About The Economy? (FALC)

[ikarl]

This explains that bit awesomely...

http://www.slate.com/id/1937/

that explains it very well to me.........never thought about it like that

[BiggestNizzy]

There is a shortage of skilled machinists in the country. Oil and gas sub contracting is actually good well at the momment (makes a nice change). This causes problems for us in subcontracting as there are no skilled men out there due in part to a lack of apprentiships in the 80's and 90's (if you have CNC machining experience especially Mazatrol pop your CV in) and this is what has driven my pay rise.

Our closest rival has been forced to increase wages by a greater amount as it has a bit of a reputation as a hire and fire shop.

[Noops]

This explains that bit awesomely...

http://www.slate.com/id/1937/

that explains it very well to me.........never thought about it like that

This explains that bit awesomely...
It does

[max1966]

As an Architect, self employed effectively since the mid 90's, there have been fluctuations in workload both up and now very much down in the construction industry.

If you followed the link to the Baby sitting analogy above and noted the posted article date none of this is really new anyway. Perhaps it's new for 'us' but the phenomenon of stasis in the economy revealed itself in Japan around the end of the 80's. People realised that they didn't need to keep borrowing money to move forward in life and perhaps there was no room to keep expanding their homes to fill full of stuff.

The older generations at the time started saving and borrowing went through the floor as did spending. What has happened this time around is that borrowing has been curtailed by the banks who had overlent, folks are rightly concerned, borrow nothing and spend less. How many are trying to reduce the capital in their mortgages at the moment? This was money we were spending, driving the economy and fueling lending.

This has happened at business and corporate levels also. There is very little commercial building work around because of the lack of confidence and the availability of finance.

I watched this the other day, Money as Debt.

http://vimeo.com/2244372

It's a little long but worth a watch through to explain why borrowing is such a vital aspect of our economies. The quotes and stats are worth paying attention to and one comment which remains in my mind is that the 30's depression was brought about by a 29% reduction in lending stiffling the economy and the flow of money. Also note the Presidents who highlighted these financial failings and met untimely deaths. Breaking the cycle of debt looks impossible, continuing along this path is the only course of action and futile.

One of the most frequent comments in the news is the 'standard of living'. Now quoted as being the same as 2003? If that is the worst of it fair enough. Think back to your childhood, two cars, holidays abroad, all the latest tech? not in my experience. There is no entitlement to an ever increasing standard of living but it was a dream. Maybe we all need to, as Campbell states, remember that people matter more than money.

[pete]

The private sector will always use supply and demand to set labour rates - more people chasing fewer jobs = lower salaries. This is perhaps a change from the "job for life" era, where companies would have different attitude to their staff. Within that model there will always be good employers and bad ones. Good ones are those that value the accumulated skills and loyalty in their experienced staff, and try to nurture new staff to have the right skills and attitudes. They will define the upper end of the salary range for a given job. The bad employers are ones that treat the labour market as a meat market. They will define the lower end of the salary range for the same job.

So I'm not sure that the government or BoE are really responsible for private sector pay, other than indirectly by allowing us to get into this mess in the first place?

Cheers,
Robin

Hmm. Labour market is supply and demand but slightly more complex than that. An employee cannot simply be plucked from the street, often they take time to select and train. In a skilled area this training may be a long time. They can also withdraw their labour to affect pay, this too is a balancing act.
Salary is not the only reward an employer can offer - they can offer job security, tyraining, positive enviroment etc. These will not necessarily define the upper end of the salary scale, indeed it is often those emplyers (or employees) who do view the market as a meat markett who pay/earn the most (know any contractors?).

HMG is very much responsible for pay though, starting with minimum wage where they actually set the wage. Then through taxes which affect people's take home and which jobs people will choose. And fundemenatally in the job "market" where they are the biggest buyer, by a large margn, and thus influence salaries.

But that's not the point, I suspect my point was that I was surprised to hear a senior member of the governing party say "We are getting out of this recession at the expense of the workforces' pay, terms, conditions and job security. And to attempt to defend those things is wrong." (Paraphrasing hugely. And no I don't have an alternative.)

[Peter]

This explains that bit awesomely...

http://www.slate.com/id/1937/

That's ridculous!, There's no way I'm baby sitting someones kids this winter so I can afford fuel for French Frolic in the summer.

[Scotty C]

This explains that bit awesomely...

http://www.slate.com/id/1937/

That's ridculous!, There's no way I'm baby sitting someones kids this winter so I can afford fuel for French Frolic in the summer.

you going to have to do a lot more then babysit to pay your fuel bill.

[Alistair]

Agree with Campbell (it happens now and again)

People matter more than money.

Happiness in your job matters more than what you get paid - you can usually adjust you lifestyle to be happy at work and at home - see above. This is assuming you can get work though - and that's where the scary economy part comes in.

If this government continue to screw the economy the way it's going there are some hard years ahead (they may or may not have a choice - I didn't go to the Harvard school of Economics) - there will be rich, there will be poor - not much in between. These things naturally seem to turn full circle and I'm a bit too young to remember but - early 80's anyone?

Alistair

[Scotty C]

sorry for the thread drift.

is that Col de la Bonette in your pic Alistair?

[roadboy]

If you don't like it, you need to run your own business and live or die by its success or failure ...

/sits back smugly and relaxes

[tut]

Oh dear, his Easy Boy chair just collapsed........



tut

[offshorematt]

You could argue that by keeping the base rate at 0.5%, the government/BOE are doing everything within their power to keep the cost of living down.

Traditionally, when inflation starts climbing, the base rate is raised to combat it. This increases the cost of borrowing (impacting mortgage repayments and car repayments for the average man in the street) and generally reins in people's spending. By forcing a tightening of belts across the board, inflation starts to come down again. It's all a balancing act (when it works).

However, inflation is above target quarter on quarter at present, because of external stimulus (commodity prices, devalued currency etc), not because UK people feel flush and are all splashing out on new tellies and foreign holidays. The external levers are in no way affected by the raising of the base rate - so the normal BOE response would only makes things worse. Fuel and groceries still go up, but people's mortgages also cost more. A world of pain, followed by a load of folk defaulting on mortgages. Not the first time it has happened.

So what are the alternatives? The government can only raise public sector salaries if they want to continue Labour's f'up spending policies. If the world markets think the UK are splashing the cash again, the markets will further devalue the pound in response - which leads to higher inflation, and the whole merry-go round continues. The private sector are free to do what they like of course, but most companies are not looking for additional overhead in the current climate...

They could cut taxes to help the man in the street but that would further aggravate the spending cuts (or it would increase the tax take depending on your school of thought ).

At present, it is all balanced on a knife edge and a lot of people just need to hold their breathe and hope it all improves of its own accord. Of course that took over ten years in Japan and they are still struggling economically.

[Edin430]

People talk themselves into recession and talk themselves back out of it - a lot of this is down to what's reported through the media unfortunately.

LIBOR is rising and will continue to rise and pull Base rate with it.. The problem is that when rates go up (as it's inevitable) we'll see the commercial property market collapse, as tenants will no longer be able to service their debt and we'll take a further hit in home owners not being able to pay their mortgages, which in turn could potentially trigger a double dip.

My prediction; Base will stay pretty flat until the olympics in 2012 at which point they will start to rise as the ecomony starts to tick over again. It's whether or not we'll manage to keep spending up, as this is the only way the Banks will be encouraged to lend again. It could as easily go one way as it could the other.

RE the pay part. Not getting a pay rise would suck, however I think anyone in stable work right now should consider themselves fortunate regardless. With so many people looking for work and so many companies looking at any possible way to tighten their belts it's a given that they will stand firm safe in the knowledge they could probably easily fill any vacancies ten fold.

My 2p

[Alistair]

sorry for the thread drift.

is that Col de la Bonette in your pic Alistair?

Hi - indeed it is - and looking rather spooky too! We took that route on your recommendation on last years Driving To Italy thread. After that - Col du Galibier nearly had us never coming home it was so foggy up there - so you nearly killed us off

There's some pics and videos of that part of the journey on our holiday site at thefords.eu if you'd like to see them.

Apols for further thread drift!

[campbell]

You could argue that by keeping the base rate at 0.5%, the government/BOE are doing everything within their power to keep the cost of living down.

This may be off-beam but isn' the "base rate" totally, utterly irrelevant to your average person just now? It has dropped significantly in 2-3 years but most mortgages have "floor rates" so there can be few people paying much less than 3%.

0.5% just allows the Govt to pretend they are doing something wonderful for us all.