Monday, 5 July 2010

We All Cannot Be 'The Apprentice'

I am no fan of the television series 'The Apprentice' in which Lord Sugar is presented with a group of budding entrepreneurs who want to become his 'apprentice' but it has a cultural impact and is discussed on so many other television programmes and on radio that it is difficult to be oblivious to.  In the programme Sugar assigns the group various tasks, sometimes bizarre, involving running businesses and on the basis of their success he weeds them out over the weeks until he is left with one winner.  The job even the winner receives is often very mundane, but being on the programme can help win the contestants attention.  What is most alarming is the nature of the contestants who are all unreformed Thatcherites with a clear belief that they are God's gift to business, and yet ironically, that 'greed is good'.  The 'junior' version of the programme was very alarming, suggesting that it is right for children to be so obsessed with money that they have lost all individuality, awareness of others and, in fact, most of their personality: they have simply become their goal.

The programme reminds me of criticisms from a woman from Hong Kong who I met at university back at the end of the actual Thatcher regime.  She whined that the trouble with the British was that they saw someone in a luxury car and complained about it, whereas in Hong Kong people would be inspired by such a sight to get on in business and make themselves wealthy.  She was wrong both about Hong Kong as she was about Britain.  For a start there was no greater opportunity to succeed in Hong Kong than there was in the UK.  The privileged tend to remain privileged and so do their children.  Occasionally people make a successful business, but ironically in the UK the ones who succeed most are people who have come into the country from the outside, this is why being opposed to immigration is so contradictory with people wanting the UK to be an entrepreneurial state.  The people who succeed in that way are a tiny percentage.  This is why 80% of the UK working population earns less than the average salary and in fact 80% of entrepreneurs do not earn above £20,000 which is in fact less than the national average salary, currently around £31,000.

Thus, even a small percentage of those who have the drive and luck to become successful in their own businesses succeed; 50% of new restaurants in the UK close within 6 months of opening.  However, what seems to be forgotten is that the large bulk of us have minimal ability to be self-employed.  Since human civilisation started the majority of people have been employees, even if it has only been to the head of the family or clan or the local landowner.  Certainly since the rise of industrialisation in the mid-18th century the bulk of us have worked for other people.  You may say we are conditioned not to take the initiative.  Certainly this was the attitude in the 1980s that anyone who was unemployed should be setting up their own business and if they were not, then they had to be lazy.  I certainly had this charge laid at my door in the 1990s.  It seemed a bitter thing to say given the efforts I had made in terms of training and development in order to be an effective employee.  Why should I throw that all away and try and run a business in something which was statistically likely to fail?  It would be a waste of time, effort and education.  Such challenges to the unemployed are returning, though these days it is even harder to raise capital than it was twenty years ago.  The banks, the beloved of successive governments, have created this position through their own failed entrepreneurial efforts and ironically have created a banking market in which it is now harder than ever for new businesses to get funding and so to comply with the New Right agenda of people's business. 

I would imagine if you took 20 ordinary people in any British town 1-2 of them would be capable entrepreneurs.  When I take the boy in my house to school, out of the 60 parents/carers waiting for children to come out of the two classes that make up his year, I know that only two of the families run their own businesses and in one of these the woman only bought into a franchise when she found no-one would re-employ her having been out of work raising children for eight years.  The rest of us are either out of work or are employees.  This is in prosperous southern England too.  The woman who lives in my house, would count as the third if she ever collected her son, but in herself shows why so few, even if they have the skills, would want to run their own business.  She has been self-employed for six years and exports a third or more of her sales.  Yet, despite ploughing back around 80% of her profits into the business (a style of re-investment not common in the UK since the 19th century) she has yet to break the magic £20,000 (€23,600; US$29,800) per year mark and there is a good chance even another six years from now she will not have done.  She would be better off working in a supermarket.  The reasons why she persists is because she has a particular mental approach.  She, unlike the bulk of us, is no good as an employee and much prefers her own business.  However, on pure earnings basis she should chuck it in and head down to Asda to get a job.

Why am I getting so fussed about those who can and cannot be entrepreneurs?  Well, in fact my point goes further than just the divide between self-employed and employed.  We also need to consider the difference between public sector and private sector work.  Of course, the New Right attitude that Thatcher and now David Cameron and George Osbourne subscribe to, is that the state is 'too big'; that people are much better off doing things for themselves.  Sometimes this attitude is sold as we need to get back to small communities providing facilities and charity and that the faceless state trying to do this is unresponsive and bureaucratic.  In fact this is all just a facade.  What the New Right want is capitalism unfettered so that they can increase their profits through no safety regulations, low wages, bad conditions and a compliant workforce.  Cameron with his focus on the budget deficit has a good excuse for pursuing the New Right agenda vigorously and aiming for 25% cuts across the public sector.  Though the public sector is not as broad as, say, in France, it does encompass not only government departments but also elements such as health and education at all levels, and effectively things like transport and utilities though these are in private hands now; they still impinge on how society functions.  Around 6 million people work in the public sector; 530,000 of these are civil servants.  Ironically the greed of UK banks actually led to the increase of the public sector when the state had to take over Northern Rock, HBOS and Lloyds.  If they had been a bit less greedy these banks would still be in private hands, probably Spanish, US, Australian, Danish or Chinese hands, but still privately owned.

Having worked in the civil service, which is mainly what people think about when they refer to the public sector, I know that a lot of civil servants are perfect for the job.  They are polite and efficient but they are not sales people or marketeers.  They can run the administrative machine well, but are never going to get you to buy a used car.  With the haranguing of the civil service for the last thirty years, no-one dare be inefficient.  Often the staff work long hours and the pay is very low.  In 1994 I left a job in the civil service paying £8,600 per year; aside from me everyone in my office including all but one of the managers, had one other job, some had two others.  I was supposed to work 37.5 hours per week but regularly did 50 hours.  My next job was £9,500 per week for 15 hours.  In 2001 I applied for a job as a tax inspector and would have earned £13,000 per year at a time when the average salary had passed £20,000 per year.  I applied two weeks ago for a managerial post in the civil service overseeing a whole office of staff and yet paying £24,000 per year.  No-one works in the civil service to become rich and yet they keep being told they need to be cheaper.  In the 1980s under the Rayner reforms around 250,000 civil servants were laid off.  Since then the number has risen again.  However, David Cameron says he wants to see a reduction of 500,000 staff across the public sector.  This would mean the end of the civil service so implies heavy cuts in health and education too.  Local government, (2.256 million, including 42,000 social workers) education (there are around 460,000 teacher posts alone; some held by more than one person) and the National Health Service (1.431 million in hospitals, community health and general practice) employ 4.507 million people, 16% of the UK workforce.  As you can see taking 500,000 people from these sectors in the next 5 years is going to have huge impacts often on the most vulnerable people in society.  In addition, in times of high unemployment as we are now quickly experiencing, more civil servants are needed to administer the welfare system and employment in the civil service always rises as unemployment does.

Cameron has said there will be no rise in unemployment because the booming private sector will mop up all of these people.  For a start the private sector has shown no signs of booming in the past few years.  Second, there is an all too easy assumption that a former civil servant or nurse can simply become an effective call centre worker or sales person.  Setting aside all the education and training it has taken to get someone to be a decent nurse or civil servant, if these people had the desire or aptitude to work in the private sector they probably would have done long ago and so got higher salaries and not be abused by the public, the government and the media all the time.  One thing that the Conservatives overlooked since the 1980s is that their policy of encouraging home ownership and permitting landlords/ladies to have the upper hands over tenants, especially fixed-term rental contracts, is that it makes for a very immobile labour force.  When people will lose on their house sale or are tied into paying rent on a property they have vacated months ago, then they are going to be reluctant to move to where work is.  If they want the pool of terrified, fluid labour that they so desire, the Conservatives need to move beyond simple bullying to the structural factors which hamper that.

The New Right, in control of the Conservative Party now, has no sense of the Old Right support of public service.  This is ironic as Cameron's government is keen to laud it when it occurs in the military but no when it appears in civil society.  There will be no easy transition for many people from the public to the private sector.  Customer service in the UK is appalling, just ring up your utility company if you want to find that out and it will jar with the bulk of former public servants.  Of course, many will buckle under because they have to, but in turn they and their neighbours will suffer as the education, health and local amenities deteriorate as the nurses, teachers and civil servants are compelled to go and work for the exploitative elements of the private sector, happy to impose long hours and low pay on workers scared by unemployment.  The sense that there will be no sharp rise in unemployment as the public sector is culled, is an utter fantasy. Loss of the income for public sector workers will further dent consumption on the back of the VAT rise which will do an excellent job of slowing consumer-led recovery.  The rump public sector that will remain will be less efficient and so more ordinary people will suffer.  We cannot all be entrepreneurs and even if we were, many of us would fail or even if we succeed would be poorer.  The same applies to going into the hundreds of thousands of private sector jobs that are supposedly going to appear.  Even if they did, people are not interchangeable parts and the 'frictional' unemployment will rise sharply even if new vacancies do appear and no-one as yet is even guessing where these are supposed to be coming from.  We are heading back to 4 million unemployed as quickly as the Conservatives and their ultra-rich supporters can engineer it.  As a by-product the public services that the large majority of us depend upon will deteriorate, but of course, the true beneficiaries of Conservative policy have the money to buy their way away from that and damn the rest of us.


Rooksmoor said...

Interestingly, despite the coalition government's faith that private-sector growth would replace jobs lost in the public sector through their harsh cutbacks, according to the Office for National Statistics (a government agency) of the 40,000 new vacancies created in the third quarter of the financial year 2010/11, 32,000 of them were temporary jobs created by the Office for National Statistics itself to employ people to work on the 2011 census. Thus, at the moment, the public sector is creating four times as many jobs as the private sector, and even then, these jobs are only temporary. The government is aware that we are facing mass unemployment, and none of us has any belief in the feeble counter-arguments they put up in an attempt to stop us all being utterly disillusioned.

Rooksmoor said...

Prime Minister David Cameron has assured the approximately 500,000 public sector workers who will be made redundant in the next 4-5 years that there will be jobs for them in the expected to boom private sector. However, as I have noted, many private sector employers have a prejudice, often an ill-informed one, but still a prejudice against public sector employers. This week a Barclays Corporate survey revealed that 57% of private employers would not take on ex-public sector workers. Of company managers 33% believed that such workers were not well equipped to work in the private sector and a further 20% felt that they had no abilities that could be transferred.

Cameron's simple suggestion of the public to private move was always a fantasy. Business people assume anyone in the public sector, whether a civil servant, teacher or nurse lives in such an 'ivory tower' that they have no ability to ever fit in the commercial world. This neglects the fact that every public sector role certainly since the 1980s has had to have an appreciation of competition and the real cost of everything; hospitals and schools are all in league tables that companies rarely face.

A lot of the problem comes from how ill-informed business people are in the UK. However, an overlooked factor is that they are aware that ethics still plays and important part in public service and they know that given how many UK companies work in an unethical way with their employers and customers, people used to actually applying ethical working practices may baulk at what is unfortunately too common business behaviour.