Posts Tagged ‘unemployment’

Youth Unemployment – The Real Issue

Sunday, November 13th, 2011

In amongst all the fantastical numbers that economists bandy around at the moment, there are some frightening figures that get lost in amongst the other seemingly more pressing numbers.  Amongst these, youth unemployment is the most worrying and is perhaps the biggest issue of all.

In the UK, youth unemployment is 21.3% against a total rate of 8.1%  (September 2011).  In Italy, youth unemployment is 29.3% with a national figure of 8.35% (August 2011).  Youth unemployment in Greece is 36% against a national level of 18.4% (August 2011) .  In Spain, youth unemployment is 46.2% with a national figure of 22.6% (September 2011). And this is not just an issue for those in Southern Europe, so in Sweden youth unemployment is 4 times higher than for workers aged 25 – 54, while in Ireland youth unemployment stands at 31.5% against a national level of 14.4% (October 2011) with 100 people emigrating every day at the highest levels since the Great Famine over 150 years ago.

Studies in the UK suggest that the cost of youth unemployment is £4.7 billion a year and £8.1 billion a year from reports by the Recruitment and Employment Confederation Taskforce as well as the London School of Economics.

This is a waste of the young peoples’ lives, dreams and hopes, as well as a mammoth waste of capital resources.  Even more than that it creates a very unstable structure for the welfare state:

  1. Failing to secure employment for a large proportion of young, let all the underemployment of many of those that find employment, is a failure of the education system, because expenditure on teaching is being frittered away by not getting graduating pupils into useful employment.  This means the wealth of the nation is being gradually eroded away through education that has no economic or intellectual value.  Apprenticeships could start to treat this scar.
  2. Then there is the structural issue for the welfare state.  At its simplest, the welfare state is pyramid scheme that relies on enough new employees entering the tax system to finance those who are retiring, needing geriatric care or other benefits.  However, if employees are not starting young and so failing to start paying taxes, then the whole structure will perhaps become irreperably destabilised, while at the other end employees are looking for more benefits from state funded pensions and geriatric care.  With high youth unemployment, the welfare machine cannot function for long before it will simply grind to a halt.  The simple truth is that the pension schemes written for public sector workers in the UK and across Europe cannot be funded as there are not enough people generating new money in our economies to finance them, and without getting the young to start creating real wealth we have not a hope of paying me a sou of my state pension, while my small private pension has shown no growth in years and will not keep me living for longer than a few days, so I expect that I will need to work until I drop.  Incentivising businesses to start recuiting the youth or schemes that will find the entrepreneurs of tomorrow are vital.

Every year more young people leave school, yet with funding cuts more will fail to find university courses to meet their needs and so exacerbating youth unemployment.  While older workers no longer need to retire and as pension schemes fail to provide people with the retirement they crave, job blocks will be created, preventing young people even starting on the employment process.

Unless this issue of youth unemployment is tackled head on and quickly, not only will there be a dangerous restlessness amongst the young unemployed, but the whole edifice of social welfare is liable to topple over under its own grandiose ambitions.

These are dangerous times and we ignore this issue at our peril.  Who will speak for the young?  Not the main political parties, not employers, not the unions, not religious leaders, so they will speak for themselves with protests without care for the consequences for the nation states of Europe, as we do not worry enough for them.

Update 16/11/2011: youth unemployment in the UK rose to 1.02 million or a rate of 21.9% for 16 – 24 year olds against a national rate of 8.3%.   This is a waste of our young, energetic and resourceful youth – who will stand up for them, rather than speak platitudes to them?  What is frightening is how the unemployment rate has grown strongly since 2000, so it is the collective failures of both previous Labour and now the current Lib-Con Governments rather than something that should be used for party politicking being any of the sides, i.e. they have all been pretty useless in addressing this issue.

Updated 19/11/2011:  Sara Blecher’s film on train surfing shows the nihilism that can enter the soul of the young when there is no hope and no father figures, or male role models to bring them into manhood.  It could be a bleak future, a Lord of the Flies’ world.  Let us all work to give the young back their dreams and hopes for the future and fight back the bleakness of self-destructive nihilism.

Where’s The Economy Really At?

Friday, August 13th, 2010

I have been intrigued by comments by Mervyn King and others about the state of the economy, as I am not sure whether they ever take into account the real situation for small companies.  So I thought I would briefly blog some notes about Steenbergs at present.

Employment – Unemployment : one of our members of staff has just left to another business on site and we are advertising to fill that post at the Jobcentre Online (our favourite way of advertising), which is just the best service.  In the past, when we have sought to recruit for this same role, we would get maybe 3 or 4 applicants, but this time we have 20+ applicants and they are still coming in. 

Firstly, it’s a warehouse role, so where are the ladies who would like to do this, as while it is being offered as part-time and for anyone, we are only getting men applying and of all ages, but not a single woman.  Secondly, there appear to be a lot of local people who have been made redundant recently.  Thirdly, I am not sure whether there are really more people available, or whether because of the gloominess in the air, people have set are prepared to look at a part-time role where in the past they would only have looked for full-time.

Finally, we are changing a full-time role into a part-time role, or perhaps no role if we do not find the right person. Are we simply part of a general caution in the economy that has become fearful about recruiting, because of the fixed costs of financing such a role and the structural rigidity of hiring someone (and the emotional desire to keep that person employed once taken on) rather than bringing in temporary staff as and when we need them.

Credit quality: We have noticed a real fall off in the credit quality of businesses we deal with over the last 6 – 9 months.  Now my dad always says that “only businesses with no business have no bad debts”, but still people who do not pay their debts frustrate and waste a lot of time and energy.  I know that some of you will say use credit checking agencies and that will mitigate your risk, but most of the people we deal with have no credit history as they are small, start-ups or have no real debt history, hence we need to make our own judgment calls.  So while we have not had such a big bad debt as we had 3 years ago (I am crossing my fingers and touching as much wood as I can find as I write that spookily self-prophesying line), we certainly have had more in volume.  Most have been small debts of less than £100 each, but they add up and are truly infuriating. 

Many people this year just seem to be disappearing or telling us that they are closing down without paying out their debts, or the administrators get called in to protect the creditors – has anyone ever been paid out by the administrators as it is mysterious how the banks and the administrators themselves seem to take any available cash and leave the small creditors out to hang and dry?  It’s that eternal thing of the big being protected and the weak being screwed. 

Our worst recent experience was The Natural Kitchen that went down last year after they had ordered lots of kit from us just before going into administration – the annoyance was they only bought from us because as Northerners we did not know they were in dire straits (I am sure everyone in London knew!) and when we asked for the stuff back they said they would pay for half of the invoice as they knew they did not really own it, but they never did – rightly assessing that we would never drive from Yorkshire to London to take back the remaining stuff from the shelves; serves me right, I guess.  And Natural Kitchen are backed by millionaires from the property world and investment banking, who quaff their premier cru wines without a care for the hard earned cash of others – disgraceful, but completely legal – aaaargh, it still makes me grumpy!

Sales: actually, they are doing surprisingly well, but we continue to innovate, tweaking our designs, range and recipes.  A few buyers of bulk ingredients are trying to switch to non-organic from organic, but some of the less active ones from last year like Spicemanns/Kerry Ingredients and Elgar Foods and Walkers Shortbread are buying again, while new ones are coming on stream, such as Northumbrian Fine Foods and John Morley; we seem to do well with small batches of blended spices for organic Fairtrade mixed spice and organic sausage seasonings (e.g. for Northumbrian Quality Meats and Riverford Organic) that no-one else will or can do, including exports of our organic curry powders to the Continent.  Prices are stabilising with less currency turmoil, even though commodity pressure is still upwards, which gives better pricing forecasts overall; everyone was nervous in 2009 as costs were all over the place, and contracts from previous years had became onerous. 

General retail is only slightly up, but that’s partly our fault as we have chosen not to embrace with the big bears of the retailing world as we are not ready to lose control of who we are and what we stand for, even if it means sales will not go into the stratosphere; we are seeing good sales of Steenbergs organic bakery ingredients via distributors like Hider, Queenswood, Suma and Tree of Life and continued good sales into some of our bigger stores like Fenwicks, Selfridges and Wholefoods on High Street Kensington, as well as really exciting enquiries from overseas, such as Whole Foods Market in the US. 

Then the web store is going a storm, but that’s more to do with increased tinkering by Sophie and me on search engine optimisation and playing with social marketing (the challenges of Facebook, Flickr, Linkedin, Twitter and we are even looking at how to use Youtube), allied to a massive increase in the range of products that we sell.  We genuinely think we do www.steenbergs.co.uk differently from anyone else’s way of retailing (whether www.tesco.com or www.ethicalsuperstore.com), and will continue to do it in our own eccentric way, for better or worse, chosing products that fit with Steenbergs image as ethical, green and different. 

It’s tough trying to change the world, but every small step forward is a step in the right direction – we will not give in to the temptations of a quick, easy buck, however nice that would be.

Given that ramble, where are we then? Cautiously optimistic about Steenbergs, but gloomy about the state of the economy.