Tag: employment

Posted on

The Winter of Discontent: the sequel?

You may ask how on earth bins are related to the post. The simple answer is that these are two things that may not be collected. They say that one wedding brings on another, but it looks like that this also applies to strikes. The Winter of Discontent in 1978-9 saw widespread industrial action, where the country almost came to a stop. Is this really where we are now?

The postal strike has been widely publicised, but it’s not just your post that may not arrive. Bus drivers have been striking against First Bus in Greater Manchester and various other places following pay freezes. British Airways is to face the possibility of strike action over new contracts, working practices and pay freezes after talks broke down. The Spanish company Iberia had to cancel over 400 flights over two days due to protests, and in Leeds, rubbish hadn’t been collected for eight weeks.

So, what’s causing all of this discontent? Are we going to see more and more workers protesting over contracts, hours of work and notably pay?

One key thing about strikes is that they affect everyone, whether it’s walking past piles of bin bags; not receiving birthday cards; getting to work late; cancelling holidays or receiving fines for late payment, and even for not submitting your tax returns. These are all problems that people have been facing, not to mention the loss of income some businesses have seen, especially resulting from the postal strike. With the government looking to reduce public-sector debt by increasing taxes or spending cuts, including public-sector pay freezes and controls on banking bonuses, we could be in for another winter of discontent with further disruptions to come.

Articles

Questions

  1. What is the purpose of a strike and how effective are they likely to be? What are the costs?
  2. One of the reasons for strike action is pay freezes. What happens in an individual labour market when pay is frozen? What happens to the demand and supply of labour? Illustrate your answer with a diagram.
  3. Some news articles have referred to ‘picket lines’ forming. What are they?
  4. What is the difference between collective bargaining and individual bargaining? Which is more effective?
  5. Illustrate on a diagram the effect of a trade union entering an industry. How does it affect equilibrium wages and equilibrium employment? Is there any difference if the trade union faces a monopsonist employer of labour?
  6. Do you think the strike action is right? Why or why not? What are the things you have considered?
  7. Discuss whether we are heading towarads another ‘winter of discontent?’ Can it be stopped?
Posted on

Have you got your mail?

Everybody relies on post, whether it is bills, cards or packages, and everyone is annoyed when something goes missing, which has becoming an increasingly common occurrence. Over the past few weeks, a country already suffering from the economic downturn has also been suffering from a lack of post, as workers throughout the Royal Mail have been striking over pay and job cuts. Postal workers are now to vote on a national strike, although the Communication Workers Union (CWU) has said they will call it off if the Royal Mail agrees to stop all redundancies.

And it’s not just individuals who are suffering. Businesses have also been affected, as packages go missing and costs begin to rise. However, there is good news for one firm, the DX Group. DX Mail is the only independent mail operator in the UK which doesn’t rely on the Royal Mail for any part of its service. If the disputes continue, it could see a significant boost to its sales.

Consider the following articles and think about the effect this strike may have on businesses and the economy and then have a go at the questions.

Postal workers to vote on strike BBC News (17/9/09)
The DX: Keeping Business Mail moving during strike Hellmail (30/8/09)
Mail Privatisation to ‘go ahead’ BBC News (11/6/09)
Threat of strikes underlines TUC warning over spending cuts Times Online (14/9/09)
Postal strikes drive customers to Royal Mail’s rivals Guardian (18/9/09)
Postal workers strike in Swindon BBC News (16/9/09)
Royal Mail denies mail backlog BBC News (11/9/09)
Postal strike over job cutbacks The Herald (Plymouth) (5/9/09)
Managers and unions fail to sort out Royal Mail modernisation Guardian (17/9/09)

Questions

  1. In what ways is a postal strike likely to cost businesses?
  2. What other options are there for postal workers apart from strikes? Consider the advantages and disadvantages of each.
  3. How does a trade union affect wages and employment when an industry becomes unionised? What happens if a trade union is facing a monopsonist employer of labour?
  4. What is this dispute about and what do you think is the best way to resolve it for all concerned?
  5. Why in pay negotiations is a trade union more effective than each individual asking for higher pay?
Posted on

Unemployment rises as growth resumes!

According to labour market data released by Office for National Statistics on 16 September, unemployment has risen to a 14-year high. The Labour Force Survey figures show a rise in unemployment from 2.26 million (7.2%) in the three months to April 2009 to 2.47 million (7.9%) in the three months to July 2009. The data also show a 12,000 rise in the claimant count between July and August.

However, there are signs that the UK economy is growing again. This was underlined by evidence given to the House of Commons Treasury Select Committee on 15 September by the Governor of the Bank of England. So does this mean that businesses will take on more labour and that unemployment will fall?

The problem is that unemployment is a lagging indicator of economic activity. The reason is that many firms are reluctant to shed labour in recession and simply take up the slack as the economy recovers, without taking on extra labour. Even if they are short of labour, they may prefer to offer overtime to existing staff rather than employing new staff for fear that the upturn may be short-lived.

So what is likely to happen to unemployment over the coming months? Will it slowly fall or will it go on rising and, if so, for how long? Read the articles and then attempt the questions.

UK unemployment at 14 year high (video) BBC News (16/9/09)
UK jobless rate hits 14-year high Telegraph (17/9/09)
Unemployment crisis creates divide between private and public sector Telegraph (16/9/09)
Record one in five young people out of work (including video) Times Online (16/9/09)
Unemployment hits highest since 1995 Guardian (16/9/09)
Rising UK unemployment (charts of UK unemployment from 1984 to the present day) Guardian (16/9/09)
Unemployment at highest level since 1995 (including video) Channel 4 News (16/9/09)

Questions

  1. What is meant by the terms ‘leading indicators’ and ‘lagging indicators’? Give some examples of each.
  2. What determines the length of lag between a rise in output and (a) a rise in employment and (b) a fall in unemployment?
  3. Is unemployment a good measure of the excess supply of labour in the labour market? What other evidence might you need in order to assess the degree of slack in individual labour markets?
  4. If labour becomes more flexible in terms of the hours that people are prepared to work, will the unemployment lag increase or decrease? Explain.
  5. Under what circumstances does obtaining a university degree improve your job prospects?
  6. To what extent would reforming the benefits system, so as to reduce the poverty trap and give people a greater incentive to work, reduce unemployment (a) during a recession and (b) over the long term? What type of unemployment would be affected?