 companies are expected to seek state support under the newly-expanded Employment Subsidy Scheme, a €65 million fund to protect jobs.
Enterprise Ireland, the state agency responsible for managing the scheme, is anticipating between 1,000 and 2,000 applications before the deadline arrives on Wednesday. Some 620 companies have already received support through an earlier round of the scheme.
However, the enterprise agency is expecting the number to be ‘‘significantly higher’’ after the government decided to extend the scheme beyond its original remit.
The scheme was initially limited to ‘‘vulnerable but viable’’ businesses in the manufacturing or export sector, but is now being broadened to all companies that employ more than ten people.
Enterprise Ireland last week circulated a request for tenders seeking consultants to help to assess the applications for subsidies.
According to the tender document, the applications will be judged on three main criteria, with the most significance being attached to the ratio between the number of jobs that will be saved against the assistance received.
The two other criteria are the company’s long-term viability and the firm’s restructuring plan. Enterprise Ireland hopes to have the assessments completed by mid-February.
The Department of Enterprise, Trade and Employment said that 7,700 jobs were supported under the first round of the scheme. In return for the subsidy, the 620 companies involved gave a commitment to retain 36,000 jobs as part of their application. It is expected that a similar number of jobs will be retained as a result of the second round.
The scheme provides support of €9,100 for each worker in qualifying businesses over a 15-month period if the employee is working 35 hours or more a week.
The subsidy is €6,370 if the employee works between 21 and 35 hours.
The fund is one of a number of initiatives designed to protect companies and jobs in the downturn. Through the Enterprise Stabilisation Fund, the government has already approved €44 million in funding to some 98 struggling businesses.
In the recent budget, the government also unveiled a €36 million Jobs PRSI Incentive Scheme for employers. Employers who hire someone who has been unemployed for six months or more will not have to pay employers’ PRSI for that employee for one year.
Interested companies can find details of the scheme on www.enterprise-ireland.com
- Law Firms Cut Junior-Lawyer Bonuses by as Much as 71 Percent (Correct), by Carlyn Kolker, 12/21 Bloomberg.com
(Corrects bonus cuts in headline and first and fifth paragraphs in story that ran Dec. 21.)
Law firms including Cravath, Swaine & Moore LLP and Skadden, Arps, Slate, Meagher & Flom LLP cut year-end bonuses for first-year lawyers by as much as 57 percent, part of a bid to keep client costs down and ride out a recession that has forced structural changes in the industry.
Bonuses dropped for first-year associates at many top-tier New York firms while staying the same or increasing for more experienced associates. Bonus reductions, along with overall pay cuts, signal a diminished role for junior lawyers at the larger U.S. firms, said consultant Bruce MacEwen.
The industrywide move to cut pay is “reflecting, frankly, the low value clients place on junior associates,” MacEwen, who is based in New York, said in a phone interview.
Facing a slowdown in work due to the financial crisis, law firms fired thousands of associates this year and last, forced new hires to delay starting dates and cut hours in exchange for reduced salaries. Demand for legal services dropped 6.8 percent in the first nine months of 2009 compared with last year, according to Citi Private Bank, a unit of Citigroup Inc.
New York firms including Cleary Gottlieb Steen & Hamilton LLP, Sullivan & Cromwell LLP, Cravath and Skadden Arps cut seniority-based bonuses from $17,500 to $7,500, a 57 percent drop, for first-year associates, according to the firms and people familiar with their policies. The most experienced associates get $30,000 or $35,000.
Other firms, such as San Francisco-based Morrison & Foerster LLP, Reed Smith LLP in Pittsburgh and DLA Piper LLP in Chicago, cut starting salaries for first-year associates from $160,000 to as low as $130,000 this year. Firms in cities including New York, Washington and San Francisco had adopted $160,000 as the industry standard beginning in January 2007.
Future Senior Lawyers
Cleary’s managing partner, Mark Walker, said the cuts aren’t a reflection on the value of young associates at his firm. The best are traditionally offered partnerships after spending eight years as salaried associates.
“The young lawyers today are the senior lawyers five years from now,” Walker said.
[Note that America is cutting its own future with downsizing instead of timesizing.]
Jeffrey Grossman, of the Legal Specialty Group at Wells Fargo & Co., said U.S. law firms are cutting associate pay to stanch their decline in profitability. Even partners are taking home less, he said.
Today’s economic justification, however, may reap rewards for law firm bottom lines tomorrow when revenue increases.
“It will be a future benefit,” said Grossman, based in Charlotte, North Carolina. “It will change the cost structure for future years.”
An additional consideration in paring pay, the law firm consultants said, is the need to address increased pushback from corporate clients seeking reduced hourly billing rates.
“It’s a philosophical reaction to the fact that clients are more demanding,” MacEwen said.
Rates for the least experienced attorneys typically range from $250 to $350 an hour, he said, spurring some clients to complain they are paying top dollar for the training of young lawyers. The perception has existed for years and “bubbled to the surface” during the recession, Grossman said.
Young lawyers have “a lot of potential,” said Brian Cabrera, general counsel of Synopsys Inc., a maker of software for chipmakers. “The question for the in-house lawyer is how much of that potential has been realized.”
Cabrera said he recently asked a firm he wouldn’t identify to pare its rate for some associates from $500 an hour to $400.
“I’m willing to recognize that I am partly subsidizing associate training, but the firms need to pay for it, too,” he said.
The bigger firms -- which often move as a bloc in setting pay -- still recognize they need to nurture top young lawyers. As a result, Grossman said, some have reconfigured compensation to reward high performance.
Orrick, Herrington & Sutcliffe LLP, based in San Francisco, this month said it would eliminate bonuses for first year associates, while keeping salaries the same. It instituted a new system in which they get raises based on performance rather than seniority.
The changes were made to align pay with performance and client needs, said Orrick Chief Executive Officer Ralph Baxter.
While compensation has dropped for younger associates, the most experienced associates have been spared, said Peter Zeughauser, a law firm consultant at the Zeughauser Group, based in Newport Beach, California.
“It’s harder to replace those people,” Zeughauser said. “They are fully trained, and they are viewed as keepers.”
Sullivan & Cromwell this year said it’s giving some of its most experienced associates, those who started at the firm in 2002, $5,000 more in bonuses than offered by Cravath and Cleary.
“We have always believed that generally the more senior classes are working the hardest,” Sullivan & Cromwell Vice Chairman Joseph Shenker said in an interview. “They are also the most highly trained. It’s fair.”
To contact the reporter on this story: Carlyn Kolker in New York at email@example.com.
Last Updated: December 23, 2009 10:11 EST
- austriamicrosystems ends short-time work at Unterpremstätten, 12/21 evertiq.com
CHip-manufacturer austriamicrosystems will terminate the current short-time work schedule at its Austrian location in Unterpremstätten on December 31, 2009.
Components - Increased demand has created a noticeable improvement in the utilization of production capacity, thus rendering continuation of the short-time work schedule unnecessary according to the company’s assessment. The number of employees working shortened hours already decreased considerably last month; currently less than 300 employees remain under the short-time work schedule.
- Economic meltdown: ILO warns on premature exit, by Remi Ladigbolu, Nigerian Compass Newspaper via compassnews.net
International Labour Organisation (ILO) has warned that an “early exit” from support measures adopted to cushion the effect of the global economic crisis could delay jobs recovery for years and further pose a threat to world economies.
According to the ILO’s world of work report for 2009, the global job crisis and beyond, also projected that unless reasonable steps are taken and in some cases continued, more than 40 million people could drop out of the labour market.
“Despite some initial signs of economic upturn and because of the significant rise in unemployment and in part time work, support measures should not be withdrawn too early” said Raymond Torres, Director of the ILO’s International Institute for Labour Studies and lead author of the report.
His words : “The global jobs crisis is not over. It is therefore crucial to avoid premature exit strategies. In short, the economic upturn will remain both fragile and incomplete as long as the jobs crisis continues. A real recovery will be achieved only when employment recovers.”
Also contained are most of the failures of the financial system that lie at the root of the present crisis which have not been tackled so far – another reason why early exit would be premature.
According to the information made available, this report complements earlier ILO analysis and policy messages.
ILO Director-General Mr. Juan Somavia stated: “This report confirms that unless decisive measures to support employment are taken and sustained, genuine recovery with employment will be unnecessarily delayed. This crisis and the one before it illustrate the need to shift the policy paradigm to one centred on people’s needs for decent work.”
The report also observes that bringing persons back into productive employment sooner would be less costly for the public purse than taking action later.
The ILO report says the length and scope of the jobs crisis could be reduced if stimulus measures and overall policies were focused on the approach of the ILO “Global Jobs Pact” adopted earlier this year. The pact presents an integrated portfolio of tried and tested policies that puts employment and social protection at the centre of crisis responses. It has received worldwide support at the highest political level, including the one by the United Nations and the G20, in the space of only a few months.
It also shows that a continuation of fiscal stimulus measures, if well focused on jobs, would raise employment by 7 per cent compared to an early exit situation.
The World of Work Report is an annual study by the ILO Institute, which provides an assessment of the current state of labour markets. Among its findings:
Based on the latest IMF growth estimates, the report calculates that employment in high GDP per-capita countries may not return to pre-crisis levels before 2013, unless more decisive measures are taken to stimulate job creation. In emerging and developing countries, employment levels could start recovering from 2010, but may not reach pre-crisis levels before 2011.
It added two-thirds of the countries for which data are available do not have regular unemployment benefits. Only one third of developing countries have provisions pertaining to informal workers or the self-employed.
According to the report, unemployment, millions of workers have been “retained” by enterprises with support from governments despite falling activity. These workers are now on shorter hours, partial unemployment or involuntary part time.
12/19/2009 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 -
- 'An economic reality' - Budget pressures trigger the first of three waves of program cuts at Cumberland County's public libraries, by MATT MILLER email@example.com, Patriot-News via pennlive.com
CUMBERLAND COUNTY, Pa. - Children's programs, service hours and spending on collections at three Cumberland County public libraries will be cut to address a major loss of state money.
Amelia Givin Library in Mount Holly Springs, Bosler Memorial Library in Carlisle and New Cumberland Public Library are only the first to feel the pinch.
More cuts will be announced in January and February to adjust to an $860,000 reduction in support for the county's libraries in this year's belated state budget, library system officials said Friday.
"It's unfortunate that, during this recession, our libraries need to reduce hours and purchase fewer newer materials," system Executive Director Jonelle Darr said. "People need us more than ever so they can apply for jobs online and to stretch family budgets.
"But," she said, "it's an economic reality."
The cuts announced Friday are expected to save about $60,000 annually.
The Givin library will be hardest hit.
As of Jan. 4, it will pare its operating hours from 59 hours a week to 45 a week. It will be closed Thursdays and will close an hour earlier on Mondays, Tuesdays and Wednesdays.
Givin is the third county library to reduce hours. New Cumberland library and the Fredricksen Library in Camp Hill both cut hours under budget pressure this fall.
Bosler library will eliminate Sunday hours for June and will cut its spending for new materials by $13,600. Spending for materials will be reduced by $8,000 and $10,000 at the Givin and New Cumberland libraries, respectively.
A $1,500 cut in spending for children's programs is planned at the Givin library, and a $4,500 cut is planned for those programs at the New Cumberland library.
Bosler employees will see lower employer contributions to their pensions as well.
Also, late fees for overdue materials, excluding DVDs, will jump by 5 cents to 30 cents per day starting Jan. 4.
- Furniture Work Shifts From NC To South China, by Frank Langfitt, (12/18) NPR.org
Bill Curtis watched his job slip away piece by piece.
He spent his adult life cutting cloth for sofas at Broyhill Furniture in Lenoir, a town in the foothills of the Blue Ridge Mountains of North Carolina. Over time, Curtis noticed more cloth arriving at his factory from overseas. Then, Broyhill began slashing his hours.
"Work just started to dwindle," Curtis recalled. "The more we saw leave, the more containers we saw coming in. So we knew that's where our jobs went — China."
Curtis finally lost his job in 2005 as American companies continued to shut down factories in the U.S. and sent the work to China. In fact, more than 300,000 furniture jobs have disappeared from the United States this decade, according to the U.S. Bureau of Labor Statistics.
Who got some of those jobs, and what sort of lives do they lead?
"I've seen some pictures of furniture factories over there," said Curtis, 55. "It's the closest thing I can think of to slave labor."
Tracking Lost Jobs To A Furniture Town
The truth is more complicated, and the global economy is full of twists and turns.
The City Of Dalingshan, China
Locator map: Dalingshan, located in Guangdong Province, China
Over 400,000 (360,000 are migrants, and about 40,000 are permanent residents)
36.7 square miles
Exports: Dalingshan is known as China's No. 1 furniture exporter
Source: Dalingshan Web site
Two years ago, NPR tracked down some of the jobs that were lost in Lenoir and other North Carolina towns to Dalingshan, a South China industrial city with factories as far as the eye can see. One of the biggest operations is owned by Lacquer Craft, an Asian furniture giant.
In early 2008, Lacquer Craft was home to 4,000 workers and built furniture for many well-known U.S. brands, including Broyhill, where Curtis had worked.
Among Lacquer Craft's employees was 25-year-old Zhao Xia, who prepared furniture for painting before it was shipped to the United States.
Toward the end of Curtis' career, he made more than $15 an hour.
In 2008, Zhao earned less than 70 cents an hour, often working until midnight with just two days off a month.
But Zhao didn't consider herself a slave; she said she was fortunate. Before working in the factory, she farmed a tiny plot of land in Southwest China's Sichuan province.
"We planted rice paddies, wheat and corn," Zhao said. "We ate what we planted. We never made any money off it."
In Dalingshan, Zhao shared an apartment down the street from the factory's back gates with her husband. They slept on a box spring next to a small TV and a DVD player. Though squalid by American standards, the conditions were a step up from Sichuan, Zhao said.
"In a factory, you don't have to work in the sun — that's the best thing," Zhao said. "I prefer working here. At least I get paid. At home, nobody paid me."
Importing U.S. Wood
Workers pour out of the back gate of the Lacquer Craft furniture factory in Dalingshan, China, during a shift change. Some of the furniture jobs lost in Caldwell County, N.C., this decade ended up here at Lacquer Craft.
Lacquer Craft can afford to source wood from such a distance because of America's yawning trade gap with China.
"There are a lot of exports to America, but some containers come back empty," Chiu said. "So, the price to ship things back in them is relatively cheap."
Laborers Have The Upper Hand
In early 2008, South China was suffering from a surprise labor shortage. Instead of begging for jobs — as they once did — furniture workers could pick and choose.
One 24-year-old worker, Chen Hong, earned $330 a month and bragged that he could command that wage anywhere.
"If we go out looking for work, we can certainly find jobs like this and get them at the same salary," Chen said. "We have a lot of friends asking us if we want to work in other factories."
Chen worked at a smaller factory called Xincheng. His boss, Kang Mincang, a bespectacled sales manager from Taiwan, said employees have the upper hand.
"Now, being a migrant worker is pretty easy — being a boss is much harder," Kang said. "I would prefer to be a migrant worker. Their job security is better than it used to be."
But conditions change fast in the global economy, and even as Kang spoke, that security was fading.
Impact Of The Great Recession
Back in America, housing prices were falling, and so were furniture sales. Becky Song was a manager at Creation Furniture, a small company in Dalingshan. By January 2008, Creation had closed two factories and Song could see the crisis ahead.
China's Growing Market Share
The amount of furniture imported to the U.S. has grown over the last decade with China leading the way.
Imports from China versus total imports, 1999-2008
Source: Mann, Armistead & Epperson Ltd, American Home Furnishings Alliance, U.S. International Trade Administration & International Sleep Products Association
Credit: Robert Benincasa and Alyson Hurt / NPR
"If there is a recession in the United States, of course, Americans' purchasing power will decline and there will be fewer orders," Song said. "Factories won't be able to survive, and they'll have to lay off people. Probably many factories will have to close."
Song was dead on. The housing boom that fueled Chinese furniture factories collapsed, and Americans stopped buying.
Creation Furniture went bankrupt late last year, according to a security guard who was manning the locked gates of the empty factory when NPR visited last month.
During the recession, Lacquer Craft, the firm that makes furniture for Broyhill and other North Carolina companies, cut its employment rolls by 1,000, according to Chiu. He said that in Dalingshan alone, more than 100 plants had shut down in the past two years.
Thousands Of Job Losses
Albert Fan, another furniture factory manager at one of a handful of factories NPR visited, said up to 400,000 workers lost their jobs in the region and returned home to the provinces.
Zou Zuoxin is one of the survivors. He said his factory, which made component parts for Lacquer Craft, cut hours until half its workers left.
"They never tell you directly that we want to fire you," Zou said, taking a break from watching a movie on a giant-screen TV one evening in the city square. "They would just tell you that you can still work here, but we have very few orders and very little work. Many people can't bear it, then they would just quit."
Zou, in his early 50s, said for people his age, unemployment is just a matter of time.
"I will lose my job sooner or later," Zou said. "It's not possible to have a career here. You can't have a job for life."
Chiu of Lacquer Craft said he learned a powerful lesson from the recession: Don't depend on the American consumer. Chiu is now focusing more on the Chinese market but said it will take time to develop.
"Chinese people have a bad habit," Zou said facetiously. "They're comparatively frugal. They can use one piece of furniture for 10 or 20 years." He added, "Americans are much more wasteful. We prefer the way Americans consume."
In the meantime, Chiu says, conditions are improving, and his factories and others in Dalingshan will survive. In recent months, orders from the U.S. have been picking up and, once again, Chiu and his factory are looking to hire.
12/18/2009 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 excerpting and [commenting] by Phil Hyde (firstname.lastname@example.org) unless otherwise initialed -
- Not all are pleased with big rig change, by Bianca Slota, (12/17) WCAX News viaWCAX.com
SOUTH BURLINGTON, Vermont - Earlier this week Congress passed a bill raising the weight limit for trucks on Vermont highways. Many towns - including Milton, Derby Line, and even Burlington - have been pushing for this change for years because they say the big trucks driving in the middle of town pose a danger to drivers and pedestrians. There are some people though, who say putting the big rigs on highways, where they can drive faster, is far more dangerous.
Julie Branon Magnan, of South Burlington, is one of the people against the change. She has been regulating for changes in the trucking industry since 2002, when her husband was killed in a horrific accident. Magnan and her husband, David, were driving through Nevada, on their way to see their daughter in Colorado, when an 80,000 pound tractor trailer crossed the median and came directly toward them.
"I was at such peace because I knew that the two of us would be killed and that was okay, he was the love of my life and it was alright," says Magnan while recalling the accident.
Magnan survived because David pushed her head down at the last second, low enough that she went under the truck.
David could not get low enough. In the years since his death she has been working to get tougher restrictions for the trucking industry. She wants drivers to work shorter hours and drive fewer miles. She would also like to see more safety inspections.
Magnan was dismayed this week to learn Congress raised the weight limit on federal highways in Vermont from 80,000 pounds to 120,000 pounds. She says heavy trucks moving at highway speeds are dangerous and thinks they are safer on state highways.
"At least in the town roads they can stop because the speed is so much lower," she says.
State Senator Dick Mazza, D-Colchester, who has been advocating for the law change for years says the opposite is true.
"How unsafe is it to run those heavy 90,000 pound trucks through villages and downtowns? Through school zones and shopping districts, when you can put them on the interstate which is designed for safe travel?" argues Mazza.
Magnan says one solution could be to lower load limits on state roads. If that is not possible she says she could be okay with heavier loads on highways if the tougher regulations she has been advocating for are in place first.
- France: Renault unions agree to short-time work, AutomotiveWorld.com
Renault has announced that all employee representative bodies (CFDT, CFTC, CFE-CGC, CGT, FOR) have signed an agreement extending the crisis-period labour deal. Under the arrangement, managers, office staff and factory workers are required to work fewer days than normal.
The agreement takes effect 1 January and will apply for the whole year. Renault expects an average short-time work period of 45 days at its French plants in 2010. The OEM has warned that the scheme could also be implemented at support sites if necessary, even where no short-time work is currently scheduled.
"I am pleased with the quality of social dialogue, with all social partners, which has led to the collective signing of the 2010 crisis-period labour deal. Based on the same principles of solidarity and equity as in 2009, the deal will allow all employees to maintain their net salaries in cases of short-time work,” commented Gerard Leclercq, senior vice president of Group Human Resources.
In related news, the OEM is now forecasting a 17-18% decline in 2009 revenues, compared to 2007. It expects an 18% decline in fixed costs, including a 24% fall in investments and a 20% drop in R&D, again compared to 2007. Overall, it expects the European market to decline 8-10% in 2010, compared to 2009.
- Uncertainty weighs on world economy, Financial Times via ft.com
The past year in asset markets is best described as an extraordinary bungee jump. UK stock prices – to take an example from the Bank of England’s latest Financial Stability Report – collapsed, then recovered, in some of the sharpest market movements in three centuries.
If real economic activity around the world were to replicate the pattern of asset prices, we should now be looking forward to a powerful rebound. But although economies all too visibly followed asset markets on the way down, no similarly sharp upward turn is yet in sight.
Growth, however, remains anaemic. Consensus forecasts of growth for 2010 are a sluggish 1 to 2 per cent for most advanced economies. Among G7 countries, only the US and Canada are expected to do better – but even their 2.7 and 2.6 per cent forecasts are hardly inspiring.
There are good reasons for this pessimism. Credit flows to businesses are still glacial. Although banks have had a good year, their long-term prospects are uncertain – and their balance sheets likely to be significantly curtailed by financial sector reforms. In the meantime, markets remain nervous as the last few weeks’ turbulence has shown: problems in Dubai and Greece set off investors’ jitters and money has flocked to the dollar.
Another reason for caution is the great sectoral readjustment underway. Businesses and households are putting prudence in the place of past profligacy; public spending must for now drive growth. This is a knife-edge transition: public deficits are worrying large, but growth can falter if the private retrenchment is not compensated for.
Over all this hangs the shadow of unusual labour hoarding. The US economy shrank by 3.8 per cent from peak to trough; unemployment doubled from about five to more than 10 per cent. That was the exception. UK output has shrunk by 5.8 per cent, but unemployment is only up by 2.7 percentage points from a similar starting point as the US. Still more output was lost in Japan, Germany and Italy, but joblessness rose even less.
Whether because of policy (such as Germany’s Kurzarbeit) or voluntary hoarding, employers cut hours but kept workers on payroll, making the recession less painful.
[Now for the big non-sequitur because this unnamed author is trapped in the paradigm of The Forty-Hour Workweek Forever, regardless of our early Eighty-Hour Workweek history, regardless of common sense ("Let's see you sell cars to these car-manufacturing robots"), regardless of logic (trim hours with no side effects instead of trimming worker-consumers). Is it easier to get out of a more painful recession than a less painful one? That is the clear implication of this commentator. Where is Bill Gates or Warren Buffett or some wealthy dude or dudette with enough gray cells to "get" this paradigm shift and think outside the box of the Sacred Eternal 40-Hour Workweek Given by God to Moses on Mount Sinai in 1800 BC and meant to be permanent regardless of all future worksaving technology and necessitating dragging government and the taxpayer into making up for all the work "lost" to technology. The real Luddites are those who haven't connected worksaving technology with its lowering implications for the workweek and diminishing implications for the puritan work ethic in the form of long hours or any given level of rigid workweek.]
Recovery, however, is all the more precarious as a result.
[No, recovery is more likely because workers still on the payroll mean consumers still in the stores.]
Employers cannot keep unneeded workers forever
[Yes they can and are, by shifting paradigm and translating this to "Employers cannot keep unneeded working hours forever." Employers can and are keeping workers on the payroll forever regardless how low a level of working hours that may take, because - surprise, surprise - they want and need customers, and they realize that customers want and need jobs, and they see that economies that don't "get" this connection are going down, down, down.]
and will start shedding labour unless demand picks up.
[But demand will never pick up as long as they do what this in-the-box thinker suggests and cut jobs instead of just hours. He's recommending a suicidal extreme response instead of a sustainable minimal response. Demand will pick up only if employers cut hours further and hire more unemployed, deactivated consumers, and REACTIVATE them with pay. Demand isn't magic. It doesn't come from nowhere. It comes from employed consumers multiplied by their dependents.]
It had better do so soon, and strongly, or we may sink back into recession.
[We've never left recession thanks to this commentator's kind of trapped-in-the-40-hour-box thinking. We are on a downward spiral stairway of bubbles and each time a bubble pops and we slide down a "step" and bounce slightly on the next bubble, our rosyrosy economic indicators, specially defined to exaggerate the positive and understate the negative by the concentrated ownership of our media and economics departments, shouts RECOVERY! - even if we've gone down 99% and only come back up 0.1%. Bubbles so far, incomplete list = early '90s, the P/E ratios bubble; late 90s, dot-com bubble; early 2000s, housing bubble; late 00s, bailout bubble...]
12/17/2009 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 -
- Rise of the desperate house husband, by Gaby Hinsliff, NewStatesman.com
Like it or not, the recession is reshaping our domestic landscape. Time to consider seriously how that should look.
There were two fathers this week at our tiny Oxfordshire playgroup. One dad among all the mothers, mumbling valiantly through the more obscure nursery songs in the manner of John Redwood tackling the Welsh anthem, is de rigueur for modern toddler gatherings. But two? Two means solidarity, a masculine presence subtly altering the chemistry in a roomful of women. They ended up happily talking football while washing up the Play-Doh cutters.
For both sexes, such blurred gender lines should be welcome. One of the biggest shocks of my maternity leave was navigating the overwhelmingly female world of those at home with small children: after a career spent in testosterone-soaked newsrooms, I found all that warm fuzzines confusing. Men used to living and working with women might equally find an all-male office weirdly retro now.
But suddenly these divides have started to crumble at great speed. A recession that has pummelled traditionally male industries - construction, finance, manufacturing - while sparing the female-dominated public sector (at least until the spending cuts start) is quietly redrawing family lives.This recession has driven men back home and some women into work.
In Canada, the number of women in employment recently overtook the number of men for the first time. Women in the US may pass the same milestone soon, having reached 49.9 per cent of the workforce. Although such progress looks breathtaking, it is less a female surge than a case of men falling back. But it has profound implications: four in ten American working mothers are now their family's main breadwinner, while the number of US female professionals whose husbands don't work has risen by 28 per cent in the past five years.
After the mancession
In Britain, the pace of change is slower - over 46 per cent of the workforce is now female, up from 45 per cent in 2007 - but there are still a lot of men who suddenly have time for playgroup. In every quarter since last spring, redundancies hit men proportionally harder than women. Employers report part-time women asking for more hours because a partner's income is at risk. And a surprising 7 per cent of mothers with three children now have more than one (usually low-paid) job. Research from the Family Commission, a study of roughly 1,000 families, led by the charity 4Children, has shown a rising trend for house husbands.
The rise of the female breadwinner/male homemaker model seems a logical outcome of a "mancession". It happened during the Great Depression, too - the percentage of working women in the US rose between 1930 and 1940, despite immense social disapproval of women "stealing" male jobs. Then, as now, need simply trumped other considerations for many couples: typically "female" clerical or sales jobs survived the slump better than "male" roles, and were thus easier to get. The trend continued into wartime as female employees replaced men away at the front.
Without a war, the gender power shift could quickly go into reverse when the recovery begins (or public-service jobs start being axed). But if it isn't a temporary blip, how might that affect both professional and domestic life? Does she who earns the pay cheque call the shots? Should he who changes nappies get custody of the children after a divorce? Some men, post-recovery, may not automatically pick up where they left off. Treasury officials predict a permanently smaller future economy, with some manufacturing jobs migrating overseas and a shrunken City. Many new jobs will be graduate-only, favouring girls, who now outnumber boys at university.
Other questions arise for fathers pushed into temporary part-time working as an alternative to redundancy. When recovery comes, might some who can afford it, having got used to seeing more of their children, seek permanently shorter hours?
[Here's hopin'! And what if recovery doesn't come?]
Similarly, some mothers forced into upshifting their careers will discover they don't want to stop when the crisis is over.
Office culture has already been greatly feminised over the past 40 years, both superficially - girlie calendars stripped from garage walls, tights machines installed in the House of Commons - and more profoundly, with a new emphasis on "soft" skills and parental rights. The critical mass of working women has started to change the culture, but has proved weaker on structural inequalities such as the pay gap. Canadian women still earn 74 cents on average for every man-dollar. A female-dominated workforce counts for little if most of those women remain stuck in low-status jobs.
And becoming the breadwinner in a crisis may be a bitter-sweet experience. Many working mothers will simply be relieved they can still support their family if a partner loses his job, others genuinely liberated by doing so. But some will be torn between suddenly needing to make more money and still wanting more time with their children. And while it may make financial sense for an unemployed father to mind the children, emotions are less easily directed. Where house husbands are reluctant, and working mothers guilty or jealous, resentment quickly follows. Evolution in family structure is a sensitive business and changes that are hard to debate calmly in public - as recent near-hysteria at Westminster over the future of marriage has shown - can be even harder to negotiate within a stressed home.
But we are entering a new year and, perhaps, a new decade characterised by uncertainty and change. It will bring opportunities as well as conflicts. Like it or not, the recession is reshaping our domestic landscape. Time to consider seriously how that should look.
Gaby Hinsliff is former political editor of the Observer
- DNR cutting hours in Rhinelander, Woodruff [Wisconsin], NewsoftheNorth.Net,WI
The Department of Natural Resources says it’s reducing office hours in Rhinelander and Woodruff as part of mandated budget cuts.
DNR’s Service Center at 107 Sutliff Ave., Rhinelander, will cut hours it is open for walk-in service to the public. As of January 4, 2010, counter service will be offered on Monday and Thursday from 9:00 a.m. to 12:30 p.m. and 1:30 p.m. to 4:00 p.m.
The Department of Natural Resources Service Center at 8770 Highway J, Woodruff, will cut hours it is open for walk-in service to the public. As of January 4, 2010, counter service will be offered Tuesday and Friday from 9:00 a.m. to 12:30 p.m. and 1:30 p.m. to 4:00 p.m.
If you have a question on rules, regulations, or other DNR program, a toll free call center is available seven days a week, 7 a.m. to 10 p.m. at 1-888-WDNRInfo [1-888-936-7463,]
- Renault Blue-collar Staff Agree To Pay Deal For 2010, by David Pearson, +33140171740, firstname.lastname@example.org, Dow Jones Newswires via Wall Street Journal via online.wsj.com
PARIS--Labor unions at French carmaker Renault SA (RNO.FR) have agreed to a 1.3% pay increase for blue-collar workers in 2010 and to extend a crisis-period labor deal for another year, the company said Thursday.
The extended contract sets out the conditions for an average 45 days of short-time work expected in Renault's plants in France next year. In addition, all employees will receive a EUR500 bonus at the end of 2010 if the company generates a positive cash flow.
Renault froze its employees' pay in 2009 as it battled to preserve cash and return to profitability amid a global slump in demand for automobiles.
A spokesman for the company said negotiations on white-collar workers' salaries will take place in January.
Next year's labor deal could also be implemented at support sites, where necessary and even though no short-time work is scheduled as of today, Renault said.
Renault budgeted for 50 days of short-time work in 2009, although the actual figure will to be closer to 45 days, the Renault official said.
12/16/2009 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 -
- Smith's Senseless Spending, Harvard Crimson via thecrimson.com
HARVARD UNIVERSITY - Last week, Faculty of Arts Dean Michael D. Smith announced he would lift the salary freezes placed on faculty and staff last winter by providing two percent merit-based raises to professors and increasing stipends for graduate students by three percent. The Harvard community has not been given a brief on the state of the budget since Sept. 15, so we are unsure of whether the announcement is a sign of budget security or an exception to the FAS policy [Faculty of Arts and Science] of late that dictates trimming spending wherever possible. Regardless, Dean Smith’s spending decisions are misdirected. Given the numerous cuts the university has faced since the unfortunate implosion of the economy and subsequent drop in endowment value, several areas of the College need future funds more desperately than professors and graduate students.
We understand the College’s desire, which we share, to attract and retain the best faculty to Harvard in order to protect the quality of research and academics here, and we certainly recognize the value of monetary incentives. That said, we doubt that a modest raise of two percent will do much to keep professors from leaving or spark any noticeable improvements to the Harvard academic experience. Additionally, as one graduate student pointed out, the three percent stipend increase amounts to more funds for groceries but is unlikely to convince anyone to enroll in Harvard’s graduate program. Moreover, we hope that the deciding factor for why one ought to pursue an advance degree at Harvard is something other than the fact that it pays more than at other schools. Professors, moreover, have countless incentives to stay at Harvard besides economic ones.
The announcement that no additional funding will be cut from the Harvard College libraries is great news. We hope that, in the future, funds secured amidst changing budget structures will include similar measures.
With any luck, the FAS’s new interest in reinstating secure spending policies will include reabsorbing laid-off staff members or reinstating cut hours as part of an effort to return services to the College and the university as a whole. The funds being directed toward professors and graduate students would conceivably have a bigger impact on the larger Harvard community if applied to initiatives such as bringing back hours in libraries and the Bureau of Study Council, serving hot breakfast, increasing hours for students who hold jobs on campus, and transitioning out of the hour reductions and furloughs many staff members face.
[So regardless of Harvard Economics professors' opinions, their employer, Harvard University itself, practices cutting hours instead of cutting jobs = worksharing instead of layoffs - though for the self-destructive underlying purpose of further raising elite salaries.]
Harvard professors are currently the highest paid in the country, according to a report by the American Association of University Professors. When compounded with the level of prestige attendant to professorship here, most professors are deeply contented to be on the faculty of Harvard University. Similarly, many students are already eager to earn a graduate degree here; providing extra incentives need not be our priority right now. While the goal of preserving the quality of teaching and research at Harvard is an essential one, these raises will have little impact. Instead, Dean Smith should have directed FAS funds toward returning staff and services—spending for which the student benefits are much more certain.
- Take Advantage of US Department Of Labor Funding To Train Your Staff, Manufacturing & Technology, eJournal (press release) via mfrtech.com
USA - To support manufacturers in the auto supply chain, the U.S. Department of Labor has funded a program allowing auto suppliers to use a federal grant to pay half the cost of training employees in continuous improvement projects such as lean and quality management.
MAGNET, the Manufacturing Advocacy & Growth Network, will provide auto supply chain employees in Ohio with 35 hours of professional training—a $1,000 value—for just $500 per employee in the first quarter of 2010.
[Looks like Timesizing Phase Two without the vital inclusion of the market-determined incidence of overtime to target, fund, gauge and pace the training.]
The mission of MAGNET, the Manufacturing Advocacy & Growth Network, is to support, educate and champion manufacturing with the goal of transforming the region’s economy into a powerful, global player.
- Help - the labour market puzzle continues, by Chris Giles, FT.com (blog)
BRITAIN - Official figures show Britain’s economy has contracted by almost 6 per cent this recession; the US economy by only 3.2 per cent. Yet the employment declines have been much smaller in the UK: OECD figures suggest British employment has fallen only 2 per cent , compared with 4.5 per cent in the US. ..UK employment stopped falling around May this year, some seven months ago.
We have blogged frequently on these enormous transatlantic labour market differences. Ralph has explained the European Central Bank’s concern that short-time working schemes in continental Europe explains much of the difference, but that argument does not apply to the UK, where there have been no such schemes.
[- except so-called UK employers' informal "labour hoarding" - see first bullet below - perhaps they're finally realizing they've been cutting their own consumer base via the employment basement.]
Looking at the UK and US together creates a deep puzzle. Both economies are famed for their flexible labour markets. Employment losses have been much smaller than in the US, but measured falls in output have been much larger. This difference cannot yet be explained, but it is consistent with one or more of the following:
* UK employers [who] have been hoarding labour, will be disappointed and are about to engage on an almighty firing episode. The contrary evidence is that surveys of employers do not fit with this picture.
* The output data is wrong. The UK has over-estimated its recession and the US underestimated its downturn. If so, there has not necessarily been a big difference in labour market performance.
* The US recession has been extremely sector specific - predominantly in the labour intensive sectors of construction and autos - while the UK recession has been more general. Again, output data does not support this theory that convincingly.
* The US is gearing up for the mother of all employment gains and rapid recoveries. This is the optimistic US view, as described by David Hale last week.
* The UK’s labour market flexibility has been significantly enhanced by migration from Eastern Europe, which has provided a buffer as unemployment has fallen. Against this theory, today’s labour market figures show the decline in UK employment is almost entirely among those born in the UK. Foreign born employment has hardly fallen.
* Wage flexibility has become the norm in the UK labour market. It is true the annual rise in the average earnings index (excluding bonuses) has fallen from around 3.5 per cent a year to 1.7 per cent a year, but is this sufficient real wage flexibility to explain the difference. I doubt it.
* The UK’s recession has been characterised by many fewer bankruptcies than in past recessions, providing scope for desired labour hoarding, which was not there in previous recessions characterised by a squeeze on corporate cash flows.
As ever, the answer probably lies in a combination of the above and in other reasons. And it matters for the economic outlook, for monetary and for fiscal policy. I am genuinely puzzled. What do you think?
12/15/2009 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 -
- Welch wants short-time compensation program added to jobs bill, by Sam Hemingway, BurlingtonFreePress.com
SOUTH BURLINGTON, Vermont -- Rep. Peter Welch, D-Vt., said Monday he wants a jobs bill now making its way through Congress to include a provision that would encourage struggling employers to temporarily retain workers rather than lay them off.
"We need to be able to find ways to fight another day," Welch said. "The economy is going to turn around, but we can't lose our manufacturers and we can't lose our skilled workers. We need to keep them going so when that economy turns around, we're ready to go."
Welch, appearing at a Burlington International Airport news conference with five Vermont business leaders, said the plan would be modeled after the Short-Time Compensation program in effect in Vermont and 16 other states.
The state program, funded via the unemployment insurance program, has saved 2,000 jobs in Vermont in 2009, according to Welch.
Under the program, the unemployment compensation fund pays for worker hours that otherwise would have been cut, allowing workers to retain their income level. Employers, for their part, are mandated to continue to provide health and pension benefits. It would be limited to a six-month period.
Welch said the program helps maintain economic stability for good workers and saves employers the cost of losing those workers to layoffs and then later having to train a new worker when work conditions improve.
"If an employer is seeing a reduction in revenues because of lower demand in economic times and they want to work with their workers to keep them on the payroll but have shorter hours, the unemployment insurance fund will help make up the difference," Welch said.
Welch said he wants the federal government to pick up the cost of the program and make it available in all 50 states, but does not know what its cost would be. He said he hopes the program could be funded through existing federal stimulus money.
Many state unemployment compensation funds have been exhausted during the current recession. Vermont's fund is expected to be empty by February.
"This program has been very beneficial to us," said Paul Frascoia, president of Fab-Tech Inc. in Colchester. "It has allowed us to maintain a steady staff during the down times and offer benefits to our employees in those down times."
Patricia Moulton-Powden, the state labor commissioner, praised Welch for proposing the idea of making the short-time compensation program part of the jobs bill.
"It's a Vermont idea that should have legs nationally," Moulton-Powden said.
Contact Sam Hemingway at 660-1850 or e-mail at email@example.com.
- Green shoots of recovery - News of a global economic rebound should be met with hope, and caution, by export-dependent countries such as Cambodia, by Kee Beom Kim, PhnomPenhPost.com
PHNOM PENH, Cambodia - HE world economy is showing some encouraging signs of a recovery. For countries like Cambodia, which are export-dependent, this is particularly good news.
But while we have probably avoided another global Great Depression (thanks in part to government stimulus measures), policy makers can’t yet relax. The jobs crisis is far from over and is at least as damaging as the economic downturn that has received more attention.
The International Labour Organisation – the UN agency dealing with work and workplace issues – has just released its latest “World of Work” report, and the findings show clearly how important it is to avoid a premature or ill-conceived exit from such stimulus measures.
Like many economies, Cambodia has been hit severely by the global economic and jobs crisis. The country’s economy grew by more than 10 percent per year between 2004 and 2007, but as the impact of the crisis spread across the globe, Cambodia’s growth slowed. It was 6.7 percent in 2008, and international experts expect it to contract in 2009.
Because of this downturn, tens of thousands of people lost their jobs, particularly in key sectors such as garments, tourism and construction.
In response, Cambodia – like other countries across Asia-Pacific – undertook a range of measures designed to address the labour market impact of the global economic crisis. In other Asian countries, such measures included spending on infrastructure to create jobs, supporting companies with subsidies to allow them to retain or train their employees and strengthening social protection systems such as unemployment insurance.
"Developing nations such as Cambodia are particularly vulnerable to external shocks."
In Cambodia, the response to the crisis included a stimulus package that was targeted to boost spending on infrastructure, social programmes and agriculture. In addition, a tourism policy task force was created with the aim of upgrading the industry and attracting more regional tourists.
Other components of the recovery strategy included reducing the Central Bank’s reserve requirements, to encourage lending, and additional loans and grants to agricultural and related businesses.
But if the economic recovery is under way, why must Cambodia – and others – continue spending hard-earned funds on stimulus measures?
Won’t the employment situation pick up naturally as the economy turns around?
Firstly, around the world, the jobs crisis is much larger than the unemployment figures suggest. In addition to those who are out of work completely, millions of other people are currently on shorter hours or involuntarily working part time. These people risk losing their jobs and sources of income entirely if companies become unviable, governments withdraw support or the economic rebound is not strong or swift enough. Millions more have moved out of necessity into the informal economy, where earnings and productivity are low (and low productivity undermines national economic competitiveness). Such informal economy work is usually not protected by law and frequently lacks social protection. Many times, workers in these kinds of jobs also have problems having their voices heard and being represented in decision-making in the workplace.
Secondly, there is a significant risk that the jobs crisis will have long-lasting negative social and economic implications. Workers without a job could become long-term unemployed or drop out of the labour market entirely.
Surprising as it may seem, this crisis presents Cambodia – and other countries – with an opportunity to improve the social protection system.
Social protection serves many purposes for individuals, business and the state.
If the spending is well-designed, not only can it address immediate needs, but it can also help countries improve their social protection system and cope with future crises.
Developing nations such as Cambodia are particularly vulnerable to external shocks. Steps taken today can pay dividends in the long run. The government’s initiative to develop a national social protection strategy is thus particularly timely.
It is also significant that the ILO and the Kingdom of Cambodia agreed last month on a national Decent Work Country Programme. This three-year programme lays out a cooperation framework and plan of action that aims to help the country recover from the global jobs and economic crisis.
Initially, action will focus on employment creation – particularly for young people and retrenched workers – and social protection. Other areas of work will focus on the garment sector, a critical component of the country’s economy and an important source of jobs and income for many families.
In addition, the ILO will continue to work to ensure that Cambodia and its other member states structure their policies and stimulus measures in line with the approach outlined in the Global Jobs Pact.
The pact, which was adopted by the ILO’s entire membership earlier this year, is designed to ensure that crisis response measures are employment-orientated and support decent work and social protection.
So while we should welcome the green shoots of recovery, we must be conscious that, in Cambodia and elsewhere, they remain fragile, and recovery cannot be complete as long as the jobs crisis continues. An “early exit” from support measures may seem an attractive option, but it could lead to a sluggish recovery process that drags on for years. This is something the women and men in Cambodia looking for a job right now neither want nor need.
Kee Beom Kim is a labour economist with the United Nations’ International Labour Organisation.
12/13-14/2009 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 -
- Initial unemployment claims rise, which could mean some will have trouble with debt, by Lewis Green, 12/13 Credit.com News
Unemployment has played a central role when it comes to the health of the economy and consumer debt relief, with many analysts tying an increase in jobs with a true recovery.
However, the most recent numbers from the U.S. Department of Labor show that initial unemployment claims rose by 17,000 to hit a seasonally-adjusted 474,000 during the first week of December. Longer-term views of unemployment claims were more positive, with the four-week moving average coming in at 473,750, which is down 7,750 from the revised average of 481,500 seen a week before.
The Labor Department also reported that the insured unemployment rate for the last week of November came in at 3.9 percent at a seasonally-adjusted rate. This marks a decline of 0.2 percentage points when compared to the previous week. The four-week moving average for the last week of November more than 5.42 million, which is down from 5.54 million.
The state with the largest decrease of initial claims was California, which reported 28,672. The state attributed the drop to a shorter workweek and a lower number of layoffs in the service industry. Wisconsin posted one of the highest increases at 8,067, which was connected to layoffs in industries like construction, manufacturing and service.
On an even wider basis, the monthly unemployment rate dropped in November to 10 percent after being at 10.2 the month before.
Though the country has seen an increase in its gross domestic product, it still remains to be seen whether that will translate into businesses feeling comfortable enough to hire more people, or at least let go a fewer workers. Along with the housing market, a reduction in consumer's debt could be found through an increase in employment.
- Economy takes toll on holiday giving on Treasure Coast, by Lisa Bolivar, 12/14 Stuart News (subscription) via TCPalm.com
TREASURE COAST, Fla. — Many charities on the Treasure Coast are seeing fewer donations because of the economic downturn.
Various charities are coping with their finances by either limiting their aid tothose in need, or by cutting back on staff hours.
None are meeting increasing demand for services.
Stacey Malinowski, programs director at Mustard Seed Ministries in Port St. Lucie and Fort Pierce, said the agency provides basic social services, is not faring well.
“Financially, I haven’t looked at this quarter, but last quarter we were down $100,000,” Malinowski said. “How do we cope? We buy less food for the pantry; we try to get churches to do more food drives; we don’t pay as much toward (client) utility bills - we pay only half. We have had to cut back on the amount of services we offer.”
Malinowski said that while the ministry has scaled down the amount of aid it can give individuals, so far she has not had to cut staff.
“But we have cut hours,” she said, and no longer allow overtime for staff. She’s also looking for grants to try to make up the difference.
[And Florida does have a state worksharing program.]
In Stuart, things are a bit better at the House of Hope, 2484 S.E. Bonita St., which is holding its own, said Diane Tomasik, communications manager. The nonprofit community service agency has a food pantry, clothes closets, emergency financial assistance and case managers who help people become economically independent and self-reliant.
“Individuals and foundations, even though they may be strapped themselves or their ability to give has been lowered, I think they have prioritized their giving to organizations that are safety net organizations like ours, which we are quite grateful for,” Tomasik said.
An example, she said, would be the Community Foundation for Palm Beach and Martin Counties, which earlier this year created a safety net challenge grant. The new drive helps agencies that address hunger and shelter issues, she said.
“Because we do run food pantries and we do provide emergency financial statements for people to stay in their homes, and we were able to apply for a funding stream that didn’t exist before, all of that has helped,” Tomasik said.
But although House of Hope can help many in Martin County, the numbers of people asking for assistance is up about 80 percent, she said. As of Nov. 30, the agency has helped 598 people that is up from 346 the year before. It has allocated $114,000 so far this year compared to $74,000 in 2008.
The story is about the same in Indian River County where United Way CEO Michael Kint said the agencies he deals with are struggling at best, although there are businesses such as CVS Pharmacy that have donated at higher-than-usual levels.
CVS in Vero Beach had fewer employees this year for its United Way campaign, but donations were up 18 percent, Kint said.
While Kint is seeing varying donation levels, Sharon Thompson at the Salvation Army in St. Lucie County said it has more clients than her agency can handle.
“We have more people than I’ve seen in 30 years of doing this,” Thompson said. “I am seeing more desperate fathers breaking down and crying in my office because they don’t know how to handle this and this is going to all demographic groups, seniors aren’t making it, single parents aren’t making it, and two-parent households aren’t making it.
“What we need is more funding to help meet people’s basic needs,” she said, exasperated. “If I could have $100,000 to start (the year) out with, it would be very nice, but even that wouldn’t last that long.”
HOW YOU CAN HELP
House of Hope: Visit www.hohmartin.org or call (772) 286-4673 for donations, to volunteer or to find a HOH location near you.
Mustard Seed Ministries: Monetary donations, food donations and volunteer help is needed. To find out more call (772) 465-6021.
United Way: St. Lucie County, call ( 772) 464-5300; Martin County, call (772) 220-4472; and Indian River County, call (772) 567-8900.
The Salvation Army: St. Lucie County, call (772) 464-4846; Martin County, call (772) 288-1471; and Indian River County, call (772) 978-0265
- Time to Kill Some Puppies, by Douglas Fraser, 12/13 BBC News via bbc.co.uk/blogs
... An attention-grabbing headline, so no surprise it comes from the Mad Men of the advertising industry - to be precise, one Simon Francis, chief executive of Saatchi and Saatchi's operations in Europe, Middle East and Africa.
He was talking at an Edinburgh Chamber of Commerce event about handling brands, at a time when others in the industry are more rather concerned with steering through recession than building brand loyalty.
More below about the advertising sector in Scotland.
But according to London-based Francis: "It's been really tough.Advertising's one of the first things to get hit. It's easy to turn off, easier than people. It's well documented that the UK market has been spectacularly badly hit, 20% down. Across Europe, it's 14% down year on year, and the year before wasn't great either."
Clients haven't disappeared, but they've changed the nature of their expenditure, he says. Some have spent through recession, particularly market leaders. Some have shifted what they're advertising on; banks on savings rather than loans, others on tactical promotions rather than brand.
The name of Saatchi's approach sounds either a bit hippie or a tad sleazy. It's a "super-evolved brand" called "Lovemarks" - the idea that you've got to take the emotional appeal and link it to the rational in equal measure, creating "loyalty beyond reason".
How that applies to the Labour Party, one of Saatchi's clients going into the general election, is something we've yet to see. Its forerunner, of course, was the Saatchi campaign 30 years ago for the Conservatives and Margaret Thatcher, a ground-breaking approach which put the agency on the advertising and political map, in the same way, according to Francis, that the Obama campaign showed the potential for a digital and online campaign.
The Lovemarks approach is pursued by brainstorming ideas in the agency's many teams across international boundaries, creating large numbers of ideas, and then whittling them down.
Even the most likeable ones have to be subjected to "brutal creativity". Hence that term "let's kill some puppies - we've got to be totally ruthless. We love them all, but you have to kill them to get the best of them".
It's not just recession that's changing the industry, of course.
There's also a technological change, which can be an opportunity.
Clients can save quite a bit on advertising spend if they use free media creatively, with viral marketing through Facebook, Twitter and on blogs.
"Our primary medium is people, and all the other media are a means to promote conversation."
And for those who wonder if the life of the advertising exec is the way it's portrayed in TV's retro chic Mad Men, the answer is: not quite.
But as an industry to work in: "It's never been better. The amount of creative opportunity! You can make films, television shows, create your own digital sites, create widgets and gadgets that they couldn't have conceived. Now is the most creative of all the ages, but perhaps the cocktail parties were more fun then".
You can hear more from Simon Francis in an interview on The Business, Radio Scotland, Sunday 13 December at 10am - also available on iPlayer and podcast.
Creative cuts in Leith
Coincidentally, I was looking at the advertising industry in Scotland this week, and it's not got its troubles to seek.
Much of it clustered in north Edinburgh, it has long operated in the shadow of London - which not only dominates the UK, but has a global role alongside New York.
Two sectors from which Scottish agencies have done well have been pulling back sharply on their spend. Predictably, the departure of Halifax Bank of Scotland's headquarters operation has taken a big client out of Scotland. Royal Bank of Scotland is hardly well placed to fill that gap.
Agencies have also won a lot of work from the public sector, but that is now being sharply reduced.
Finance Secretary John Swinney's draft budget has a 54% cut in the strategic communications budget, much of which is advertising spend on public service messages - encouraging you, for instance, to switch off the lights, use your car less, and to stop binge drinking.
That's a cut from £10.8m to £5m. And that's just the Scottish government. The other parts of the public sector, across quangos, are less obvious in their advertising spend, but there's a lot of it going on, from marketing Scottish tourism to fish, meat, water and Business Gateway.
And with the state of the public finances, that £5.8m cut is expected to be only a small part of the story.
A much bigger advertising spender is the UK government - second only to Proctor and Gamble. While others hacked back at their recession ad spend, the Central Office of Information went on a bit of a splurge.
Recent data from Nielsen shows it put up ad spending by 33% since last year, much of that on smoking and drinking messages, and protection against swine flu.
But that's coming sharply down again. Gordon Brown announced at the start of the week that Whitehall's advertising spend is to be cut by 25%.
The Scottish advertising sector has already lost a significant player in the 1576 agency, which went bust last year. Others have quietly been laying off staff, moving to shorter hours and cutting pay and benefits. Barkers went into administration, with few jobs retained under the new ownership of Penna, while brand design agency Navyblue is one of those to be struggling.
Ken Dixon, of the IPA advertising institute and boss of Newhaven says clients are cutting fees and demanding more for less, but he wants to be upbeat about opportunities. He has told the IPA members things are not going to return to the way they've been, so they have to look outside Scotland for new business.
Ian McAteer, of The Union, says the recession meant nothing happening until August, but it has picked up since then.
However, with the public sector cutting sharply, and the private sector recovery uncertain, he fears another dip in the economy would be "extremely bleak".
12/12/2009 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 -
- Sullivan vetoes funding for arts, libraries - VETOES: Assembly's recent additions for arts, library services fall under the ax, by DON HUNTER, firstname.lastname@example.org, Anchorage Daily News via adn.com
ANCHORAGE, Alaska - Mayor Dan Sullivan on Friday snipped a tad more than $174,000 from the $421.4 million municipal budget passed by the Anchorage Assembly this week, vetoing last-minute additions for arts and cultural service grants and library services.
He let stand about $600,000 in additions included in a compromise package worked out earlier by Assembly members Patrick Flynn and Jennifer Johnston, and another amendment passed Tuesday that restores People Mover bus service next spring on two holidays -- Martin Luther King Jr. Day and Presidents Day -- at a combined cost of about $75,000.
The final budget means the elimination of nearly 200 city jobs. Between 55 and 60 of those are currently filled, Sullivan said, and employees will be laid off in coming weeks.
Sullivan announced the vetoes at an afternoon press conference, targeting a $124,330 appropriation for the additional grants and $50,000 for libraries that would have added hours of operation for branch libraries in Girdwood and Eagle River.
Sullivan said both services already had gotten extra funding in the compromise worked out with Flynn and Johnston, which added $150,000 for the grants and $75,000 for library materials. Flynn earlier said most of that library money will be used to buy books.
The Assembly needs the votes of eight of its 11 members to override vetoes. The $50,000 appropriation for libraries might be restored if the eight members who voted to add it Tuesday stay behind the idea. The extra $124,000 for grants passed with a bare, six-vote majority.
The Assembly sponsors of those amendments, Sheila Selkregg and Matt Claman, said the changes added small amounts of money that could make big differences in the community.
"It's a shame to engage in this kind of struggle," Selkregg said. "I really worry about our capacity to be a wonderful, vibrant city. I don't see that vision anywhere in this budget. What he's demonstrating is he wants to do it his way."
Claman said libraries, arts and bus service got the most support from citizens in three public hearings. The grants to arts and cultural groups make up a small part of their overall budget, but helps them get bigger donations because it shows city support, he said.
"It's a very, very small price to pay in terms of the whole budget, and the benefit is huge," he said.
The original spending plan Sullivan sent to the Assembly in early October totaled about $420.6 million. After the Assembly's amendments, the budget swelled slightly to about $421.4 million. Sullivan's vetoes take the final number to $421,260,249 -- a reduction from the Assembly approved package of .04 percent.
Small numbers in a big budget, Sullivan acknowledged, but he described the additions he vetoed as "piling on."
"Both those categories did get significant increases (in the compromise budget), but we don't agree with adding on even more than we had agreed to," he said.
Sullivan said he was pleased, however, to see the Assembly add back money for bus service on the two holidays. Those cuts were originally made earlier this year as the Assembly wrestled with this year's budget deficit, and Sullivan said he hadn't added the money back into his budget because he didn't think the Assembly was interested in restoring the holiday service.
MORE CUTS LIKELY IN 2011
Sullivan argues that long-term labor contracts approved by the Assembly late last year will add millions in payroll costs each of the next five years. He plans to address that by making big cuts in his first two budgets as mayor, and said again Friday that the budget for 2011 likely will see even deeper cuts than the one just passed.
"We have to remember that everything added this year likely will mean additional cuts next year," Sullivan said. "At some point you just have to draw a line in the sand and say, 'That's a good, balanced, fair budget. Anything beyond this we just really aren't going to accept.' "
Most city unions earlier this year gave up already-approved 3 percent wage increases to help the Assembly and Claman, then acting mayor, close a $17 million deficit, in return for one-year contract extensions. Police and firefighters, for example, said their concessions respectively saved the city $900,000 and $1 million this year, and union leaders have said Sullivan rejected additional savings they've offered.
Leaders of the Anchorage Municipal Employees Association, responding to news reports this week that Sullivan is still interested in talking with unions about shifting most city workers to a shorter, 37.5 hour workweek to save money, said they want to be involved in cost-saving discussions, although they are dubious about Sullivan's revenue projections. They noted that stock markets and the national economy are recovering, and that state officials say they expect oil prices to stabilize.
"City employees want to help with the city's alleged financial problems," AMEA President Mark McKee said in an e-mailed statement. "At this point, we have not been involved in serious discussions with the mayor about the alleged budget problems since earlier this summer. We are learning about the mayor's proposals in the news."
Sullivan needs the agreement of unions to implement the shorter workweek, which carries a 6.25 percent pay cut. The AMEA, the biggest city union, rejected the idea in September.
On Wednesday, the mayor said he hasn't talked to unions about the idea since then, but now that the budget is out of the way, he expects to revisit the workweek and other ideas.
"We really are in the next few weeks (going to) start sitting down and re-engaging them," he said. "There's no intent on our part to try and pressure them or anything. They say they've had lots of ideas come forward, and some of them employee relations is working on."
- Canada's economic engine revs up, driving recovery – and hope, by Susan Krashinsky, Greg Keenan and Jeremy Torobin, Toronto Globe and Mail via theglobeandmail.com
WOODSTOCK, Ont., Canada - A lineup had already formed on the frigid walk outside Woodstock's Community Employment Services office by the time the doors opened at 8:30 a.m. yesterday. Then the phone calls started, almost 200 by the end of the day.
The word was out: Toyota is hiring.
Toyota Motor Manufacturing Canada Inc. said Thursday it will add a second shift, or 800 jobs, at its Woodstock plant, about 144 kilometres southwest of Toronto. It's a small number compared to the scale of the layoffs in the industry – but for the part of the country hardest hit by the downturn in manufacturing, it's a sign that a recovery is under way.
“Everybody just wants to know, ‘How do I apply?'” said career counsellor Karen Oldroyd, who has been coaching applicants. “It gives them a little hope that things are headed in an upward direction. In the last 24 hours, just the buzz is amazing. It's exciting for people.”
Darrell Crane, who was laid off last summer by Ingersoll Fasteners after 24 years, went online within hours of hearing about the Toyota jobs, but had trouble navigating the company's online application. At a resumé workshop at the job centre, he was able to work with other participants to figure out how to apply.
The Toyota openings, he said, are a “hopeful sign.”
Job seekers such as Mr. Crane tell a story few would have believed a year ago: Canada's auto industry is coming back.
In Southern Ontario, the epicentre of Canada's manufacturing meltdown, the announcement that Toyota would double Woodstock's production of the RAV4 crossover utility vehicle by the end of March marked a turning point, a cautious resurrection.
The tentative comeback of the country's automotive industry is already starting to ripple through the manufacturing sector, as parts makers gear up to meet rising demand.
Canada's industrial heartland has been devastated by the auto slump and the broader manufacturing downturn. Vehicle production plunged 31 per cent in Canada from January to November, driving employment in both the assembly and parts industries down to lows not seen since the early 1960s, when the Canada-U.S. auto pact created a common market for vehicle output in North America.
Thousands of jobs have died, partly because of plant closings by U.S. parts makers that have gone through bankruptcy protection.
Now, increases in production by Toyota and by General Motors Co. at its Cami Automotive plant will generate several thousands jobs.
Toyota's original plan was to start with two shifts of production when the plant opened about a year ago, but it began on just a single shift because of the crisis. Now, as it ramps up, it's a bright spot in the manufacturing landscape.
Suppliers to Toyota are already planning for the boost in business. The number of jobs created at suppliers will likely be more than double the 800 the plant is adding, said Toyota Motor Manufacturing Canada president Ray Tanguay.
Seat manufacturer Toyota Boshoku Canada Inc., for example, located about a five-minute drive from the assembly plant, will hire more than 100 workers, adding to the 200 already employed. And about 50 kilometres away in Guelph, Ont., Denso Manufacturing Canada Inc. will hire 20 new employees to make more engine-cooling modules, which contain the radiator, fan and other cooling system parts for RAV4 models. Denso employs about 400 people now.
Woodstock – not to mention Ingersoll, Ont., a bit west along Ontario's automotive artery, Highway 401 – must give Americans much of the credit for the new-found optimism.
U.S. drivers have pumped up their purchases of crossover utility vehicles, which ride and handle better than their sport utility vehicle ancestors and consume less fuel because they're built on a car chassis instead of a truck frame. And in the way the auto maker slices and dices vehicle segments, not just any crossover utility vehicles, but in particular, those that are compact.
Americans bought more compact CUVs last month than pickup trucks. That category includes the RAV4 models that roll out of the Toyota plant in Woodstock and the Chevrolet Equinox and GMC Terrain assembled at Cami.
Compact crossover sales jumped 32 per cent in the United States last month in a market that was flat overall. That segment has grown to more than 1 million vehicles this year. So these are the vehicles that are helping the auto industry in Canada crawl out of the depths of the Great Recession.
Vehicle production in Canada – about 85 per cent goes into the U.S. market – will rise next year from the low levels of 2009, although it will be far from a spectacular jump, Bank of Nova Scotia economist Carlos Gomes said yesterday.
“It's better than creeping, it's certainly not roaring back, but somewhere in between,” Mr. Gomes said.
While Toyota's decision is a sign of the auto industry's comeback, it's also a signal that the worst days may be behind the manufacturing sector, which was hit first by a stronger dollar, which makes Canada's exports more expensive in other countries, and then by a recession that crippled global trade.
Still, economists question whether all 200,000 factory jobs lost in the downturn will ever return. Competitive challenges remain in the auto sector and the broader manufacturing industry, that predate the recession.
“It's confirmation that employment is improving again, but it doesn't necessarily mean that we have solved all of the competitive issues of our manufacturing sector, such as the strong Canadian dollar and the gradual erosion in market share to overseas manufacturers, said Avery Shenfeld, chief economist at CIBC World Markets.
Optional trim Mr. Shenfeld points to Statistics Canada figures showing about 2.3 million factory jobs in 2004, when the Canadian dollar had started to climb from an historical low. By the time the recession hit, that total was down to about 1.95 million. It's now around 1.74 million.
“We might get back half of what we lost in the recession, or maybe a bit more eventually, but we're unlikely to recover even all of those because part of that was still the trend decline we were facing before the recession even began,'' he said. He added that even as Asian auto companies such as Toyota boost their market share in North America they tend to use fewer domestic parts than the Detroit Three plants they're replacing. end trim
Still, sales by Canadian factories in September climbed for the third month in four as new orders reached a high for the year, although Mr. Shenfeld said there will still be more job losses despite the industry and economy having turned a corner.
Woodstock, where officials estimate the unemployment rate runs below the national average at about 8 per cent, is a prime example of what can happen to a region struck by a manufacturing slump. Still, entire plant closures that hit other towns like St. Thomas, Ont., haven't been seen there.
“Over 400 of our members were laid off in the last eight months,” said Ross Gerrie, president of the Canadian Auto Workers union Local 636. “Their unemployment is running out.”
According to Brad Hammond of Woodstock's economic development team, Woodstock has seen layoffs, work sharing, and some small businesses firing up to half of their employees. And unlike slumps of the past, which have generally cut loose younger workers with lower seniority, this time many who lost their jobs are in their 40s and 50s.
Back at the employment workshop, Mr. Crane's resumé skills are a little rusty. Until he was laid off last summer, he worked at Ingersoll Fasteners for 24 years. He'll need to make his application stand out. When the plant opened, Toyota had to wade through an estimated 45,000 resumés just like his, in a climate starved for manufacturing jobs.
The layoffs in the region have hurt businesses that depend on local consumers. The downtown core could certainly stand for some revitalization: while the town has worked hard to preserve its heritage architecture, some of those pretty store fronts are boarded up and vacant.
“The banks, locally, have red-lined our downtown core,” said Woodstock Mayor Michael Harding. “They won't reinvest.”
He believes that's about to change: a new budge hotel, an art gallery and a travel centre are all slated to open soon. Officials hope Toyota's decision will ripple through the rest of the community.
“We're two weeks away from Christmas, and the merchants are nervous,” said Kelly Morrison of the downtown Woodstock Business Improvement Area. “This announcement will help. People will want to spend again.”
As a whole, Canada's manufacturing industry may never return to earlier levels, because companies are learning to do more with less.
Rob Hilborn, president of Darcor Ltd., a company in Toronto that makes high-performance casters and wheels used for anything from automotive tow lines to portable ultrasound machines to props and stages for Cirque de Soleil and Mirvish Productions, said the Toyota announcement is “probably a good indicator'' that things have stopped getting worse.
But he's unlikely to hire back anything close to the 20 per cent of the work force shed in the recession.
“We may add staff as sales increase, but I don't think our staffing levels will ever be to the level they were for the same level of sales,'' he said. “We're going to be shooting for higher revenue per employee than we have in the past.''
- Protesters in Madrid challenge job-market reforms, Agence France-Presse via AFP via google.com/hostednews/afp
MADRID, Spain — Tens of thousands of demonstrators marched in Madrid on Saturday in a protest called by the two main Spanish trades unions against the Socialist government's plans to reform the jobs market.
With the jobless rate running at nearly 18 percent, the UGT and CCOO unions called the march in Madrid to warn Prime Minister Jose Luis Rodriguez Zapatero against going ahead with the proposed changes.
Many of those marching Saturday called for a general strike to resist the government, but that is not an option currently favoured by the main Spanish unions.
Earlier this month, Zapatero suggested that Spain's employers and unions discuss moving towards a reform of the labour market based on the German model.
Germany has introduced a system in which businesses can put their workers on short-time working, with the government carrying much of the financial burden for a two-year period.
[As the next bubble inflates and pops, Deutschland will have to shift this program from temporary to sustainable funding based on a confiscatory tax on overtime profits (relative to hiring more employees) coupled with a complete exemption for reinvestment in overtime-targeted hiring (and training if needed).]
Unemployment there was running at 7.6 percent in November, compared to 17.9 percent in Spain in the third quarter of the year.
But UGT leader Candido Mendez told the demonstrators: "We are in a critical situation, with four million people out of work. The priority is to the fight against unemployment. People first!"
Ignacio Fernandez Toxo, General Secretary of the CCOO, told the daily newspaper El Pais that the march was to serve notice on the government that they should not take short cuts in their bid to create jobs.
"Since the beginning of the crisis, we have resisted the temptation of a structural reform that would lead to... a reduction in workers' rights," he said. "Now we are seeing an increase in pressure in that direction."
12/11/2009 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 (email@example.com) unless otherwise initialed -
- [Continuing orgies of library stories -]
Libraries to make cuts to balance books - With a drop in state funding, programs will be trimmed and staffing changes will be made, the library system's director says, Patriot-News via pennlive.com
Cumberland County's public libraries will have to cut hours and programs while buying fewer books as they wrestle with an $860,000 state funding cut, Jonelle Darr, the library system's executive director, said Thursday.
Darr didn't give the county commissioners specifics on where the ax will fall.
The boards of the seven libraries will announce their cutbacks in three waves -- this month and in January and February, she said.
- Childhood literacy hurt by library budget cuts, letter to editor by William D. Smither of Indianapolis, Indianapolis Star via indystar.com
It is unfortunate that the Beech Grove Public Library has to shorten its hours of operation ("Beech Grove's library to cut hours in 2010," Dec. 6).
What is not being said is that the library will lay off its children's librarian and discontinue the position. As someone who grew up going to that library and who was inspired to become a children's librarian after working there, I find this decision disturbing.
I realize difficult decisions had to be made to deal with current financial struggles, but surely there were better options than removing the only position dedicated to serving children. In a time when many libraries have adopted early literacy as a primary objective, the Beech Grove library has decided that providing quality service to children is less important than other services (like the library's Dining Car Café, for example).
It is a sad day when a library purposely chooses other services over the children of the community. I hope the people of Beech Grove realize what they are losing.
- Working through the recession. by 'Phil on the Hill,' Paris Star via parisstaronline.com
As Canadians continue to face the challenges of the global recession, our Conservative Government is still working to ensure that workers and their families can manage through this difficult time.
Through Canada's Economic Action Plan, our Conservative Government is working to protect vulnerable Canadians whose jobs and security are at risk due to the global recession. Because the challenges are not permanent, our Government has worked to deliver solutions that can provide short-term help to those who need it, while ensuring that future generations aren't saddled with permanent deficits and out-of-control debt.
To give workers some extra protection while they are looking for new jobs, we are extending Employment Insurance benefits by an additional five weeks for the next two years. We are also extending the benefits from forty-five weeks to fifty weeks for the same timeframe. This extension will also help workers facing tough times in finding a new job in this challenging economic situation.
For those Canadians who have lost their jobs, we are taking action to help them gain new skills and train for better, higher paying opportunities. With almost an additional $1 billion over the next two years, we are working with the provinces and territories to expand those programs which have delivered results in the past.
In the midst of the recession, it is important to protect as many Canadian jobs as possible. That's why we are also acting to help keep more Canadians working by extending work-sharing agreements by fourteen weeks to a maximum of 52 weeks. Through work-sharing agreements, companies are able to avoid laying off their skilled employees, and families are saved from the difficulties and stress of losing their jobs.
More recently, we have also taken action to help protect long-tenured workers. These workers, who have been paying into EI for years, are facing unique challenges. That's because they have been continuously employed for many years, and may face more difficulty finding new employment. Through Bill C-50, which is now law, our Government is providing between five and twenty additional weeks of EI benefits.
In addition, our Government has brought forward new legislation that will allow self-employed Canadians, including farmers and small business owners, to have the choice to opt-in to special Employment Insurance benefits. Many organizations have called for this option on behalf of self-employed workers, and our Conservative Government is delivering. In this challenging economic climate, our Government is continuing to give self-employed Canadians the tools they need to succeed.
12/10/2009 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 (firstname.lastname@example.org) unless otherwise initialed -
- Why Work Sharing Wont Work, by James Sherk, Heritage.org via blog.heritage.org
[Can't even spell "won't"? It's amazing to see conventional economists and their followers arguing against common sense - as if you can't split one 40-hour job into two 20-hour jobs. In fact, this genius argues that strategy will result in only one part-time job. Let's see where his thinking stops short - the economic version of creationism... (and note he has NO SOLUTION to offer as a substitute - just a flawed sophistry to criticize the only sustainable non-tax-intensive solution on the table - worksharing alias timesizing, not downsizing).]
With over 15 million Americans out of work Congress is searching for ways to reduce unemployment. The latest idea, put forward by Sen. Jack Reed (D-RI) is “work sharing.” Under work-sharing, companies reduce the hours (and pay) of all their employees instead of laying off some workers and having the remaining employees work normal hours. The government then gives workers a pro-rata share of unemployment insurance payments to partially compensate them for their lost earnings from their lost hours.
Work sharing seems like a simple solution to the unemployment problem.
[And it is.]
Why not encourage companies to share the work that needs to be done instead of forcing some workers into unemployment? It prevents workers job skills from deteriorating and companies from having to retrain new workers when demand picks up. It makes so much sense that several European countries have already tried it. Studies of their experiences show that work sharing perfectly illustrates H.L. Mencken’s point: for every complex problem there is an answer that is clear, simple, and wrong.
Study after study after study shows that European work sharing programs have done nothing to increase employment.
[And exactly what ARE these studies?? Name names. (Funny how they never give the exact citations!) And how were they conducted...? Their flaws are probably pretty obvious to anyone who isn't determined to prove a priori that black is white.]
One study of 16 developed countries found no evidence that work sharing programs created or saved jobs. If anything, the evidence suggests that work sharing slightly reduces the number of workers companies hire.
[Then why are thousands of companies independently cutting hours to save jobs and avoid layoffs? See just the tip of the iceberg on this webpage and its archives. In many cases, the worksharing was a static one-shot thing and we need to keep the workweek fluctuating downward as long as there is excess non-frictional un(der)employment and labor-surplus-depressed wages.]
Sen. Reed wants to save jobs by cutting hours, but instead workers would work shorter hours in fewer jobs.
[Rubbish. If this were true, as we said, why are hundreds of companies a day in the USA and thousands around the world independently cutting hours to save jobs and avoid layoffs? See just the tip of the iceberg on this webpage and its archives. The so-called studies must have started with a strong bias and, wondrous to relate, corroborated their prejudgement. Is James Sherk suggesting we lengthen the workweek to create more jobs?]
Say what? Do not employers have to hire more (or lay off fewer) workers if the rest of their workforce worked less?
[OK, so he's going to trot out the fallacy of the sneer at the Lump of Labor Fallacy (actually the Declining Employment Truism - they can't even name it accurately!]
No. The mistake comes from believing that there is a fixed amount of work in the economy to be divided among workers.
[It is a mistake but in the opposite direction from this superficial thinker - the amount of human work is actually declining in an automating and now, robotizing economy.]
If that were true, then cutting work hours would create more jobs.
[So it IS true because cutting work hours DOES create more jobs and has for 200 years. Otherwise, we'd still have the over-80-hour workweeks of the period prior to 1840. And in every recession, thousands of companies that value their skill set avoid layoffs by cutting hours - by independent invention - - - sounds like creating jobs to us because those jobs are being destroyed in companies that do not cut work hours.]
But the amount of work that can be done in the economy is virtually unlimited. Why? Because human desires are unlimited.
[Two gross fallacies here = (1) the amount of work that CAN be done in the economy does not equate to the amount of work that IS being packaged into available job openings that the un(der)employed can apply for and actually GET NOW.
(2) Unlimited human desires do NOT equate to unlimited employment, because the desires do NOT automatically come with the spending power to satisfy them.]
Samuel Gompers, the founder of the American Federation of Labor, was once asked what his members wanted. He could answer in just one word: “More.” That is true of most people – if someone gave you $20,000 you could probably find a way to spend it. What would you buy? A down payment on a house? A vacation to Rome? More education?
All these things take work to produce. There is always more work to be done. If an individual electrician works 30 hours a week instead of 40, another electrician may work longer hours to pick up the slack. But if all the electricians in a city work fewer hours then electricians will do less electrical wiring, leaving the city poorer.
It does not feel like that in the middle of a recession. With unemployment at 10 percent it feels like the amount of work to do in the economy has fallen. But that is not the case. Rather, the types of work that need to be done are shifting. The housing and financial bubbles have collapsed. Americans want fewer expensive financial products or houses at sky-high prices and more of others goods and services. So the economy is shifting workers out of construction and finance and into new jobs that better serve American’s changed economic desires. Many unemployed workers will take jobs in companies that do not exist yet. They will work hard to produce new goods and services that Americans value. This transition can be prolonged and painful. It certainly is now.
But it is better to let jobs shift in the economy than to have taxpayers pay to encourage companies to cut their employees hours’. When that happens jobs do not increase – less work gets done.
Congress would do better to encourage entrepreneurial risk taking and investment. Unemployment has continued to rise not because of increased job losses but because job creation has fallen. The credit crunch and the risk of higher taxes and expensive regulation from Washington have reduced the incentive for and the ability of entrepreneurs to create the new jobs that unemployed workers would normally find. More entrepreneurship – not working fewer hours – will create jobs and lower unemployment.
- GERMANY: Porsche extends short time working to end March, just-auto.com
Porsche, now 49.9% owned by Volkswagen, on Thursday said it would extend shortened working hours at its main Zuffenhausen plant near Stuttgart until the end of March 2010 "in view of the uncertain sales development on the individual markets".
The company is taking 16 days out of the work schedule for the next three months for about 2,300 employees.
"Thanks to the flexible working-time models, Porsche has been able to compensate for sales fluctuations in production over the last few years," the luxury sportscar and SUV maker said in a statement.
"However, working-time accounts reached the minimum level in [autumn] 2009, so the management board and works council decided to announce shortened working hours for the period of September to December, totaling 18 days of shortened hours.
"The works council [agreed] with [Porsche that no] employees will suffer no financial disadvantages as a result of these shortened hours and this will also apply to the further 16 days of shortened working hours that have now been agreed."
This is the first time since 1995 that Porsche has had to resort to implementing shortened hours, the automaker added.
The Leipzig plant in eastern Germany, which produces the Cayenne SUV and newly launched Panamera luxury sedan, is not affected by the shortened hours.
12/09/2009 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 (email@example.com) unless otherwise initialed -
- Obama faces a difficult dilemma, From staff and wire reports, Jackson Clarion Ledger,Jackson,MS,USA via clarionledger.com
For Terry Cooper, sales manager at Quest Fitness Club in Jackson, hiring employees is entirely dependent upon getting new customers.
When assembling financing for a new location on Mississippi 18, Cooper said it became clear that banks - more than before - were interested in gyms demonstrating they would have steady cash flow from long-term member contracts.
However, with high unemployment, people are less willing to commit to such a perk.
For his and other businesses, hiring new employees is entirely dependent on business growth, a difficult task when consumer confidence and spending are perpetually low.
Business leaders say it's the Catch-22 that has defined the recession and the issue the country will have to overcome to create jobs.
Speaking at the Brookings Institution, a Washington, D.C., think tank, President Barack Obama outlined a job creation and stimulus package without giving a price tag.
"We avoided the depression many feared," Obama said.
[No, you didn't. But your antennae are so sugar-coated, you can't tell that you're still in it and getting deeper daily.]
But, he added, "Our work is far from done."
[And still far from on target with worksharing.]
Obama said the nation must continue to "spend our way out of this recession" until more Americans are back at work."
A major part of his package is new incentives for small businesses, which account for two-thirds of the nation's work force.
Obama proposed a one-year elimination of the capital gains tax on profits from small-business investments and a new tax cut for small businesses that hire in 2010.
"For a tax cut to be factor, you have to be making money," said Trent Mulloy, president of Laurel Machine & Foundry Co. "Nobody is making money. Everybody is trying to break even and keep their heads above water."
Mulloy's company builds and repairs steel equipment for a customer base of largely manufacturing companies. His clients are going out of business or cutting back, so his business has been cut back.
To avoid layoffs, Mulloy's company has cut hours and salaries. In the past 18 months, they've lost 35 through attrition.
Before companies hire, they'll have to be certain they can bring in enough revenue to at least cover the expense of an additional employee, said Ron Aldridge, state director of the National Federation of Independent Business, a trade organization for small businesses.
Obama also proposed an elimination of fees on loans to small businesses, coupled with federal guarantees of those loans through the end of next year.
Businesses, Aldridge said, are facing the additional expense of new regulations from the Department of Labor and the Environmental Protection Agency, and talk of new health care has some worrying about increased expenses.
"At this point in time, you have to establish what the real priority is," Aldridge said, "and the real priority for small businesses is to get this economy back up and running."
Obama didn't say how much his proposals would cost, although congressional Democrats are eyeing a $70 billion package to help create jobs and to provide aid to hard-pressed state and local governments.
Obama also didn't characterize his new proposals as another stimulus program, but Republican critics have called it just that.
"We need to give the private sector confidence with permanent, long-term tax relief and immediate steps to rein in our skyrocketing deficits," said Rep. Tom Price of Georgia.
Obama included sharp criticism for Republicans in his speech, accusing them of opposing economic stimulus efforts and his health care overhaul while supporting tax cuts and spending that have ballooned the deficit.
He said that soon after taking office, he and congressional Democrats took "a series of difficult steps" to try to stabilize the financial system and pull the economy out of a deep recession.
"And we were forced to take those steps largely without the help of an opposition party which, unfortunately, after having presided over the decision-making that led to the crisis, decided to hand it to others to solve."
Obama focused on job creation, noting that the unemployment rate was still at 10 percent in November, though down slightly from its 10.2 percent peak. He said "a staggering" 7 million Americans have lost jobs since the recession began two years ago.
Staff writer LaRaye Brown contributed to this report.
- Canada's Economic Action Plan Helps More Canadians Continue Working Through Work-Sharing, MarketWire.com (press release)
OTTAWA, Canada--Canada's Economic Action Plan is supporting Canadian workers with enhancements to the *Work-sharing program, enabling more Canadians to continue working while companies experience a temporary slowdown.
"Work-Sharing is a win-win for employers and employees," said the Honourable Diane Finley, Minister of Human Resources and Skills Development. "That is why our government's Economic Action Plan makes it easier for Canadian businesses and employees to take advantage of it."
Recognizing the uncertainty facing many businesses during the economic downturn, the Government extended the duration of Work-Sharing agreements to a maximum of 52 weeks until April 2010, increased access to Work-Sharing by providing greater flexibility in the qualifying criteria and streamlined processes for employers. These measures have resulted in a large increase in the number of people benefiting from the Work-Sharing program.
As of November 29, 2009, there were close to 6,000 Work-Sharing agreements nationally, benefiting almost 167,000 Canadians.
Employers in key sectors of the economy, such as forestry and manufacturing, are using Work-Sharing. Many of these businesses across Canada are ending their participation early as they recover and reach normal operations.
Examples of Work-Sharing success stories
In Ontario, there are over 2,800 Work-Sharing agreements with close to 90,000 workers participating. One of these agreements is with Global Upholstery, a major office furniture manufacturer in Toronto, where almost 1,000 employees are benefiting.
Nova Agri Inc.
In Nova Scotia, there are close to 50 Work-Sharing agreements with almost 1,900 workers participating. One of these agreements was with Nova Agri Inc., a farming organization located in Centreville. The company began their agreement in January 2009 and have since returned to normal business activities. At Nova Agri Inc., close to 20 employees were benefiting from the program.
Univeyor BC Ltd. and True North Furniture Co.
In British Columbia, there are over 1,100 Work-Sharing agreements involving more than 18,000 workers. One of these agreements is with Univeyor BC Ltd., a manufacturer specializing in conveyor products and systems in Burnaby. At Univeyor, close to 20 employees have been benefiting since February 2009. There is also an agreement with True North Furniture Co., a manufacturer of solid wood furniture. True North Furniture Co. began a Work-Sharing agreement benefiting 15 employees in March 2009. The company ended their agreement early and all of the employees have returned to normal working hours.
Doepker Industries Ltd.
In Saskatchewan, there are close to 40 Work-Sharing agreements with more than 1,500 workers participating. One of these agreements is with Doepker Industries Ltd., a manufacturer of highway semi-trailers located in Annaheim. At Doepker Industries, close to 50 employees have been benefiting from Work-Sharing since July 2009.
This news release is available in alternative formats upon request.
Work-Sharing is designed to help companies facing a temporary downturn in business avoid layoffs by offering Employment Insurance (EI) Part I income support to workers willing to work a reduced work week while the company recovers. Under Work-Sharing, employers can retain employees and avoid expensive re-hiring and re-training costs. Employees are able to continue working and keep their skills up to date.
The objective of the temporary policy change announced in Canada's Economic Action Plan is to increase access to Work-Sharing during this difficult economic time. Also, extending the duration of Work-Sharing agreements to a total maximum of 52 weeks allows a longer period for companies to recover.
The employer must have been in business in Canada for at least two years and be able to show that the need for reduced hours is temporary and unavoidable-not a cyclical situation. The employer must produce a recovery plan detailing how the company will remain viable during the period of the agreement and recover as the economy strengthens.
To qualify for Work-Sharing, permanent full- and part-time employees must be eligible to receive regular EI benefits. A minimum of two employees is necessary for a Work-Sharing agreement.
More information is available on the following Web site: http://www.servicecanada.gc.ca/eng/work_sharing/index.shtml.
For more information, please contact
Office of Minister Finley
Human Resources and Skills Development Canada
Media Relations Office
- So what should Darling do today? Interviews by Sean O'Grady, Nick Clark, Alistair Dawber and James Thompson, Independent.co.uk
BRITAIN - Alistair Darling [Chancellor of the Exchequer], has to ensure that Britain makes it out of recession while tackling the deficit, and helping Labour to win a fourth term. So what is our diverse jury of experts hoping for from the pre-Budget report?
Jon Moulton, Chairman, Better Capital
The first thing I would like to see in today's pre-Budget report is Alistair Darling's resignation.
As for the other things he might announce, I am more fearful than hopeful.
If there was a Churchillian-style plan to rapidly and radically cut the country's budget deficit and debt, then that would be welcome – but frankly I don't think we're going to see any measures that will alter anything other than the opinion polls.
I expect to see a series of short-term, peripheral measures that will be very hard to judge over the next five years, and by that time the current government will have been thrown out of office anyway by the voters.
What we need instead is a radical plan that will involve a lot of short-term pain [for others but not me], but will see us get through the crisis within a shorter period of time: the Government needs to haul back its spending and its borrowing and needs to encourage more consumer spending to rescue the economy.
I think there is an important moral point to make here, too. With all the debt we in this country have got, we are consuming future production – and that is unfair on generations to come.
Brendan Barber, General secretary, Trades Union Congress
[With typical unionist cluelessness, the union guy is not the one who talks about labor's power issue, worksharing. Dumb & dumber.]
The TUC does recognise that while long-term public debt is not a serious cause for concern, the collapse in tax revenues brought about by the financial crisis and recession has created a rapidly rising annual deficit which is not sustainable or desirable in the longer term.
The TUC rejects the notion that this is a national emergency requiring an urgent response. However, it is vital that government identifies measures to reduce the deficit over the medium to long term. At the heart of such a strategy will be restoring economic growth and thus reviving tax revenues, but we also believe other measures have a key role to play.
There are tax options which could play a key role in deficit reduction. Not all of these options require implementation, but they do show the sorts of choices available, such as a major financial transaction tax (£30bn). The tax due on a transaction of £100,000 would be just £55. Other options are a general anti-avoidance principle (£1bn); a tax relief cap (£10bn); an empty property tax (£5bn); collecting tax by improving HMRC resources (£20bn); and abolishing the Non-Domicile Rule (£3bn).
There are ways of reducing the deficit that have more or less of an impact on ordinary working people – the victims, not instigators, of this crisis.
John Hawksworth, Head of macroeconomics, PricewaterhouseCoopers
The Chancellor needs to put forward realistic economic growth and public borrowing projections and a credible plan for restoring current budget balance by 2015/16.
This plan should include further details on how public spending will be brought under control in the medium term and public sector efficiency improved. Hard choices will have to made on prioritising which spending areas to protect and which to either stop or cut back significantly.
The size of the fiscal deficit means that some big and potentially unpopular tax decisions will also be required in the medium term, and higher green taxes might form part of that package against the backdrop of the Copenhagen summit. But short-term tax rises that might jeopardise the recovery should be guarded against, particularly in areas that could deter business investment and job creation.
In particular, while higher taxes on high earners may appear politically attractive at present, one should note the recent comment in similar circumstances of the Irish Finance Minister, Brian Lenihan. Mr Lenihan warned his nation: "There is no pot of gold that can be raided from the wealthy that can solve our difficulties."
Richard Lambert, Director general, Confederation of British Industry
This is all about credibility and growth. Credibility because the Chancellor needs to set out a realistic path back to fiscal stability – not next week or even next year, but certainly from 2011 on, and we need to restore fiscal balance before the Government's current target of 2017-18. We need measures for growth because without that, restoring the public finances is very difficult. The PBR needs to be skewed towards job creation and investment.
[Then why aren't you talking about workweek reduction and worksharing = Brit. "short-time working"???]
On fiscal policy, we would like to see a tightening by 2015-16, with the emphasis on trimming current spending rather than, as was planned in the last Budget, capital spending. The emphasis should also be on measures to promote private-sector investment and improving our trading performance with the rest of the world.
Recent reports on the NHS, the police and the education system have all suggested much scope for efficiency savings. Some £136bn of savings could be achieved over and above the Treasury's existing efficiency commitments, gradually over a six- or seven-year period, through radically redesigning the delivery of public services and learning from private-sector practice in managing workforce costs and cutting waste.
David Coats, Associate director, The Work Foundation
The Chancellor must have two priorities: minimising the inflow of new claimants on to the unemployment register; and preventing the scarring effects of youth unemployment.
Specific policy proposals we would like to see include the introduction of a short-time working scheme similar to the arrangements that apply in Germany. This has helped to keep German unemployment low and it has been matched by a more ambitious stimulus package than in the UK.
We also favour a one-off expansion of higher eduction places in 2010 so that all suitably qualified applicants are guaranteed a university place. There is an increase in the size of the age cohort in the next year, which will disappear in 2011. We are not calling for a reduction in standards or entry requirements, simply an increase in resources so the grades good enough to secure access in 2007 are the same in 2010.
The job guarantee should be adapted so that an assessment is made at six months over whether a young person will find a job before the 10-month period expires. We would also like an immediate rise in jobseeker's allowance of £10 per week – a symbolic policy change designed to provide more support to the unemployed.
David Frost, Director general, British Chambers of Commerce
There are two simple steps for implementation in the short term. First, extend successful support schemes and promote measures that stoke demand and investment and encourage lending. This should include extending the enterprise finance guarantee scheme that has helped firms during the downturn.
To boost output, the Chancellor should increase the threshold of the annual investment allowance and maintain the temporary first-year capital allowance of 40 per cent. He should also make small business rate relief automatic to ensure more small firms receive the reliefs.
Second, he should clearly outline a credible plan that illustrates how public spending will be pared back over the life of the next parliament, and how the country's finances will be brought under control to prevent our international credit rating from being put at risk. This plan must include freezing the overall public sector pay bill, and reforming public pensions to bring them more into line with the private sector.
In the medium term, the rise in employer National Insurance contributions, planned for 2011, is a tax on jobs and recovery. It should be cancelled. Mr Darling should also maintain investment in vital infrastructure, such as transport, energy and high-speed broadband.
Paul Everitt, Chief executive, Society of Motor Manufacturers and Traders
The success of the scrappage incentive scheme has been crucial to stimulating private demand throughout the
second half of 2009.
It is vital that government does not impose measures that could deter private purchases at this critical time. The SMMT calls for the Government to maintain the reduced 15 per cent VAT rate into 2010 and phase in gradually any increase to avoid a sharp fall in consumer demand; defer the third stage of increases to DVLA first vehicle registration fees; and remove the 3 per cent diesel car penalty in the company car benefit-in-kind calculation.
Government must cut financial and legislative burdens to help generate demand, especially for premium vehicles and in the hard-hit commercial vehicle market. Government should thus encourage commercial vehicle purchases by raising the enhanced writing-down allowance to 60 per cent.
We would also like them to reconsider lifting the expensive car cap (£80,000) in the company car tax regime to remove the stigmatising effect on UK premium products, and to continue consistent and durable incentive programmes for biofuels, ultra-low carbon vehicles and their associated infrastructures.
Brigid Simmonds, Chief executive, British Beer & Pub Association
[Sounds like a fun girl to know!]
We need the Government in the pre-Budget report to make a start on implementing policies that recognise the value of beer and pubs to Britain's economic and social life.
Beer is a vital industry which needs a break, having endured huge tax increases in the past year and a half. When it puts VAT back up in January, the Government should return the beer tax hike it introduced last December, otherwise we are going to see another 6p on a pint of beer, so putting more of Britain's hard-pressed pubs under intense pressure.
This should be just the start of a new approach, which would ease the tax and regulatory burden on one of our great industries and traditions. Ever higher taxes just won't work – there are clear signs that tax revenues from beer have now reached a ceiling.
If we do not see a change of policy, then many more pubs will close and jobs will be lost. Just as they have with post offices, the public is increasingly aware of the impact that government policies are having on thesector, and protesting to government and MPs.
This protest movement will only grow, as more people realise that with fewer and fewer pubs, something special about community life in Britain is being lost.
Miles Templeman, Director general, Institute of Directors
There should be a new fiscal target to reduce public spending to 35 per cent of GDP by 2020-21 via a 10-year real freeze in spending. Canadian experience in the 1990s shows that deep reductions in public spending can be achieved – where there's a will there's a way. Progress towards the 35 per cent of GDP target should be monitored by a new independent fiscal policy committee that would also have a remit to monitor the ring fencing of key productive areas of public spending such as transport, energy and IT infrastructure.
The 35 per cent of GDP target for public spending would allow reductions in direct taxation. As a first step, the main rate of corporation tax should be reduced over the next decade, from 28 to 18 per cent. A 12-month pay freeze, possibly extending to 24 months, across the public sector from 2010-11 onwards would yield an annual saving of around £6bn from 2010-11 onwards. There should also be radical reform of public sector pensions, with a one-third increase in employee contributions to unfunded schemes.
As a nation we face some difficult choices. We either squeeze public spending, taxation and regulation, or all three will squeeze the life out of the economy.
John Dickie, Spokesperson, Child Poverty Action Group
To continue the progress made in reducing child poverty, the Government should increase the minimum wage. Although working tax credit provides a valuable and much- needed financial boost, subsidising low wages via tax credits means that families remain reliant on an inherently complex tax credit system which contributes to financial instability, and allows employers to get away with low pay. The gradual removal of tax credits when parents work longer hours or their pay increases constitutes a disincentive to progress at work. And young workers should receive the same recognition of their contributions in the workplace as adults: the minimum wage should be the same for them as it is for adults.
The Government should also increase the earnings disregarded for means-tested and passported benefits – moving into work triggers the sudden withdrawal of support such as free school meals and free prescriptions, and this means that low-paid workers are often no better off in work than they are on benefits. The abrupt removal of benefits contributes to high rates of in-work poverty and poses a major barrier to employment.
A decade of PBRs [=Public Business Reports? nope, they're Pre-Budget Reports]: From Brown to Darling, those autumn statements remembered
November 2008 Brown goes for broke The battle lines for the election were redrawn as Alistair Darling announced plans to raise taxes for those earning more than £40,000 a year. The Chancellor gambled, abandoning New Labour's pledge not to hike income tax rates, and massively raise borrowing.
October 2007 Boost for thousands of people with second homes Thousands of second-home owners and wealthier individuals were among the winners from Mr Darling's first pre-Budget report, after the Government unveiled plans to slash the rate of capital gains tax from 40 per cent to 18 per cent.
December 2006 Business attacks Brown's tax rises Business reacted with anger as Gordon Brown tightened the screw further on the corporate sector with a series of measures that will raise hundreds of millions of pounds in new taxes. The accountancy firm Deloitte & Touche said the measures would add £500m to the tax burden on business.
December 2005 Industry leaders criticise unchecked spending and 'worrying' borrowing Business groups led by the Conferation of British Industry criticised the pre-Budget report as a "missed opportunity" by Mr Brown, failing to rein in spending and relying too much on higher borrowing and business taxes.
December 2004 Brown taunts the Tories after meeting his growth forecast Mr Brown was able to taunt the Opposition front bench and his critics in the City alike with the news that he had hit his ambitious growth forecast. The Chancellor said gross GDP would come in at 3.25 per cent this year, smack in the middle of the range of 3 to 3.5 per cent that he had set 20 months before.
December 2003 Brown goes deeper into the red Mr Brown moved to prevent further tax increases harming Labour's election prospects by adding an extra £10bn to government borrowing and curbing big increases in council tax. The Chancellor surprised the City by disclosing that borrowing this year would rise from the £27bn he forecast in April to a record £37bn.
December 2002 Chancellor cracks down on tax breaks for bonuses The investment banking sector was dealt a fresh blow in the pre-Budget report, with a clampdown on tax avoidance on big bonuses that was expected to save £435m a year by 2005-06.
November 2001 Brown appeals to heartlands but also tries to keep business sweet Mr Brown appealed directly to Labour's traditional heartlands with a series of pledges on health spending, pensions and jobs while simultaneously seeking to embellish the Government's reputation as a supporter of enterprise.
November 2000 Brown: Everyone must share in the rising prosperity of our nation "We will do nothing to put at risk the economic stability that has given us the lowest unemployment for twenty years, the lowest inflation for 30 years... and a budget discipline that has enabled us to cut borrowing and now invest more every year in hospitals, schools and public services."
November 1999 Public finances: surplus to total £46bn over next four years Mr Brown admitted there would be a little extra in the kitty during the next few years, revising his estimates of likely government revenues compared with March's Budget. But the Chancellor was less optimistic than many forecasters, basing his predictions of future tax revenues on cautious assumptions.
12/08/2009 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 keeps focus on jobs, warns no silver bullet - Obama to discuss modest new plans to boost jobs, by Alister Bull, Reuters.com
WASHINGTON - President Barack Obama, battling a public outcry over double-digit U.S. unemployment, on Tuesday will lay out several new steps to boost jobs and confront a challenge that has hurt his popularity.
Building on a jobs forum and road trip to the industrial heartland last week, Obama is expected to discuss extending aid to cash-strapped states, encouraging energy efficiency by weatherizing buildings and using bank-bailout money for jobs.
However, a deficit-wary White House said that this will not amount to a second stimulus package, implying any price-tag associated with the additional measures will be modest.
"What my speech tomorrow will focus on is the fact that having gotten the financial crisis under control ... our biggest challenge now is making sure that job growth matches up with economic growth," Obama told reporters.
U.S. unemployment dipped slightly to 10 percent last month but Americans remain anxious about the economy, nudging Obama's approval ratings to 50 percent or below and potentially dimming his Democratic party's prospects in mid-term congressional elections next November.
The White House separately said Obama was "not going to unveil the silver bullet idea" on Tuesday, because if there was an easy solution out there, it would have already been done.
Under fire from Republicans for bailouts created when they in fact held the White House, Obama will review using some money previously earmarked for a $700 billion bank rescue fund that has been returned to the public purse.
Obama said that some of the money from the Troubled Asset Relief Program, or TARP, will be used to pay down the record U.S. budget deficit, but he was open to other options.
"The question is, are there selective approaches that are consistent with the original goals of TARP, for example making sure that small businesses are still getting lending, that would be appropriate in accelerating job growth, and I will be addressing that tomorrow," Obama said.
The speech, in Washington, is scheduled for Tuesday at 11:15 a.m. EST (1615 GMT).
The Treasury said on Sunday that TARP will cost U.S. taxpayers about $200 billion less than previously estimated.
Republicans oppose diverting any of this money from deficit reduction, and Obama is aware of the perils of not tackling the country's record budget shortfall, which hit $1.4 trillion in the financial year that ended in September.
Obama told a White House jobs forum on Thursday the best way to cut the deficit in the short-term was to boost jobs and growth, lifting tax revenue and curbing welfare payments. But he also stressed the risk of scaring away investors if the country fails to improve its budget position over time.
Obama signed a $787 billion emergency spending bill in February and is keen to avoid having any additional action tagged as a second stimulus package, not least because two-thirds of this money has still not been spent.
As a result, he is expected to focus on relatively low-cost initiatives that will not significantly add to the deficit.
Beyond exploiting the TARP windfall, the White House is also looking at extending aid to states, which have a gaping $144 billion budget deficit this year and will have to start firing workers like teachers and firefighters unless Washington can find some way to ease their pain.
Renewing unemployment insurance and other welfare support that has already been extended under the emergency stimulus act will be politically hard to resist, with over 15 million Americans out of work and the jobless rate at a 26-year high.
Another idea Obama highlighted at the jobs forum last week was a so-called cash-for-caulkers plan to improve energy efficiency by weatherizing buildings. This recalled the wildly popular cash-for-clunkers deal earlier this year to trade in old gas-guzzling automobiles for new higher mileage rides.
Obama has also mentioned tax incentives to encourage firms to add to payrolls, echoing measures that appear to have helped Germany avoid suffering a steep climb in unemployment despite also going through a severe recession last year.
"I hope he goes for some work-sharing tax credit. The idea is picking up lots of support in Congress. It is hard to envision a quicker way to get unemployment down," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.
(Reporting by Alister Bull; Editing by Cynthia Osterman)
- Spain to Reform Labour Laws, Kyero Spanish Property News via news.kyero.com
The proposed changes which may be modelled after the Germany scheme will include allowing firms to cut costs by reducing their hours instead of making them redundant.
Spanish Prime Minister Jose Luis Rodriguez Zapatero vowed Wednesday to reform to the nation's rigid labour market rules to fight a rising unemployment rate that is already the highest in the eurozone.
He said the proposed changes, which include allowing firms to cut costs by shortening workers' hours but without making them redundant as Germany has done, would be discussed between unions and employers during the first half of next year.
"I think the overhaul of our (economic) growth model requires reforms in all areas of the economy, also in labour relations," Zapatero told parliament.
Under the "short-time working" scheme that Germany’s cabinet extended for a year last month, the state pays up to 67 percent of the salary of a worker whose hours have been reduced for a period of up to two years.
In November, Spanish Economy Minister Elena Salgado said her socialist government would study the Germany model as a possible example to follow in its bid to transform Spain's labour market.
"This is a formula that is not used much which we should discuss," she said at the time when asked if Spain would be willing to adopt the German scheme.
Among the other measures proposed by Zapatero was the introduction of more flexibility for collective wage bargaining and the improvement of job placement services.
Earlier Wednesday the labour ministry announced that the number of people claiming jobless benefits in Spain rose by 60,593, or 1.6 percent, in November, the fourth monthly increase running, to reach 3,868,946.
Spain provides only quarterly data on the unemployment rate but according to the European Union statistics agency Eurostat it stood at 19.3 percent in October, the second highest rate in the 27-nation bloc behind Latvia.
The unemployment rate across the 16 nations that use the euro single currency stood at 9.8 percent in October, while in Germany, the region's biggest economy, the jobless rate fell to 7.5 percent from 7.6 percent in September, according to the agency.
Spain's main business federation argues the government needs to lower the cost of firing workers in order to encourage companies to hire and boost the economy but Zapatero has repeatedly refused to take any steps to reduce workers' rights.
"I firmly believe our commitment should be to strengthen our companies without harming workers," he said Wednesday.
The high cost of firing workers leads Spanish companies to rely heavily on temporary staff, who have far fewer benefits and rights than those on permanent contracts.
During the third quarter more than 25 percent of Spanish workers had a temporary contract compared to 14 percent in 2008 in the entire 27-nation EU according to Eurostat.
"In this country, the burden of the crisis has fallen disproportionately on temporary workers," European Central Bank President Jean-Claude Trichet told a conference in Madrid last week.
"Compensation for those employed on a permanent basis has seen only minor adjustments. Looking into the future, wage flexibility will need to be made more widespread," he added.
Spain's gross domestic product contracted 0.3 percent in the third quarter, its fifth straight quarterly decline, even as the entire eurozone officially joined the United States and Japan in emerging from recession during the same period.
Europe's fifth-biggest economy has proved especially vulnerable to the global credit crunch because growth relied heavily on credit-fuelled domestic demand and a Spanish property boom boosted by easy access to loans that has collapsed.
Story from Expatica
- Economy to remain sluggish: Treasury, by Kim Christian, BrisbaneTimes.com.au, Brisbane,Queensland,Australia
The Australian economy will remain sluggish for at least the next 18 months despite forecasts of above trend growth, a senior Treasury bureaucrat says.
Treasury director of the Domestic Macroeconomic Group Dr David Gruen says the fewer number of hours being worked by Australians could be masking a higher unemployment rate after employers cut hours rather than jobs during the financial crisis.
[Here's some backwards thinking - instead of fewer hours masking higher unemployment, a frozen pretechnology workweek is masking the higher quality of life and greater amounts of financially secure free time, rest, low stress levels and health that Australians would be experiencing if they quit assuming that the 40-hour workweek was given by God on Mt.Sinai as mankind's permanent schedule regardless of worksaving technology.]
Dr Gruen said even if the economy experienced above trend growth next year, it would take time to bridge the gap between GDP growth and trend growth of three per cent.
"The unemployment signal is underestimating the amount of slack in the economy, simply because employers have been able to cut hours rather than jobs," he said after delivering a speech to the Australian Business Economists (ABE) conference in Sydney.
"So, it seems to me, even with these optimistic forecasts of aggregate growth, we're still looking at some amount of slack in the economy for 18 months or so.
"The reason I say that is because we've just gone through a year in which the economy grew by 0.6."
Dr Gruen said it was unlikely that the economy would spring back boldly in 2010.
"You don't just go back to trend growth, you've also got a gap you've got to fill.
"Even if we were to go to above trend growth through 2010, there'll still be slack in the economy for a good 18 months or so, if not longer."
He said his views were based on work being carried out at Treasury.
"But that's an aggregate story, I accept that."
Dr Gruen's comments came after the release of private sector survey on Tuesday that found business confidence had risen to a seven-and-a-half year high in November.
The National Australia Bank's (NBA) monthly business survey showed business confidence rose three index points to plus-19 points in November, its highest level since May 2002.
NAB has upwardly revised its forecasts for economic growth and unemployment due to the ongoing confidence of businesses.
Australian gross domestic product (GDP) is now forecast to be 1.25 per cent in calendar 2009, up from a previous forecast of one per cent, and the economy is expected to grow by 2.75 per cent in 2010, up from 2.5 per cent.
According to the latest official figures, GDP grew by 0.6 per cent in the year to June 30.
In his earlier speech, entitled The Return of Fiscal Policy, Dr Gruen revealed that Treasury modelling during the financial crisis had assumed 70 per cent of fiscal stimulus payments to Australians would be spent, with the remainder being saved.
"This 70 per cent assumption was chosen to accord with empirical evidence on spending out of temporary tax cuts," he said.
"So it is at odds with the permanent income hypothesis which would predict that spending from one-off tax rebates would be spread evenly over consumers' lifetimes rather than largely spent over a couple of years."
12/06-07/2009 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 -
- The Reason for 15 Million Unemployed: Poor Thinking at the Top, op ed by Dean Baker, 12/07 truthout.org
The United States has more than 15 million people unemployed. This is not their fault. It is the fault of really bad policy decisions by people who get paid more than almost all of the unemployed ever did or ever will. The failure of economic policymakers to recognize and attack an $8 trillion housing bubble led to the downturn. The continuing failure of economic policymakers to think creatively is why 15 million people remain unemployed.
The basic problem of unemployment is in fact a very simple one; we don't have enough demand in the economy. The collapse of bubbles in both residential and nonresidential construction led to a falloff in annual construction of close to $700 billion. The disappearance of more than $6 trillion in housing bubble wealth has forced consumers to pare consumption by approximately $500 billion a year. This creates a total shortfall in annual demand of $1.2 trillion.
In the face of inadequate demand, people lose their jobs. There is not enough demand for houses, cars, restaurant meals and thousands of other goods and services to keep everyone employed.
One way to fix the problem is to create more demand. That was the point of the stimulus package passed last February. This helped, but it was nowhere near big enough.
Subtracting out tax accounting measures (the alternative minimum tax fix) and spending to come in 2011 and later, the stimulus was about $300 billion for both 2009 and 2010. The federal stimulus is also being offset by approximately $150 billion in annual budget cuts at the state and local level. This leaves a net stimulus from the government sector of around $150 billion a year. This will not offset a loss in annual demand of $1.2 trillion; it's like trying to fill a swimming pool with five buckets of water.
In principle, the federal government could spend much money on stimulus until it has generated enough demand to get the unemployed back to work. For political reasons, this doesn't seem possible. The deficit fixation in Washington is preventing effective action, just as a balanced budget craze in the '30s forced Roosevelt to cutback the deficit in 1937, throwing the economy into another recession.
If politics makes it impossible to increase the demand for labor, an alternative way to create jobs is through decreasing the supply of labor. Specifically, employers can be given an incentive to cut the hours of their current workforce, while keeping their pay constant. This should then cause them to hire more workers. This is not an untested idea. Germany has used work sharing tax credits to keep its unemployment rate from rising in this downturn, even though its recession has been more severe than ours.
There are proposals for using this sort of work sharing being considered in both houses of Congress at the moment. Sen. Jack Reed (D-Rhode Island) and Rep. Rosa DeLauro have both introduced bills that would build upon work-share programs that already exist in 17 states. These programs allow employers to use unemployment insurance funds to keep workers employed at shorter hours, rather than laying them off and collecting unemployment benefits. These bills would provide additional funding to the existing programs so that they would be more widely used and help the other states establish work-share programs.
Rep. John Conyers has proposed a tax credit that would allow employers to reduce work time, while still maintaining their pay, and thereby creating the demand for more workers. This route has the benefit of allowing employers to try to innovate at their workplace, even if they are not currently planning layoffs, so it could have a much broader impact.
However, it is important to remember that nearly two million workers are still losing their job each month. The jobs' figure that is reported each month is a net figure. It shows how many jobs the economy has gained or loss after adding up all the workers hired or fired. If we reduce the gross monthly job loss figure by 10 percent, or 200,000 workers, it has the same impact on employment as adding 2.4 million jobs. This means that even though the Conyers bill would have a broader impact, even the Reed-DeLauro bills could lead to many more jobs being created.
It is important to realize that work sharing can also have a lasting impact on the structure of work. There have been major efforts by labor unions and women's organizations to make the workplace more family friendly through paid family leave, paid sick days and paid vacation. These work-share programs offer an opportunity to both quickly reduce unemployment and lay a basis for lasting change in this area. Companies can take advantage of these programs to experiment with paid sick days or family leave. If they work, they are likely to leave these policies in place even after the public funding is no longer there.
It is absolutely unacceptable to have 15 million people unemployed just because the people who call the shots are too dumb to figure out how to get them back to work. We got into this mess because the people on top didn't know what they were doing. We shouldn't have to stay here because they still can't figure things out.
In Germany, they are experiencing the recession through short workweeks and longer vacations, rather than mass unemployment. We should be doing the same here.
Dean Baker is the Co-director of the Center for Economic and Policy Research. CEPR's Jobs Byte is published each month upon release of the Bureau of Labor Statistics' employment report.
- Upstate companies seek concrete solutions to jobless problem - Bankrupt benefits fund concerns those businesses trying to keep workers employed, by Jenny Munro, 12/06 Greenville News,Greenville,SC,USA via greenvilleonline.com
Dan Crosby, president of Metrocon, a Pickens County ready-mix concrete plant, believes he's done his part during the recession to keep workers working, but he worries that the state's bankrupt jobless insurance trust fund could cause problems for his and other small businesses down the road.
To date, the company, started by three partners in December 2006, has not laid off any employees although it did cut hours back from 40 hours, he said. But the projects he bids on get fewer and the number of companies bidding for any specific job gets larger.
“I think it's another 12 to 18 months” before an economic recovery really takes hold, he said.
Metrocon, which does mostly residential work but has done some public projects and wants to expand further into commercial work, made a “significant” profit its first year of operation and had a “solid” second year. Then the construction slowdown hit the Upstate.
“High-end residential has really slowed down this year,” he said. But then, “every segment of the residential market has slowed.”
Residential tends to slow before commercial activity is affected, he said. But commercial also has slowed. And some public projects also have been put on hold.
“There's just little out there,” he said.
The way he judges the health of the construction sector is that projects usually draw five to six bidders. Now a project often draws 15 to 25 bidders.
The Associated General Contractors of America said the construction industry in general, not just the concrete sector, has been hit hard by the recession.
“The problems facing the construction industry aren't just devastating construction workers, they are crippling our broader economy,” said Stephen Sandherr, the association's chief executive officer. “Simply put, you can't fix our economy until you fix the construction industry.”
Crosby said the slowdown of projects isn't good, but he's philosophical: “In the long run it will help us prepare better. If we can tighten up now, it will be better down the road.”
(2 of 2)
He's kept his employees working. But he's concerned about how he will be affected by the current unemployment problems.
“Our unemployment now is funded by the federal government,” he said of federal loans to the state Employment Security Commission for unemployment insurance benefits. “Why should I have to pay it back when I haven't contributed to the problem?”
The issue won't resolve itself, said Donald Schunk, research economist with Coastal Carolina University.
“We've got to replenish those funds,” he said, “and there's not many options out there. They've got every right to be concerned. Right now it is very damaging to be raising taxes on businesses when they are not hiring anyone.”
But he said businesses need to plan for higher taxes because that is likely the major way the unemployment insurance fund will be replenished and the federal loans repaid.
Crosby said he agrees that all businesses should pay employment taxes because that's an insurance policy in case they have to lay workers off.
“I don't mind doing my part,” he said. “I do mind companies taking advantage of the system.”
His idea is that how much a company pays to repay the loans and build up the fund should depend on how much an individual company used the system to help with employees it laid off, Crosby said.
Schunk said he expects that groups now considering ways to get the unemployment insurance system back on solid ground are probably looking at just the issues Crosby is concerned about.
Crosby said the real answer could come from legislators working together to find a way of putting people back to work. For example, the state of Missouri has a 1993 law that restricts who can work on public construction projects when the state has “excessive unemployment” — three consecutive months of jobless rates over 5 percent. The law says only Missouri residents and workers from other specified states can work on taxpayer-funded projects.
South Carolina could try that, he said.
Schunk agreed that “the No. 1 way to solve the unemployment insurance fund problem is to create jobs.”
That, however, will be difficult when unemployment remains high — draining the system further — and businesses are faced with higher taxes, he said.
- Federal program to spur job retraining falls flat [as they have set it up - So, they need to fix it - And fast], by Norma Greenaway, Canwest News Service via 12/06 Canada.com
OTTAWA, Ont., Canada — A much-touted federal program designed to encourage auto, manufacturing and other workers to retrain if they are jobless after years of employment is proving a near bust.
[This retraining program is different from the worksharing program discussed in the second half of the article.]
Promoted by the Harper government as a measure that would lure as many as 50,000 people into retraining by early next year, it has attracted only about 6,000 takers so far, according to the government’s own numbers.
Indeed, the government acknowledges in its latest report card on its “economic action plan” that it now anticipates a maximum uptake of 20,000 — less than half of its original estimate — by the time access to the program is cut off in May.
“The program is proving to be a dud as they have set it up,” said Laurell Ritchie, a national representative with the Canadian Auto Workers union. “So, they need to fix it. And fast.”
The program for “long-tenured workers” provides up to two years of Employment Insurance benefits to those registered in authorized training courses on condition that: they were laid off after Jan. 25 of this year; they have worked seven of the last 10 years; and they have not collected more than 35 weeks of EI benefits in the past five years. Those who use part of their severance package on retraining are given earlier access to the EI benefits. The government earmarked $500 million for the initiative.
Ritchie said the program is overly restrictive and leaves thousands of jobless men and women with no chance of qualifying.
A big problem, she said, is that many manufacturing and resource-based jobs were lost in 2008, first to a strong Canadian dollar and later to the economic recession that swept over Canada and the world.
Ritchie said local union offices are being bombarded with complaints from unemployed workers who have discovered their hopes of retraining as a cook, trucker or health-care worker are out the window because they were laid off last year and don’t qualify for the program.
Ritchie praised the EI retraining program for recognizing that people need income support while they learn a new profession or trade. But she said the program must be revamped to allow participation by all jobless workers who are prepared to enrol in approved training, regardless of how long they have worked and when they got laid off.
Human Resources Minister Diane Finley says she wishes the participation was greater, and doesn’t rule out adjustments to the program down the road.
“We’re tracking all of our programs that are there to help people get back to work. And we’re keeping very close tabs on them to see what, if anything, needs to be done next,”
Finley told Canwest News Service.
For now, though, she blames the poor uptake on poor promotion. “Many people who do qualify, unfortunately, aren’t aware of the program,” Finley said.
Finley said the government is writing letters to potential recruits, launching an “awareness” campaign at its Service Canada outlets and working with the provinces to spread the word.
Finley has the reverse problem with one of the other EI programs announced in the government’s economic action plan. It has become wildly popular and industries are already lobbying for a one-year extension to March 2011.
Known as *work sharing, it has been around a long time and helps companies in such sectors as forestry, oil and gas and manufacturing stay afloat in tough economic times by providing EI benefits to top up the wages of employees who work a reduced week.
Under the enhanced program, work-sharing agreements were extended by 14 weeks to 52 weeks, and a requirement was waived that said companies could not have access to the program for 26 weeks after a work-sharing agreement expires.
A total of 225,000 workers have participated in the enhanced program, and officials say they expect spending to exceed the $200 million earmarked for the initiative.
Andrew Casey of the Forest Products Association of Canada said the program is a lifesaver for such businesses as lumber mills because it allows them to keep running at a lower level of production and keep a highly skilled staff instead of having to close down.
The association and the Canadian Manufacturers and Exporters are among groups pressing for an extension.
“If we can just get through this next year, we’re in good shape,” Casey said. “We see the markets rebounding at the end of 2010. Anything that can get us through the period is going to be the perfect thing.”
- Continued economic stimulus measures key for job creation – UN report, 12/07 UN News Centre via un.org
A premature withdrawal of national economic stimulus packages could delay a jobs recovery boon for years and throw 40 million more people worldwide on to welfare, a new United Nations report warned today.
The International Labour Organization (ILO) report also noted that most of the failures of the financial system which lie at the root of the current crisis remain in place, strengthening the argument for continued government economic support.
“Despite some initial signs of economic upturn and because of the significant rise in unemployment and in part time work, support measures should not be withdrawn too early,” said Raymond Torres, an ILO Director and lead author of the World of Work Report 2009: The Global Jobs Crisis and Beyond.
“The global jobs crisis is not over,” said Mr. Torres. “The economic upturn will remain both fragile and incomplete as long as the jobs crisis continues.”
Unless adequate measures are adopted and in some cases continued more than 40 million people could drop out of the labour market, including the long-term unemployed who simply stop looking for a job and new entrants who shift directly to social assistance.
The annual ILO study noted that bringing people back into productive employment sooner would take less out of government coffers than delaying action on job creation, adding that a continuation of fiscal stimulus measures would raise employment by seven per cent compared to an early exit situation.
Employment in countries with high gross domestic product (GDP) per-capita may not return to pre-crisis levels before 2013 unless more decisive measures to fuel job creation, while in emerging and developing countries employment levels may reach pre-crisis levels in 2011, according to the report.
In addition to unemployment, the report found that businesses have retained millions of workers on shorter hours, partial unemployment or involuntary part time with help from government funding, and warned that an estimated 5 million workers are at risk of losing their jobs if that support is taken away.
“Clearly, what we have on our hands is a situation that could become critical in the long–term unless we concentrate on promoting jobs and helping those who have lost theirs,” said Mr. Torres.
The report also analyzes the challenges and opportunities of moving to a greener economy, as well as the risks associated with the increasingly important role of financial markets in the operation of the non-financial sector.
In an analysis of the effects of moving to a “greener economy,” the report suggested that by imposing a levy on carbon dioxide emissions – a measure under discussion at the UN climate conference in Copenhagen – and using the resulting revenues to cut labour taxes, global employment would rise by 0.5 per cent, or 14.3 million new jobs, by 2014.
12/05/2009 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 -
- Study: In Md., working class bears brunt of recession - Most Md. job losses, foreclosures hit lower-, middle-income residents, by Jamie Smith Hopkins, BaltimoreSun.com
Maryland might be holding up better than most states, but the deep national recession walloped rank-and-file workers on the lower end of the pay scale, according to a new report by two groups.
The Progressive Maryland Education Fund and the Maryland Budget & Tax Policy Institute, which both focus on low- and moderate-income families, said in the study issued Friday that these Marylanders "represent the bulk of the job losses and foreclosures." Median wages fell last year for Marylanders without a bachelor's degree, including an 8 percent drop for those with some college education.
"These families are much more likely to be living paycheck-to-paycheck without any savings to cushion a downturn," write the authors of "The State of Working Maryland 2009" report. "For these families, a setback quickly becomes a crisis."
Even as more residents need help, government agencies and nonprofits are less able to provide it because of state budget cuts, the study adds. The Maryland Budget & Tax Policy Institute has called for tax increases to reduce the need for cuts.
Neil Bergsman, director of the institute, said recession-fueled setbacks for workers have ranged from job losses to income reductions as hours are cut back. Maryland's average workweek was just under 35 hours in July - down 9 percent from the beginning of 2008, in the early part of the recession, the report said.
Unemployment, always higher in Maryland's lower-income communities, topped 10 percent in Baltimore City and Dorchester County in September, the report notes. That compared with rates below 5.5 percent in affluent Howard and Montgomery counties.
The state's overall unemployment rate that month was 7.2 percent, much lower than the national rate, 9.8 percent.
Richard P. Clinch, director of economic research at the University of Baltimore's Jacob France Institute, said there's no question that lower- and moderate-income workers are feeling the recession's pinch more than higher-income residents. That's what always happens in a downturn, he said. Even in good times, "the lower your level of educational attainment, the higher your level of unemployment."
The recession that began at the end of 2007 has been particularly rough on blue-collar workers because of steep job losses in construction, part of the fallout from the housing slump, Clinch said.
One upside he sees is that falling home prices make high-cost Maryland more affordable for the working class. But that doesn't help residents who bought during the bubble and have seen their home equity disappear.
Joanna Smith-Ramani, director of the Baltimore CASH Campaign, which offers tax preparation and financial education to lower-income workers, said she's seeing a lot of residents in "deep financial distress."
"People have lost jobs, they've lost health insurance," she said. "They didn't have the flexibility before or didn't make the choice to have an emergency savings account, so they literally have nothing to fall back on."
Even some who saved for a rainy day have run through that money, she said. What they need most of all is for businesses to start adding jobs rather than cutting.
"People are so anxious because they have no clue when it's going to end," Smith-Ramani said. "There's definitely this sense that 'things aren't going to get better for me; I don't know what to do.' "
- Pay cut for two million Britons causes collapse in tax revenue. by Edmund Conway and Andrew Porter, Telegraph.co.uk
Almost two million Britons have accepted pay cuts or reduced hours to stave off unemployment, causing government income tax receipts to collapse by almost one fifth.
The Government is now facing the biggest peacetime deficit in history, and ministers will next week confirm they are likely to borrow close to £180 billion this year – the equivalent of the entire NHS and education budgets combined.
Alistair Darling, the Chancellor, will say in his pre-Budget report that the deficit is higher than expected because income tax receipts have been directly hit by the fall in wages.
Between April and October, the amount the Treasury received in income tax fell by 16 per cent – more than £17 billion – compared with the same period in 2008.
The Treasury calculates that 1.7 million people who might have been made redundant in the recession have been saved from the dole queue by taking a pay cut or shorter hours.
"This wage restraint is the reason why, in bald terms, there has been lower unemployment," one Treasury official said. "But the price we have paid is we have had less money coming in and therefore higher borrowing."
Officials have calculated that in the past year a third of all pay settlements between workers and their companies, affecting up to 10 million employees, were for pay freezes or below-inflation increases of a mere 1 per cent.
This proportion has never been so high: in the years preceding the recession, only one in 50 pay settlements was in that range.
Independent research has shown that, on top of this, around seven per cent of businesses were this year preparing to cut their workers' pay.
In addition to reduced full-time salary agreements, a number of major companies such as BT and KPMG have offered their workers sabbaticals in return for pay cuts.
Mr Darling will cite the shift to "more flexible working" next week as he declares that the Government's policies have helped prevent unemployment – currently 2.5 million or 7.8 per cent of the workforce – from reaching the peaks it did in previous recessions. However, the Treasury still expects unemployment to continue to increase next year.
Yesterday the steelmaker Corus announced that it was to axe 1,700 jobs as it cuts production at its Teesside plant.
John Philpott, of the Chartered Institute of Personnel and Development, one of Britain's leading employment economists, said: "This is a shared pain recession, with the impact of the downturn spread throughout the workforce rather than falling solely on the jobless.
“Although the number of pay freezes will be moderate, it will be a continuing phenomenon right into next year, and perhaps beyond.”
The Chancellor will use Wednesday’s pre-Budget report to give warning that although the economy is expected to start growing again before the end of the year, Britain will this year record its biggest slide in economic output since comparable records began. He will forecast a fall in gross domestic product of 4.75 per cent, and only weak growth of 1.25 per cent next year.
He will risk causing instability in the markets by announcing that, far from drawing up more ambitious plans to cut the deficit as the Treasury had suggested in previous months, he will borrow more this year than originally expected.
But he will take just as long to start paying it back as was laid out earlier this year in the Budget. In a set-piece which is likely to kick off six months of campaigning ahead of next year’s general election, the Chancellor will focus on the extent to which the Government’s policies have prevented a Great Depression in Britain.
He will emphasise that Conservative plans to cut the deficit more dramatically would risk sending the country into a longer-lasting recession.
A spokesman for the Conservatives said the Government’s lack of a credible plan to deal with the deficit “will mean higher taxes and higher interest rates, undermining the recovery”.
The PBR is likely to opt for political positioning over good government,” the spokesman added.
12/04/2009 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 -
- Congress moves to extend jobless benefits , by Tami Luhby, CNNMoney.com via money.cnn.com
Bills would extend deadline for applying for benefits. Without such a measure, more than 3 million people will run out of benefits by end of March.
NEW YORK, N.Y. -- Lawmakers in both the House and Senate introduced bills this week to push the deadline to apply for unemployment benefits to as far back as 2011.
Congress last month passed a record-long extension of federally paid benefits, but the law only helps those who exhaust their lifelines by year's end. So while unemployment benefits now run as long as 99 weeks, depending on the state, not everyone will receive checks for that long a stretch.
If the deadline is not extended beyond Dec. 31, one million jobless Americans will lose their benefits in January. Some three million people will stop receiving checks by March, according to the National Employment Law Project.
Some 9 million people currently depend on jobless benefits. The government reported Friday that 10% of Americans are out of work and more than a third have been unemployed for at least six months.
The House bill to expand the benefits lifeline calls for extending the deadline through March 2011 and would continue the unemployment stimulus provisions, including the $25 boost to weekly checks. It would cost as much as $100 billion.
"If we don't pass this legislation before the end of the year, millions of Americans will have no support next year while they try to find another job," said Rep. Jim McDermott, D-Wash. "This extension is an economic lifeline for these families. We need to give them the help they deserve while they look for work."
Every dollar spent on unemployment benefits translates into $1.63 in economic activity, according to Mark Zandi, chief economist for Moody's Economy.com.
[Presumably via Keynes' "multiplier effect."]
House Democratic leaders said they are likely to push for a bill extending the deadline this month.
The Senate bill, meanwhile, would extend benefits through the end of 2010. It would cost up to $90 billion.
"[I]t is vitally important that families not suffer and the unemployment insurance should be a slam dunk obvious thing to do," said Sen. Sheldon Whitehouse, D-R.I.
Democratic leaders in the Senate said they will work with colleagues to find a way to extend the deadline.
Both bills would also provide temporary federal funding of a program that allows workers whose employers have reduced their hours to collect partial unemployment benefits. The bill calls for the federal government to cover the cost for two years. The House bill would cover the 17 states participating in the program, while the Senate bill would extend it to all 50 states.
"It is a cost-effective, proven job saver that helps businesses retain skilled workers and allows workers to maintain their health insurance and retirement benefits through difficult economic times," said Sen. Jack Reed, D-R.I.
The bills' reception in Congress, however, may not be that warm. Although the November extension passed both houses easily, some lawmakers are not as eager to lengthen the deadline.
Saying he was concerned about making businesses shell out more in federal unemployment taxes, House Minority Leader John Boehner, R-Ohio, said Friday that he would have to look at the details of the bill.
"We want to help those who are seeking work," Boehner said Friday. "But we've got to look pretty closely at - at how you extend unemployment and how you do it fairly."
Unemployment has been the focus in Washington, D.C., this week, with President Obama Thursday huddling with 130 business leaders, economists and others to discuss how to jumpstart hiring. Ideas abound for how to deal with the stubbornly high unemployment rate.
One is to give more assistance to the unemployed. Unless Congress acts quickly, those who run out of their 26 weeks of state-paid coverage in 2010 will not receive any additional benefits. The jobless currently receiving extended federal benefits, which are divided into tiers, will stop getting checks once they complete their tier.
In addition, come Jan. 1, workers will no longer receive the $25 boost in benefits or be able to apply for a 65% subsidy to continue their company health insurance coverage under the Cobra program. These benefits, along with the Dec. 31 deadline, are part of the $787 billion stimulus program passed in February.
- Major funding cut to jobs subsidy scheme, by SUZANNE LYNCH, IrishTimes.com
DUBLIN, Ireland - Funding for the *employment subsidy scheme has been almost halved, to €135 million.
Some €250 million was originally earmarked for the scheme, launched in August as a way to encourage businesses to keep staff.
Under its initial terms, “vulnerable but viable” exporting companies could apply for a subsidy of €9,100 per qualifying employee.
Last month the Tánaiste announced the scheme would be extended to non-exporting companies, following criticism from business groups that the eligibility criteria were too restrictive.
Yesterday the Department of Enterprise, Trade and Employment announced that €65 million would be allocated to the second phase of the scheme, bringing to €135 million the total allocated.
A department spokeswoman said the drop in funding was due to poor take-up of the first phase of the scheme, and that funds may be increased if there was sufficient demand.
The second phase is open to exporting and non-exporting companies that employ more than 10 people.
Unlike the original scheme, the second phase distinguishes between two categories: employees who work 35 hours or more, and those working 21-35 hours per week.
Employers with workers in the first category will receive a subsidy of €9,100, paid over a 12-month period for each subsidised job, while those in the second category will receive €6,370.
Tánaiste Mary Coughlan said the second phase took account of the fact that many firms had cut working hours.
Enterprise Ireland, which administers the scheme, will begin accepting applications from 2pm on Tuesday. The closing date is December 23rd.
Isme, representing small and medium-sized businesses, strongly criticised the details of the scheme, saying it discriminated against firms employing fewer than 10 employees.
The Irish Exporters’ Association was also unhappy. “Spreading the employment subsidy fund to importers and general traders will inevitably dilute the impact of the fund to support the retention of exports, which is the key route to balancing the exchequer and driving the economy out of recession,” its chief executive, John Whelan, said yesterday.
12/03/2009 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 -
- As Obama's jobs summit convenes, pundits offer job-creation ideas, by David Schepp, DailyFinance.com (blog)
When it comes to reducing the nation's historically high unemployment rate, the stakes have never been higher for the Obama administration. With more Americans out of work -- and for longer periods -- jobless workers are understandably anxious about their futures.
Taming that anxiety and finding ways to put more people back to work is at the heart of discussions at Thursday's White House jobs summit. President Barack Obama and members of his administration are meeting with private-sector leaders to hear their ideas about how to get the nation's job-creation engine running again. Ahead of the gathering, a number of experts and pundits have offered up several suggestions for how to address the jobs issue.
First, there's work-sharing, a concept that allows a company to avoid layoffs by reducing the number of days employees work. The arrangement eliminates the need to cut positions and leaves employers in a good position to ramp up business when the economy turns around since they already have trained work force on hand. Seventeen states have some form of work-sharing program, the Associated Press reports.
Germany has successfully used [work]-sharing to keep its national unemployment rate at 7.5%, far below the U.S. level of 10.2%, according to npr.org. (The Labor Department will release fresh data about November's employment picture on Friday. The White House has said it expects the rate to edge higher, while many analysts expect the rate to remain steady.)
To avoid layoffs, the German government subsidizes employers to keep workers on the payroll by reducing their hours and wages, npr.org says. It's an idea that both conservatives and liberals see merit in.
Tax Rebates, TARP Shifts and Access to Credit
Washington can also stimulate job creation by offering tax credits to encourage employers to hire more workers, the website of The Christian Science Monitor says. One estimate says 5 million jobs could be created over the next two years if Congress were to approve legislation that would offer tax refunds of up to 15% of new-wage costs.
Further, csmonitor.com says, more effort is needed to repair channels to get credit flowing to small businesses that broke down last year as the financial crisis escalated. Expanding loan programs could help more entrepreneurs find the funds they need to start new businesses or expand existing ones.
The AFL-CIO suggests that funds from the Troubled Asset Relief Program should be directed away from big banks and given to community banks to use to make loans to small and medium-sized businesses. About half of the $787 billion allocated for the program remains. House Speaker Nancy Pelosi (D-Calif.) would like to see the administration use that money to fund a new jobs-creation initiative, The Wall Street Journal reports online.
While there's no shortage of ideas, there is no guarantee that any of them will work -- especially if the economy slips into a double-dip recession, which Obama and some economists fear may occur if the nation's deficit isn't tamed.
Further, with Congress debating issues as large as health-care insurance reform and ways to combat global warming, businesses may prefer to postpone hiring until the details of those proposals and others are finally hammered out and signed into law.
- Two Roads to Job Creation, by CATHERINE RAMPELL, New York Times via economix.blogs.nytimes.com
President Obama hosted a job summit today in Washington. For the uninitiated, here are two broad, simplified ways to think about what Washington could do to increase hiring opportunities.
(1) Continue to promote growth in economic output, and hope that the increased demand for goods and services will eventually create jobs.
(2) Try to promote job creation even at a given level of economic output.
[Oops, slipped to second place here...]
Many of the stimulus measures the government has taken so far fall under the first strategy. Tax cuts, extensions of unemployment benefits and other policies that give people more money to spend have the effect of raising demand. If companies see demand rising — i.e., they’re getting more orders for their goods and services — they will probably hire more workers to help fill the orders.
In recent months, though, companies have figured out how to do more with less. Productivity has been rising, and companies have filled more orders and made more products with fewer people. If productivity continues to skyrocket, it means that additional economic growth probably won’t have much impact on hiring, at least in the near-term.
The second strategy involves getting more people back to work even if they don’t add much (immediate) value in additional goods and services.
Examples of these types of policies would be some sort of payroll tax credit, which makes it cheaper for companies to hire more people; the companies might then choose to use labor, rather than machinery or other capital goods, to expand. A work-sharing program, in which employers reduce their workers’ weekly hours and pay and governments make up some of the lost wages, would similarly keep more people working without directly stimulating more demand.
Another alternative would be directly creating public sector jobs, along the lines of the Works Progress Administration from the 1930s.
The W.P.A., and subsequent incarnations like the Comprehensive Employment and Training Act in the 1970s, added millions of Americans to the government’s payrolls. In many cases the projects that workers were hired for do actually added economic value (constructing a bridge, say). But in other cases the goal was just to get people working again no matter the immediate market value of their work (such as painting a mural in a public park, which may have cultural value but generally few obvious monetary benefits).
But job creation in and of itself, of course, is not the final goal. The ultimate goal — or hope — is that putting people back to work will allow them to spend more money and boost demand, thereby lifting output, thereby lifting employment, thereby lifting output further, and so on.
[This is the facile assumption that begs to be questioned, and is thoroughly questioned by steady-state economists like Herman Daly.]
In other words, in an ideal world, employment growth and economic growth would feed each other. It’s sort of like one of those executive desk-toy doohickeys with the metal balls, known as a Newton’s cradle. The difference between the two strategies above is which steel ball, employment or output, gets picked up first — and which would produce the most momentum, so that the balls can keep bouncing ad infinitum without any additional intervention from an external force (in this case, the government).
[Note that a Newton's cradle is not growing.]
Traditionally the government seems to emphasize strategy No. 1 — output growth first — with the view that increased demand will help the private sector allocate new jobs where they’re most needed, making any new jobs more sustainable. But to politicians — who, at least in theory, answer to voters and not businesses — the longer the lag between the pickup in demand and the pickup in jobs, the more attractive the second strategy starts to look.
- White House jobs summit: Eight ideas to aid job growth, by Mark Trumbull, Christian Science Monitor via csmonitor.com
For all the focus on healthcare, a different issue ranks more than twice as high on Americans’ priority list: the state of the economy and job market.
That domestic priority comes into focus Thursday with a jobs summit, at which President Obama will solicit ideas on everything from worker retraining to how to create more clean-energy jobs.
The unemployment rate reached double digits in October. Next year, the jobless rate could approach the highest it’s been since World War II – matching the 10.8 percent level reached in the 1982 recession, forecasters say.
In addition to Thursday’s White House jobs forum with business leaders, Democratic leaders in Congress say they’ll be working on a “jobs bill” early in the new year. And Republican lawmakers are warning that the Democratic plans are job killers rather than job creators.
The question is how to translate the goal of employment into reality. “We’re at the bottom” after a deep recession, says James Galbraith, an economist at the University of Texas in Austin. “The risk is that we don’t get off the bottom very soon.”
That is a very real concern. Often after deep recessions, the recovery of consumer spending and jobs has been swift. This time, economists worry that consumers will be held back by record debt levels and the decline in their net worth caused by falling home values.
Adding to the difficulty of a jobs recovery is the depth of the problem. Some 7.3 million jobs have been lost since the recession began in December 2007, and the labor force is growing by more than a million people per year. Yet the biggest year for job creation in the past three decades was 1984, when 4.3 million workers were added to US payrolls.
What can be done to get that kind of jobs rebound? Ideas span from the restrained – based on concern that federal budget deficits are growing dangerously large – to the ambitious:
(1) Just wait, jobs will come back. The first Obama administration stimulus package of $787 billion is still only partly spent. That, plus a nascent consumer recovery, will generate job growth next year, some economists say. And there’s this tough-love recipe for jobs: Let US wage rates adjust downward, so that the demand for labor comes into balance with supply. That’s a process that tends to be slow, however.
(2) Help credit to flow. The Obama administration is working on several fronts to expand lending activity, including through the Small Business Administration’s loan programs. But some economists say more efforts are needed to repair channels of credit that broke down during the recession.
(3) Tax credits. As it did with incentives this year for people to buy cars or houses, Congress may dangle cash in front of employers who hire. The liberal Economic Policy Institute estimates that if the Treasury refunds 15 percent of new wage costs in 2010, and 10 percent in 2011, the result could be 3 million jobs next year and 2 million in 2011. Some experts argue the credit won’t be that successful.
(4) Emphasize tax cuts and free enterprise. On the political right, economists would take the idea of a temporary tax break for hiring a step further. They say business and household confidence will get a bigger boost from permanent reforms to the tax code. This could increase incentives to hire, while reducing the risk that future tax hikes or government borrowing will put a drag on economic activity.
Kevin Hassett of the American Enterprise Institute recommends a permanent cut in the income tax on business, to make the US more competitive with other nations. Others call for elimination of payroll taxes.
(5) Encourage shorter hours so more people can work. If firms keep more people on the payroll, working fewer hours, the decline in income for those workers could be partially offset with payments from the unemployment insurance system.
[Oops, worksharing via shorter hours has slipped to 5th place here, so this commentator's thinking is still five eighths inside the box. The Timesizing program combines #5 here with #6 following.]
(6) If you can’t hire them, train ’em. The 15 million unemployed American workers include many whose old jobs will not come back as the economy recovers. The jobless also include many high-school graduates with limited access to internships or other opportunities. Government-supported training opportunities could help both groups be better prepared after today’s job-drought eases, says Margaret Simms, a researcher at the Urban Institute in Washington.
(7) Provide more aid to states. Obama’s initial stimulus helped reduce layoffs in 2009 by state and local governments. But without additional support, more cuts appear likely in 2010. A job saved is one that doesn’t need to be created.
(8) Create jobs through direct spending. Some economists say fear of deficits is misplaced, and that government should take a much stronger role in job creation. The American Recovery and Reinvestment Act is already boosting spending on infrastructure projects such as roads, but Gary Burtless, a labor expert at the Brookings Institution in Washington, calls for more such spending. The industries hardest hit by job losses include construction and makers of heavy machinery, both of which would benefit.
Another sector ripe for job creation is energy, such as retrofitting homes and buildings to cut heating and electric bills, says Professor [Peter?] Galbraith. The question policymakers should ask is, “How many jobs do you need to create?” he says, not how much it will add to the deficit.
Americans want Washington to do something. “Economy/jobs” is the top priority for 45 percent of Americans, according to a recent CBS News poll, versus about 20 percent for the second-place issue, healthcare.
But polls also show voters are worried about rising federal deficits. In a November survey, members of the National Association for Business Economics ranked US deficits above unemployment as their top concern.
Lawmakers on Capitol Hill appear mindful of this.
“What they’re looking at is trying to help the economy help itself,” says Scott Lilly, a public-finance expert at the Center for American Progress, a left-leaning think tank in Washington. The goal, he says, is “to provide as much stimulus with as little increase in the deficit as possible.”
Given all this, it seems likely that Obama and Congress will end up steering a middle path.
President Obama acknowledged his conundrum in a recent interview on Fox News: “One of the trickiest things we’re doing right now is to, on the one hand, make sure the recovery is supported and … at the same time, making sure that we’re setting up a pathway long term for deficit reduction.”
12/02/2009 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 (email@example.com) unless otherwise initialed -
- AP IMPACT: For White House job summit, 4 ideas, by ADAM GELLER and CHRISTOPHER S. RUGABER, The Associated Press via google.com/hostednews/ap
The question is jobs, but there's no one right answer.
[Yes there is. These reporters are too trapped in the box to know that, but at least they're listing the right answer first on their list of four now, though they haven't quite yet realized that the first answer unfolds into the ink and paper of the list itself.]
When President Barack Obama convenes a jobs summit Thursday, he and all the brainstorming economists and CEOs, small business owners and labor leaders face a dire predicament with no simple solutions.
The nation's unemployment rate has climbed to 10.2 percent, the highest since 1983. Some 15.7 million Americans are out of work. The average jobless worker has been unemployed for more than six months.
Meanwhile, the immediate benefits of the economic stimulus passed by Congress earlier this year are fading. The recession may be over, but analysts say many of the jobs lost in the downturn probably will not return and high unemployment is likely to persist.
But doing nothing is not an option. The Associated Press spoke with a variety of experts, looking for ways to create and preserve jobs. They offer four strategies they say should be in the mix at the jobs summit — hardly an exhaustive list, but certainly a starting point for discussion.
[At last! FIRST on the list! And worksharing programs can be upgraded from temporary to permanent by changing the funding from impacting the unemployment insurance fund to impacting only what we want less of, overtime.]
When home construction fell sharply, orders coming in to Gary Melillo's department at a factory in Cranston, R.I. suffered. Workers at Taco Inc. continued building heating, ventilation and air conditioning equipment to fill the plant's inventory. But if business didn't pick up, it was clear there wouldn't be enough work to go around.
"It would be very scary to be totally laid off," said Melillo, a 25-year veteran of the plant whose wife also works for Taco (pronounced TAKE-o). "That could be a double hit."
Taco wanted to avoid layoffs. If it cut workers who average nearly 18 years on the job, it couldn't be certain of getting them back when business picked up. Training new workers costs time and money. Instead, the company tried a strategy called work-sharing to spread the pain and preserve jobs.
Workers in some departments at Taco were cut back to either a three-day or four-day week. Unemployment insurance covered more than half their lost wages and they kept benefits including health insurance. This year, all Taco's 292 production workers in Rhode Island and Massachusetts have been on work-sharing at some point, cut back to four-day weeks.
"If we had not been able to use the work-sharing program, I believe we would have seen some potential layoffs," said Kyle Adamonis, Taco's senior vice president of human resources.
Rhode Island is battling 12.9 percent unemployment, spurring interest in a program in place since the early 1990s. Employers have used work-share to avert the equivalent of 5,800 layoffs through October, quadrupling the program's rolls from two years ago.
At least 17 states have some version of work-sharing. Some come with bureaucratic requirements that discourage employers and many programs are little known, said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. But broader, more aggressive use of such programs could prevent job losses, which goes hand-in-hand with creating jobs, Baker said.
*A similar strategy has helped cushion the recession's blow in Germany, which is subsidizing the pay of thousands of workers assigned shorter hours. The government's program covers as much as 67 percent of lost pay. By spring of this year, more than 2 million workers were registered for the program. Unemployment in Germany stands at 7.6 percent, down from earlier this year.
Work-sharing's impact has been much more limited in the U.S. But on the production floor, Melillo says, it has provided a sense of relief.
"The work-sharing comes in and helps ease the pain," he says. "I'm still working. That makes me feel good."
[The US elite have given themselves quite a few tax holidays in the last 25-30 years - that means the tax burden falls on their foundations in the consumer base and the employment basement. Again, how many more trillions do you want in your annual deficit (currently $1.4T) and national debt (currently over $10T)?]
Small businesses are a job engine in an expanding economy. But many are just trying to get by now in the face of slumping sales.
To help them avoid laying off workers and encourage them to hire new ones, some business groups are calling for a payroll tax holiday that would give all companies a break from Social Security and Medicare payroll taxes, which total 15 percent.
Half the tax is paid by the employer, the other half by the employee. Suspending the taxes would lower the cost of both existing and new workers while at the same time putting more money in the pockets of employees. That, in turn, could boost consumer spending, which powers about 70 percent of the economy.
"Our membership is saying that their number one problem is lost sales," says Bill Rys, tax counsel for the National Federation of Independent Business. The group has been pushing a payroll tax holiday since last year, and estimates it could cost $300 billion.
A temporary break on payroll taxes would enable small business to keep more of the cash that is still coming in and "eliminate one cost of doing business," he said.
Other economists favor a temporary tax cut targeted only at new hires. Companies that add to their payrolls would get a tax break, equal to perhaps 15 percent of pay for the new hires.
That would provide more "bang for the buck," says Lawrence Katz, a professor at Harvard University, because it would cost taxpayers less than an across-the-board cut. On the other hand, it wouldn't necessarily help companies struggling to keep their current workers, he admits.
A targeted tax cut could be "gamed" by employers, who might lay off some workers, only to hire them back as "new" employees to claim the credit. That can be prevented by requiring employers to increase their total payrolls to benefit, Katz said.
A NEW JOB CORPS
[= Makework. After two years of makework, FDR wished he had got behind the worksharing approach of the Black 30-Hour Work Week Bill and pushed it through Congress back in April 1933 when he had the chance.]
The New Deal programs of the 1930s were, by far, Washington's best known effort to put people directly to work. But the federal government has paid to create jobs more recently and some experts say, drawing on lessons learned, the time is right to try again.
In the early 1970s, Bill Tracy was a novice local official in Jersey City, N.J. The city was strapped and short on police officers when the Nixon administration offered money for states and cities to hire unemployed workers. Tracy pushed to move officers from desk duty to the streets, then used federal money to fill the clerical jobs with the recently jobless. He hired others as unarmed guards for city parks and housing projects, a net gain of about 200 jobs.
The programs started under Nixon were expanded more than threefold under President Jimmy Carter — roughly $4.5 billion in 1978 to fund about 750,000 jobs nationwide.
The hiring went well beyond local police departments. In Portland, Ore., agencies hired unemployed Vietnam veterans, trained them in carpentry and put them to work renovating abandoned homes that were then sold. In Vanderburgh County, Ind., the tax assessor's office used the money to hire people who combed through files of those owing property taxes and then went after evaders.
"This is a pretty effective way to get money into the economy and into the pockets of people so they can do something productive," says Carl Van Horn, director of the Heldrich Center for Workforce Development at Rutgers University.
The Public Service Employment efforts of the late 1970s were not perfect. Critics charged that government money was used for wasteful projects and that the programs were ripe for patronage hiring. There was also concern that those hired would displace better paid workers. Tracy, who went on to direct New Jersey's administration of those programs and is now retired to North Carolina, says some of the criticism was valid.
Waste is inevitable in such a program because it is designed to get money out fast to where it's needed, which limits accountability, he says. But a new program could include better oversight, probably by having states monitor local administration of hiring, he said. Patronage could be limited by setting clear eligibility cutoffs, perhaps requiring that workers hired must have been unemployed for at least six months or a year.
If such a program were put in place, it could very quickly have an impact in areas where unemployment is high, he said.
"This is what we need," Tracy said. "We need it now."
DIRECT AID TO STATES AND CITIES
[Ah, how many trillions more of national debt do you want? You're not satisfied with a $1.4 trillion annual deficit?!?]
With money collected from taxes down and its budget under pressure, the Gary, Ind., school district had to find spending to cut. Nero Lawrence and more than 250 other administrators, teachers and custodians lost their jobs in the fallout.
When Lawrence..was sent home in September, he considered opening his own counseling service. But a couple of weeks later, armed with about $6 million in stimulus money, the district called to offer him a new job. Lawrence returned to work as a "secondary transitional coach" at the Lew Wallace STEM Academy, grades 7-12 program focused on science, technology and engineering. He counsels at-risk students, makes sure they attend school, visits their families at home and does tutoring.
"It put me back in my element," he said. "I can provide the services I was trained to provide."
Other coaches hired with stimulus money work with teachers on improving instructional methods and train them to use new technology.
The pressures Gary faces are far from unique. One of the quickest, most direct ways for the federal government to keep people employed, many economists say, is to help state and local governments close their yawning budget gaps. The recession has sent tax revenue plunging, forcing states and cities to cut workers and services.
It's likely to get worse. The Economic Policy Institute, a liberal think tank, estimates that states and localities face about $330 billion in shortfalls over the next two years. Providing $150 billion in budget relief would save or create more than 1 million jobs, EPI estimates.
Some economists argue the Obama administration's stimulus package has already added jobs in this way. About $40 billion of the stimulus was intended to limit layoffs of teachers. The White House claims that part of the stimulus saved 325,000 jobs.
While some layoffs have taken place, the cuts "would have been substantially worse had it not been" for stimulus funding, says Harry Holzer, an economist at Georgetown University.
In Gary, the city's schools rehired about 45 teachers and staff and added eight new positions after receiving stimulus money, Superintendent Myrtle Campbell says.
"It has helped us a great deal," she said. "We were able to expand the academic day for our students and provide more remedial instruction."
Still, the assistance is only for two years and Campbell, like other school officials, worries about what will happen when the funds run out.
"The student needs will still be there, even if the dollars are not," she said.
AP Business Writer George Frey in Frankfurt contributed to this story.
- Less Bad ADP Data Not Good Job News, by Randall Forsyth, Barron's via blogs.barrons.com
ADP’s Report showed private-sector payrolls shrinking by 169,000 workers, a bit more than the 150,000 predicted by the consensus of economists.
Thus, the ADP data is in line with the November ISM report released yesterday, which showed a slowing rate of improvement in the factory sector.
October’s job cuts were revised down slightly, to 195,000 from 203,000 originally estimated. ADP adds that it expects business to continue to pare payrolls for several more months, extending the string of 34 straight months of job cuts.
Meanwhile, Challenger Gray & Christmas reports the pace of corporate sackings eased for the fourth straight month.
Employers announced 50,349 job cuts in November, 9.6% fewer than October’s 55,679, and down 72% from November 2008’s paroxysm of firings that followed the Lehman collapse, Challenger’s data are not seasonally adjusted.
Which mainly proves that after employers slashed workforces to the bone, there’s hardly anybody left to sack.
Consensus forecasts for the official employment report from the Labor Department call for a cut of 100,000 in non-farm payrolls while the jobless rate is expected to remain unchanged at 10.2%.
But Trim Tabs’ estimate of based on tax receipts is for a much larger drop of 255,000 in payrolls. These tax data don’t count the phantom jobs assumed by government statisticians resulting from the start-ups of small businesses. Nobody pays phantom taxes on these phantom jobs.
Last month’s jobs report shocked the markets and the public as the jobless rate soared past 10% as the result of the household survey showing far more weakness than the establishment survey, from which the payroll data are derived.
Moreover, the broader definition of job weakness—which includes folks working part-time when they want full-time jobs and paychecks and those who have given up looking for work—was 17.5% in October. That’s the real measure of pain in the labor market. And with many workers putting in shorter hours or taking involuntary unpaid days, employers can simply reverse these draconian measures rather than hiring new workers.
[These reporters describe non-dramatic, minimal-impact, job-saving shorter hours and unpaid days off as "draconian" and have no comment on job&market-slashing downsizing after downsizing, mass layoff after mass layoff?! This economy is goin' down deeper and faster until these bubbleheads can manage to figure out which strategy is really extreme and destructive, and which is moderate and conservative.]
- PM arrives in China, unveils economic update, by David Akin, Canwest News Service via MontrealGazette.com
BEIJING — Prime Minister Stephen Harper stepped off a 20-hour plane ride from Ottawa to Beijing Wednesday and the first thing he did on Chinese soil was unveil his government's economic action plan back in Canada.
In a downtown hotel here, Harper said that $28 billion in federal stimulus funds or 97 per cent of what was allocated for the current budget year has now been "committed." More than 12,000 infrastructure projects across the country have been approved and, of those, work on 8,000 has begun. The government says it has created or preserved more than 220,000 jobs, exceeding the target set in the January budget of 190,000 jobs. And all that in just 250 days since the budget passed the House of Commons.
But many in the House of Commons, thousands of kilometres and 13 time zones away, will dispute the prime minister's claims and quarrel with his odd choice of delivering the news to Canadians while he's in China.
"It was a parliamentary resolution that insisted on a report in December," Harper said in answer to his choice of location. "If you look at the schedule the timing didn't permit me to do this before or after this trip."
Harper was in Trinidad and Tobago at the Commonwealth leaders summit on the weekend and, after visiting China this week, will touch down in Seoul, South Korea next Monday before returning to Ottawa on Wednesday. He has said that he will travel to Copenhagen for the climate change summit and, while his office has yet to confirm the date, he's expected in Denmark in the middle of the month.
"The economy remains our No. 1 priority wherever we are in the world and I didn't want to miss the opportunity to comment on what I think is an important milestone in the implementation of our economic action plan," Harper said.
Liberal MP John McCallum said the decision by Harper to release the update from China shows that the Conservatives are embarrassed by their failures.
"Conservatives are clearly embarrassed by (the Ottawa Citizen) story, based on government's own numbers, showing that as of Sept. 22 construction had started on only seven per cent of projects funded by the $4-billion Infrastructure Stimulus Fund," McCallum said. "Today, they say that 97 per cent of the money under this fund has been committed . . . A commitment does not mean that one shovel is in the ground or one job created or saved."
Finance Minister Jim Flaherty had a previously scheduled press conference in Winnipeg Wednesday afternoon to release the update.
The opposition continues to argue that infrastructure money intended to help resuscitate the economy has, in fact, been slow to get out the door and, in many cases, when it has been spent, it has been spent disproportionately to help communities in Conservative-held ridings.
When the federal government says, as it does several times in the most recent update, that it has "committed" 97 per cent of its stimulus funds, it means that the federal government has agreed to help fund a project proposed by city or a province but that does not necessarily mean any money has actually been spent yet creating jobs.
The government does say, however, that, according to Department of Finance estimates, 70 per cent of this year's stimulus money is "flowing" in the economy, the term used in Ottawa to describe funds that are actually being spent.
That 70 per cent includes big-ticket items such tax breaks and boosts to unemployment insurance benefits.
The quarterly updates are a creation of the opposition Liberals, who insisted on getting status updates on the implementation of the government's spending plan every three months as their condition for supporting last January's budget.
Among other things, the government says that 167,000 Canadians are enrolled in work-sharing programs, "preserving jobs that would otherwise be lost."
"The government is implementing Canada's economic action plan as quickly as possible, balancing effective stewardship of taxpayer dollars with speed of implementation," the government says in the 168-page quarterly update.
This update, though, contains explicit warnings to provinces, municipalities and other partners that deadlines to apply for and receive federal funding are fast approaching and that any funds not claimed by the end of January will not be given out.
So far, about $400 million in federal funding has yet to be "claimed" by provinces for new infrastructure spending.
While the deadlines are not new, the government, by reminding provincial partners about them, is underlining its intention to make sure the stimulus programs are temporary measures that should expire as the recovery strengthens.
The fourth quarter report also maintains earlier budget deficit projections of $55.9 billion this year, $27.4 billion within two years and less than $5 billion by 2014.
12/01/2009 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 -
- Engel: Machine manufacturer ends short-time working early, Plastics Information Europe,Bad Homburg,Germany via Plasteurope.com
Injection moulding machine manufacturer Engel (Schwertberg / Austria; www.engelglobal.com) will end short-time working at all its Austrian sites earlier than planned, on 1 December 2009. The company says it can take the step before year’s end because of its improved order book situation as well as a sequence of support measures such as the scrappage incentive, leasing offers and supplier credit.
Originally, Engel had intended to keep short-time working – which began in April 2009 – in place until March 2010.
- German November Jobless Falls as Economic Recovery Broadens, by Brian Parkin and Christian Vits, Bloomberg.com
German November Jobless Falls as Recovery Widens (Update1)
German unemployment fell in November as government measures discouraged firings and the economy recovered from the recession.
The number of people out of work fell a seasonally adjusted 7,000 to 3.42 million, the Nuremberg-based Federal Labor Agency said today. The jobless rate declined to 8.1 percent in November from 8.2 percent the previous month.
Germany’s economy, Europe’s largest, pulled out of recession in the second quarter and grew 0.7 percent in the third quarter. The Ifo institute’s business confidence index increased more than economists forecast to a 15-month high in November, suggesting the recovery may gather pace next year.
“Even if economic growth is weak, unemployment will continue to fall at a slow, progressive rate, helped by expanding orders and a generous labor-market subsidy,” said Francisco Vidal, a Madrid-based economist who monitors international labor developments for Intermoney Valores SV SA. Small and medium companies “weathered the lean months” and are “not likely to drop staff as recovery broadens,” Vidal said.
The decline in unemployment comes as the government steps up efforts to help spur economic recovery. Chancellor Angela Merkel’s Cabinet agreed on Nov. 25 to extend its so-called short-[time] work program for a year from January, allowing companies such as Volkswagen AG to continue tapping federal aid to help pay wages. Companies can file for help from the 5 billion-euro ($7.5 billion) plan, which tops up pay for people working shorter hours when orders dwindle.
Economists including Nobel Prize-winner Paul Krugman credit the subsidies with helping damp unemployment during the worst recession since World War II.
Those subsidies, allied to “a skilled-labor shortage, stimulus programs and demographics are keeping unemployment from taking off,” said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. “Historically speaking, we should have seen recessionary unemployment soar in 2009 -- it didn’t happen.”
Economists had forecast that unemployment would increase by 5,000 in November, according to the median of 32 estimates in a Bloomberg News survey. Excluding statistical changes, unemployment rose 10,000 in November, the Labor Agency said.
Frank-Juergen Weise, Labor Agency head, told reporters in Nuremberg that unemployment is set to rise in the coming months.
New Year Rise
“We expect a slight increase in December, with the main increase coming in January and February,” Weise said. Unemployed usually rises by about 250,000 in winter for seasonal reasons, he said.
Germany’s recovery may lose momentum as fears over job security curb consumer spending, the Berlin-based Finance Ministry said on Nov. 20.
“The crisis isn’t over,” Merkel said in her weekly video message posted on her Web site Nov. 28. “We’ll feel the effects, particularly on the labor market, in the coming months.”
The government plans to cut taxes by about 20 billion euros ($30 billion) in January and by the same amount in 2011 to boost growth.
[This will work only if they cut sales taxes and increase graduated income taxes. Decreasing graduated income taxes actually cuts growth, because it funnels more of the national income out of the consumer base to the upper brackets where it changes from spending power into investing power - and when there's nothing to invest in, into the "savings rate."]
Merkel will hold a summit tomorrow with industry and bank federation chiefs to unlock a credit squeeze that she’s said threatens the recovery.
At the same time, a 115 billion-euro fund to provide loans and guarantee for companies suffering as a result of the economic and financial crisis will continue to run through 2010, as will an 85-billion euro infrastructure program.
“These program[s] could well stave off the long-feared rise in unemployment if push came to shove,” said Bielmeier.
[Not really. The only program that will do that is the Kurzarbeit program, especially if it converted to a permanent basis.]
According to the latest comparable figures published by the Organization for Economic Cooperation and Development, Germany’s jobless rate stayed unchanged at 7.6 percent in September. The unemployment rate was 10 percent in France and 9.8 percent in the U.S.
To contact the reporter on this story: Brian Parkin in Berlin at email@example.com; Christian Vits at firstname.lastname@example.org
Last Updated: December 1, 2009 04:59 EST
- [But now the knives come out for the German unemployment rate and worksharing solution -]
German Jobs Data: Not as Good as It Looks? SeekingAlpha.com (blog)
Germany reported Tuesday that November unemployment fell 7k instead of rising 5-10k as the market expected. This is the fifth consecutive month that the number of unemployed has fallen in Germany, offering a stark contrast to the US jobs picture, where another net 125k are expected to have lost their jobs last month.
But does it?
[Does what what? This guy needs somebody to proofread his stuff before he hits the Send button.]
There are two drivers behind German labor market developments.
The first applies strictly to today's report. There was a one-off change in methodology of calculating the unemployed totals. The German Labor Office says that without this change unemployment would have risen by 10k.
The second is a government subsidized scheme that encourages employers to cut hours but not jobs. In effect, a business pays an employee for the hours worked, and these could be cut to half time. The government grants an allowance to make up the bulk of the difference. In essence, an employee can draw roughly 80% of his/her salary and work half the time.
The Labor Office says this program, which has local variations in a number of other European countries, including the Netherlands and Austria, saved 400k jobs. The latest figures we found were from September and show about 1.05 million German workers participating in this scheme, which also gives employers a tax incentive to participate.
Prior to the onset of the crisis, Kurzarbeit, as the scheme is called, could subsidize a cut in hours for six months. But near mid-2009 the program was extended for up to 24 months, until the end of the year. However, last week, the Labor and Social Affairs Minister, Dr. Franz Josef Jung, announced that the 24-month subsidy would be extended until June 2011. That means that it is possible for a worker that joins the scheme in June 2011 to still be subsidized until June 2013.
There are a number of benefits from the program. It socializes and shares the costs. It preserves the important relationships between employer and employees. It also help preserve aggregate demand by maintaining to a greater extent purchasing power of the employee (they can still consume even if not working full time).
The drawback of the program becomes more evident the more protracted the economic downturn is and the longer it take to return to sufficient strength to boost hours worked. In addition, not all jobs may lend themselves to shorter hours or what is in effect job sharing. The skeptics will also say that this simply delays but does not solve the labor market problems.
On the other hand, it shows a kind of flexibility in the labor market that, while different than the flexibility of the US labor market, may produce better economic results in at least the short-term.
- [And the knives come out for US worksharing plans -]
Son of Stimulus Set to Attack American Economy - Son of Stimulus is likely to be as big a disaster as its parent, by Daniel Greenfield, CanadaFreePress.com
Even as the health care debate continues to rage, Democrats have their hearts set on countering their disastrous ratings and the loss of the independent voter by rolling out a job creation package, or Son of Stimulus Plan. There are no clear plans yet, but the ones floating around as preliminary ideas are bad enough on their own.
With price tags going as high as 1.2 trillion dollars and various gimmicks being trotted out to hide their cost and avoid blame for inflating the already massive deficit further, the Son of Stimulus is likely to be as big a disaster as its parent.
Take House Democratic leader Steny Hoyer’s plan to pay for a job creation plan with a financial transactions tax. Not only would this plan help push investors out of the US stock market, at a time when the market is already in bad shape, but it would weigh down the stock market thereby preventing companies from expanding and going public. Which naturally would crush the very same job creation congressional Democrats claim to want.
After spending taxpayer money to bailout Wall Street, and now that the Dow Jones has hardly passed the 10,000 mark, congress now wants to abort the recovery by taxing Wall Street for their job creating programs. Which will help push the Dow Jones back down and perhaps allow for a second bailout of Wall Street. Which will naturally outrage taxpayers even further, leading to another attempt to tax Wall Street. That is the kind of economy lunacy that governs the thinking of Washington D.C., mixing the worst of socialism and corporate welfare into one indigestible stew.
Hoyer is promising that the bill would include extended unemployment benefits, which is fitting enough since the bill itself would help perpetuate unemployment by killing job growth. That same paradox lies behind virtually all of the Democratic job creation plans, which is that they involve taking money out of the economy, lowering the value of the dollar further or bulking up the national debt- conditions which would in turn backfire on the very people they’re claiming to want to help.
Meanwhile New York Times columnist Paul Krugman, the economic court jester of the Democratic party, is agitating for a jobs creation plan that does not offer any tax cuts but instead provides aids to local governments to cover their gaps combined with a low paying public works program. Krugman, who favors enlarging the deficit, doesn’t even bother trying to explain how this will be paid for. A variation on Krugman’s reboot of the WPA is a work sharing proposal that would essentially also mean having the government directly subsidize jobs. The problem with both approaches is that they don’t actually involve real job creation, but a dressed up form of public assistance, no fundamentally different than the able bodied welfare recipients who are expected to do some work in exchange for being on the dole.
But it all comes down to government welfare programs, rather than job creation. Job creation involves creating actual private sector jobs, in contrast to the government maintaining artificial jobs which will vanish the moment the funding for them does. Furthermore since the money to fund such job welfare programs will itself help damage the economy further, this is yet another type of job creation plan that will undermine the ability to create genuine jobs. And additionally work sharing drags us closer to socialism, with the government deciding which jobs to subsidize, thus propping up some businesses at the expense of others.
House Speaker Nancy Pelosi meanwhile has gone back to making the argument that the only way to cut the deficit, is by spending more money on job creation programs, never mind the fact that the last stimulus failed to create any actual jobs, but did succeed in bulking up the deficit. This time the plan can’t fail. Pelosi is trying to win back the working class by talking up infrastructure projects, but considering that the last stimulus plan had its infrastructure projects gutted to, in the words of Obama’s economic advisor Robert Reich, avoid giving jobs “to high skilled people who are already professionals or to white male construction workers”. Instead the money was funneled into more social services spending, which helped lead to the He-Cession. This was in keeping with the ruthlessly partisan approach that characterizes everything the Obama administration does, and mandated that what few jobs there were, would go to Obama’s own base. The result has helped lead the backlash among swing voters away from Obama and against the Stimulus Plan.
But Obama and his congressional cronies have no real answer, because their plans are all focused on using government spending as a tool, rather than realizing that government spending is the problem, not the solution. Since most of the job creation plans involve spending more money, the result would not be jobs created, so much as government subsidies and more social services spending that would place a band aid on unemployment, while helping perpetuate the economic conditions that cause unemployment. Tax cuts, damned for their association with the Bush Administration and for running counterintuitive to the socialist premise that government action is the solution, rather than government inaction, are hardly heard from.
There is some talk of a hiring tax credit, but it is not only widely opposed by congressional democrats who are allergic to any talk of tax cuts, but follows the rigid socialist pattern of attempting to tightly control business to get the results they want, rather than understanding that human economic behavior is not a Stalinist puppet show in which you can pull a string and create jobs. A hiring tax credit would certainly create more jobs than anything and everything that Obama has done until now, but that is faint praise at best. Mainly what a hiring tax would accomplish is to allow Obama to take credit for every business that chose to hire a worker and receive a hiring tax credit, regardless of whether or not the business hired a worker because of the credit, or because it needed to hire said worker anyway. A year from now Obama would be able to claim to have saved a million jobs, if the government hands out a million hiring tax credits to every pizzeria that decided it needed to hire an extra delivery boy on weekends.
And above it all, Obama’s union backers who helped dictate his auto bailouts and health care plan are breathing down his neck. Union officials will be prominently in place at Obama’s jobs summit, which is likely to be an amen chorus backing Son of Stimulus and shaping it into another giant boondoggle of pork and money used to save union featherbedding. But Congressional Democrats have failed to realize that another extension of unemployment benefits and a few hundred billion more lavished on state governments such as California which have created their own financial disasters by kowtowing to unions may make for some cheerful headlines, but will not improve the situation of those same Americans who have turned against them.
Nor will using various gimmicks to hide the cost of the spending by spreading it across different years or pretending to pay for it out of money saved from absolutely nothing, disguise the inevitable fact that Son of Stimulus, by the time it goes through both the House of Representatives and the Senate, will be another monstrous spending plan with nothing to show for it.
Furthermore Pelosi is wrong when she claims that Americans will willingly accept a higher deficit that they will have to pay off, in order to get a few WPA or workshared jobs. Many Americans who have jobs have turned against Obama and Congress because of their fiscal irresponsibility, rather than simply because they haven’t gotten their share of the pie. Congress may be incapable of simple math, but millions of Americans who run their own businesses are well aware of the consequences of out of control spending as Democratic politicians act like they have an unlimited American Express card from the Bank of China.
For hacks like Pelosi the only possible reason for public dissatisfaction is because they haven’t seen their share of the pork. But Pelosi can’t see past her own pork-centered attitude to realize that Americans increasingly want fiscal responsibility from their government, at a time when they themselves have to tighten their belts. Instead what they see is a line of pigs slurping uncontrollably from the trough and on hearing of their anger, they wipe a little of the mud off their faces and offer them a slurp too.
Independent voters who are particularly hard to fit into the interest groups that Democrats are so good at rewarding, are the least likely to fall for Son of Stimulus, and the most likely to be further alienated by a Congress and Administration that shows itself to be completely incapable of changing its ways. It is not a question of pork, but of responsibility and accountability. Obama promised voters the most transparent administration ever, only to provide an administration of czars and a complex tangle clashing figures. The Democrats promised a congress focused on fixing the economy, yet everything they’ve done has only hurt the economy more. Obama and his spin artists have cynically tried to disguise that by claiming that their deficit spending actually averted a depression, an evidenceless claim, and by bandying about completely fraudulent numbers of jobs saved. What all this adds up to is blatant irresponsibility, the same kind of irresponsibility that the people now in charge in Washington D.C. worked hard to charge Bush and the Republican congress with, only to be found guilty of it themselves by the very people who helped elect them.
As it stands now any jobs creation plan is likely to once again cross the gap between conservative democrats from districts that want to see more fiscal responsibility from the government, up against left wing democrats backed by unions and the Congressional Black Caucus who want to see a Son of Stimulus plan that’s even bigger and more wasteful than what came before it, with money directed into social spending, swelling the state and federal bureaucracies and of course subsidizing union jobs. And with Pelosi and Obama at the helm, after some token protests by Democrats from American working class districts, they will probably win.
Obama and Congress think that focusing on jobs is the key to raising their numbers, but while it might bring back some straying Democratic voters, it will not actually save them in the polls, nor will it actually create jobs. That is because the source of the problem cannot become the solution until it recognizes that it is the problem. Obama and Congress are the problem. And while Obama and Congress may be incapable of recognizing that they are the problem, more and more Americans are coming to just that conclusion.
Daniel Greenfield is a New York City based writer and freelance commentator. “Daniel comments on political affairs with a special focus on the War on Terror and the rising threat to Western Civilization. He maintains a blog at Sultanknish.blogspot.com.
Daniel can be reached at: email@example.com
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