ToUChstone blog: A public policy blog from the TUC

Owen Tudor

A new report, launched in Brussels on Monday by the Socialists and Democrats in the European Parliament, shows that – contrary to what the finance sector’s paid lobbyists have been insisting – a European financial transaction tax (FTT) would boost growth in Europe by at least 0.25%,  raise the revenue to combat poverty and climate change at home and abroad, and help re-balance the economy by making long-term investment more worthwhile than short-term, high frequency trading. This new report by noted economists Prof Avinash Persaud and Prof Stephany Griffith-Jones comes on top of revised estimates from the European Commission who originally produced some of the data that fat cat financiers pounced upon. The Commission’s original impact assessment was based on a flawed model which shows all taxes as harming growth, whatever the revenues are used for, but misunderstandings of what the impact assessment showed were used to create concern among progressive politicians and abused by people opposed to the tax all along to justify their position (even though the same people shed few tears over the impact on growth of measures they support like increased VAT or cuts in public services.)

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Philip Pearson

Recession looms, unemployment touches a 17-year high. But 101 Tory MPs want David Cameron to shackle the UK’s wind industry, which now employs over 10,000 people. Their call will feed the predominant anti-renewables line in some media. The MPs want cuts in “taxpayer subsidies” for onshore wind and stronger rights for planning objectors. In January alone, 2,700 wind industry jobs were either created or reinforced with new contracts, including Samsung in Fife teaming up with Huddersfield-based David Brown Gear Systems; Vestas in Sheerness; and wind turbine tower manufacturer Mabey Bridge, Chepstow. What is it about renewables with some MPs and the media?

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Anjum Klair

So, according to DWP minister Maria Miller, there is no shortage of jobs.

Every month I report on the latest unemployment data, the number of people claiming JSA and the number of vacancies in each Local Authority. The last set of data showed that there are as many as 20 people chasing the one vacancy in some areas, in Lewisham there are almost thirty five dole claimants chasing each vacancy.

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Owen Tudor

UN Secretary General Ban Ki-Moon has issued a report to the current meeting of the UN Commission for Social Development which pretty much reads like a trade union manifesto. The ITUC leader Sharan Burrow welcomed his ”emphasis on employment to reduce poverty, as well as the recognition of the deep crisis of youth unemployment.  Governments need to heed the UN’s call to deliver decent incomes and security, and the protection of international labour standards.” Ban Ki-Moon identifies weakened unions, austerity, inequality and informal employment as key causes of increasing poverty around the world:

“Growing inequality is attributed to several factors, including the reduced power of trade unions, the uneven distribution of the benefits of globalization, the growing disadvantage of marginalized groups such as young people, and inadequacies of institutional frameworks and policies such as redistributive policies” (para 9)

He urges Governments and international institutions to back the ILO Global Jobs Pact, extend social protection (eg disability benefits and pensions), offer youth jobs guarantees and take climate change mitigation action to reduce inequality and start reducing poverty again (global poverty was declining – albeit too slowly – before the financial crisis began, and has been thrown into reverse since).

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Owen Tudor

The row about the decision by the organisers of the London 2012 Olympics to accept sponsorship from Dow Chemicals for the stadium wrap demonstrates that good intentions are no longer enough. As the Playfair 2012 campaign that the TUC helps run argues, the International Olympic Committee (IOC) needs to put ethics at the heart of the financial decision-making of the Olympic movement. People had hopes that the London Olympics would be the first ethical Olympics, and the TUC believes the organisers have done more than any previous organisers in that direction (disclosure: the TUC have signed Principles of Cooperation with LOCOG covering many ethical issues). But it is becoming clearer, as the opening ceremony comes closer, that they have not done enough. And with the Brazilian World Cup in 2014 and Olympic Games in 2016 looming, we need to learn – and apply – the lessons of London 2012.

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• NIESR UK and world economy forecast
  NIESR expects global growth of 3.5% in 2012 & 4% in 2013 (provided there is a ‘successful resolution’ of the Euro Area crisis.) Despite this, NIESR expect a mild recession in the Euro Area and the UK, with the UK economy contracting by 0.1% this year – but growing 2.3% in 2013 (provided the Euro crisis ends well).
  Unemployment is expected to reach 9% this year and stay high till after the next election: “Unemployment at this elevated level for such a long period is likely to do permanent damage to the supply side of the economy, with large long-run economic costs.”
  CPI inflation is expected to fall to 2.2% this year and 1.4% in 2013. The cyclically adjusted current budget is forecast to return to balance in 2016–17.
  “The UK economy currently suffers from deficient demand; the current stance of fiscal policy is contributing to this deficiency. A temporary easing of fiscal policy in the near term would boost the economy.”

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Owen Tudor

The US January jobless figures came out today, and showed that December’s leap forward has been improved upon. In December, the economy grew by 200,000 jobs and in January a further 243,000 jobs were created, meaning that the unemployment rate has fallen from 8.6% to 8.3% in just two months and by 0.8% since August. That means that the US unemployment rate is now almost certainly better than the UK rate (which was 8.3% in 2011 Q4 and has deteriorated since) but even worse for us, we are heading in different directions. Apart from the fact that this surge of nearly half a million jobs in just two months suggests that the economy is improving just as the US heads towards its Presidential election, it does vindicate the efforts by President Obama to continue stimulating the economy: in contrast to what the UK Government is doing with predictably different results.

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Richard Exell

Before the recession, this country could take some pride in its jobs record – our unemployment rate was lower than the average for developed countries. Over the past four years, unemployment has risen, but it has in most countries – what is our relative position like? Well, new figures from the U.S. Bureau of Labor Statistics provide a rather depressing answer to that question.

The BLS provides tables for the USA and nine other countries America compares itself with, one of which is the UK. The most usable figures are those that translate each set of national figures into US definitions. This means they’re not quite the figures we’re used to talking about in this country, but it’s the relative position we’re interested in here, so that doesn’t matter so much. Our unemployment rate is still a little lower than America’s and Italy’s, and significantly lower than France’s:(*)

Our unemployment rate is usually higher than Japan’s, but it is a little depressing to find ourselves lagging some of the other countries so badly. What’s much more interesting, though, is how these countries have coped with the impact of the global recession on their labour markets: (*)

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• Thoughts on a benefits cap
  At the IFS website Robert Joyce considers the benefit cap in the Welfare Reform Bill. This is now expected to affect about 67,000 households from 2013-14, reducing their benefit entitlement by an average £83 p.w.

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Tim Page

I spent yesterday afternoon and evening, and this morning, at the fascinating conference, ‘Financing Innovation and Growth: Reforming a Dysfunctional System’, first at the House of Commons and then at the Italian Cultural Institute in London. The Science Minister, David Willetts, and his Labour Shadow, Chi Onwurah, both spoke at the event. What is most important is that policy makers from all parties, as well as Treasury Ministers, learn some lessons from the FINNOV study.

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