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How safe is your job?

This has been a year of financial panic, but 2009 will be dominated by unemployment. In a flexible l

The poster that won the 1979 general election was a fake. The "Labour isn't working" dole queue was ac tually composed of 20 fully employed Hendon Conservatives, photo graphed by Saatchi & Saatchi. But there was nothing synthetic about the impact that the poster had on the Labour government of James Callaghan. Never again, Labour resolved, could the party afford to go to the country when the country was out of work. Yet that is what Gordon Brown risks doing, if you believe the spin about him delaying the next general election until 2010.

This was a year of financial panic as oil prices spiked, banks collapsed and stock markets tumbled. But it is likely that 2009 will be the year of the dole. Unemployment, already higher than at any time since Labour came to office in 1997, is expected to climb to almost three million by 2010, according to the Confederation of British Industry. The turnaround in the UK employment market has been astonishing. The pace of job losses, led by the shake-out in the banking sector, has astounded analysts: the Centre for Economic and Business Research (CEBR) has forecast that 300,000 private-sector jobs will have been lost in the six months to the end of this year alone. The CBI's forecast, made only a few days ago, is almost certainly an underestimate, because it is based on Britain's GDP declining by 1.7 per cent in 2009. The Bank of England is now talking about the economy shrinking by 2 per cent next year, as Britain enters the worst recession since the 1980s. Capital Economics has forecast that unemployment will peak at 3.3 million in 2010.

The situation is already worse than the formal statistics suggest. Stephen King, of HSBC, argues that the official International Labour Organisation unemployment figures exclude two million people who are economically inactive but would like a job.

What is undeniable is that British firms are taking advantage of the "flexible" labour market to fire first and think later. Unusually, the region hardest hit is likely to be the one most able to cope: the south-east. The London area alone could lose 650,000 jobs, according to the Local Government Association. This is one of the wealthiest areas on the planet thanks to the financial services sector based in the City. Redundant middle-class professionals might find life a little different on £60-a-week Jobseeker's Allowance, but most can probably look after themselves. The people who will have their lives destroyed first are the legion of temporary and casual workers, many of whom do not figure in the unemployment statistics because of their age or country of origin.

Many of the new redundancies are unavoidable, but there are signs, too, that some firms are reducing their workforce as a message to shareholders, hoping to bolster their equity prices. When BT announced 10,000 redundancies on 13 November it made no attempt to play down the human cost and, according to some analysts, even exaggerated the job losses for effect.

After three decades of losing industries, the UK desperately needs to protect the skills it has left, not allow them to dissipate in the lengthening dole queues

Firms such as Virgin Media, Rolls-Royce, Yell, Wolseley and Citigroup have all announced thousand-plus job cuts in the past few weeks alone. The flexible labour market, inspired by the Tories and realised by new Labour, has allowed contraction to be a first, rather than a last, resort. It is the quickest way for a management in trouble to show that it is doing something.

The problem is that these job losses, rather like the banks' refusal to lend to small business, are enormously destructive to the broader economy. After nearly three decades of losing productive in dustries, the UK desperately needs to protect those skills it has, not allow them to dissipate in the dole queues. But with trade unions weak, employment law liberal and the government compliant, firms are being allowed to throw out the seedcorn of the future.

Only the state would be able to counter the effects of this attrition. In the pre-Budget report, the Chancellor's measures on benefits, pensions and VAT were intended to boost pre-Christmas demand in the high streets. However, the government is severely limited in its ability directly to fill the jobs gap. Yes, the public sector is still hiring, and will have put on 50,000 jobs in the six months to the end of the year, according to the CEBR. But, with public borrowing likely to reach at least £118bn next year, there will have to be a retrenchment in the labour-intensive public sector to get the public finances into some kind of order in the medium term. Make no mistake - the price of this year's fiscal stimulus is likely to be public-sector job losses, even with the Chancellor's heroic, and unrealistic, assumptions about an economic recovery in 2010.

In this instance, the weakness of the pound is unlikely to boost employment in export industries. This is a global recession, perhaps a global depression, and Britain cannot rely on international markets to replace lost domestic demand. There is also likely to be a wave of protectionism, starting in the US, as countries seek to save their own core industries with state subsidies and other anti-competitive tools. The world market may be a tougher place in which to sell in future. Anyway, Britain has lost most of its manufacturing base - down to 14 per cent of GDP.

In recent years, most of our "exports" have been in financial services - "invisibles", the demand for which will be slight for the duration of the credit crunch.

We can be thankful at least that the right man is in the White House at the right time. Alistair Darling has moved some way towards matching Barack Obama’s plan to create 2.5 million jobs over the next two years through public work projects and alternative energy investment. Yet this will not happen quickly and will do little to alter job losses already in train. And, in America, which is 12 to 18 months further advanced into the recession than Britain, life is already desperate for people on the margin.

The US department of agriculture reported on 17 November that the number of children who went hungry in 2007 - the first year of the credit crunch - jumped by 50 per cent to almost 700,000. It said that, overall, 12.2 per cent of Americans, 36.2 million people, "do not have the money or assistance to get enough food to maintain active, healthy lives". It could happen here.

At the very least Britain faces a return to a period of sustained joblessness, and to the destructive psychology that accompanied it. There will be dole queues, of course, but the social composition of the new jobless - led by financial services, property, retail - will be very different from what we saw in the early 1980s. As a recent report from the Chartered Institute of Personnel and Development argued, those at most risk in the coming "redundancy torrent" will be managers, professionals and skilled non-manual workers.

Tens of thousands of jobs are about to eva porate from British banks. Multiply that by all the professional jobs which depended on those middle-class incomes, such as estate agents and lawyers. Certainly, the first to be hit will be those at the bottom. But they are likely to be joined by large numbers of articulate, middle-class individuals shaken out of the financial, media and peripheral service occupations - from aroma therapy to management consultancy - which have grown up during the long boom.

Middle-class workers are not ready for this and it will be a shock to their self-confidence and self-esteem – a social and cultural transformation that could have profound political implications.

In the 1980s, the middle classes were still relatively secure in their career structures in management and the professions. They had homes, occupational pensions, clear employment paths. Certainly, they were a world away from the trade unionists fighting for their jobs in the old industrial heartlands of Britain. Margaret Thatcher relied on the middle classes to support her war on the militants with their braziers - and to blame them for the recession of the 1980s. The braziers are gone and the industrial working class has largely been dismantled. So, too, have the secure middle-class career structures.

Those who will suffer are the children of the baby boomers, who graduate with high debts and higher expectations

In the 1980s, professional and other white- collar jobs were, by and large, jobs for life, with annual pay increments, annual promotion, pension rights and a predictable future. Not any longer. The modern media, for example, are a shifting sea of freelance and contract workers for subcontractors to the large institutions. Even at the BBC, where I started out, there may be a crust of well-paid performers and anonymous executives who earn more than the Prime Minister, but below that is a huge army of irregulars, often on low salaries, coming in and out of the corporation's revolving doors. The commercial sector has been relying on large numbers of underpaid or unpaid "interns" desperate for work. This is the flexible labour market at its most pernicious. Such practices are widespread throughout the British economy.

Deregulation and leveraged buyouts by private equity over the past two decades have left many firms with flattened management structures, often relying on outside consultants to get them through busy periods. Occupational pensions have become a rarity. Promotion has become intensely meritocratic. Companies increasingly "offshore" white-collar functions to countries such as India, where an educated middle class is willing to work for much lower wages. Most of the job losses at BT are among self-employed contract workers in the UK; the firm has not cut any of the jobs it has outsourced to India.

The group hit hardest is the under-35s, sons and daughters of the postwar baby boomers, who have emerged from university with high debts and even higher expectations. These are the young people who have little experience of recession and none of mass unemployment. Neither have many of their parents, who lived through the 1970s and 1980s largely untouched by unemployment or debt. If there is to be a political response to the new depression, it is likely to emerge from this group of déclassé graduates, many of whom face a future without the security they have been brought up to expect. They will not be able to afford houses or establish careers. Indeed, the under-35s have so much personal debt that their net wealth is actually negative. Three-quarters of the under-35s are in the red, according to the Skipton Building Society, owing more than £9,000 on average. They will look to the state for security, but the state will not be able to deliver.

This time there is no trade union menace to blame for economic distress

A Ministry of Defence think tank has made a remarkable forecast about political militancy. The Development, Concepts and Doctrine Centre published a report in April 2007 in which it speculated that in coming years “the world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest”. “The middle classes could become a revolutionary class taking the role envisaged for the proletariat by Marx . . . the growing gap between themselves and a small number of highly visible super-rich might fuel disillusion,” the report said.

The idea of a revolution sweeping suburbia is faintly risible, though it was a subject of a recent J G Ballard novel, Kingdom Come. But the MoD may have grasped an important truth about the nature of politics in the new global economy. It is beginning to erode class differentiation and has left many middle-income earners exposed to the kind of insecurities that formerly afflicted only lower-class workers. Clearly, the economic circumstances of management consultants cannot be compared directly with those of retail workers. But when they lose their jobs, they face very similar challenges: mortgage and credit-card debt, catastrophic loss of earnings and the need for retraining.

Part of the difficulty experienced by the Conservative leader, David Cameron, in developing a coherent political response to Gordon Brown's neo-Keynesianism, is that the party of capital has lost its "class enemy": the industrial working class. There is no trade union menace to blame for economic distress and the Conservatives have had to fall back on "fiscal conservatism" - or reduced public spending. This is simply not a priority for an electorate that is looking to the state to protect it from the predations of the market. Equally, new Labour under Brown has been forced almost against its will to become more critical of the plutocracy running the banks, to accept nationalisation and greatly increased government spending. Brown's government has even had to abandon one of the founding principles of new Labour by proposing higher taxes on the rich.

The Conservatives, who have not entirely lost their Thatcherite reflexes, are looking to the middle classes to react against the new profligacy - but they will find it difficult to do so. As un employment mounts among the middle classes, especially among the under-35s, there is going to be a much stronger demand for policies which promote jobs and growth even at the cost of public borrowing. The Tories cannot afford to be on the wrong side in this battle.

As Martin Hutchinson, author of Great Conservatives, has expressed it: "A world in which few if any have security in their livelihood is not conservative, it is anarchist. It is also deeply repugnant to the average voter."

If Labour isn't working, neither are the Conservatives.

This article first appeared in the 01 December 2008 issue of the New Statesman, How safe is your job?

Photo: ANDREW TESTA/THE NEW YORK TIMES/ EYEVINE
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Interview: Nicola Sturgeon's Scottish referendum dilemma

In a candid interview, the First Minister discusses Theresa May’s coldness, Brexit and tax rises – and why she doesn't know when a second referendum will be held. 

Nicola Sturgeon – along with her aides, who I gather weren’t given much choice – has taken up jogging in the verdant country­side that lies to the east of the Scottish Parliament. “The first time was last week,” she says, when we meet in her large, bright Holyrood office. “Loads of people were out running, which made me a bit self-conscious. But it was fine for ages because everybody’s so focused. Then, suddenly, what must have been a running group came towards me. I saw one of them look and as they ran past I turned round and all of them were looking.” She winces. “I will eventually get to the point where I can run for more than 100 yards at a time, but I’m not at the stage yet where I can go very far. So I’m thinking, God, they’re going to see me stop. I don’t know if I can do this.”

This is a very Nicola Sturgeon story – a touch of the ordinary amid the extraordinary. She may have been a frontbencher for almost two decades, a cabinet minister for half of that and the First Minister since 2014, but she retains that particularly Scottish trait of wry self-mockery. She is also exceptionally steely, evident in her willed transformation over her adult life from a shy, awkward party member to the charismatic leader sitting in front of me. Don’t be surprised if she is doing competitive ten-kilometre runs before the year is out.

I arrived at the parliament wondering what frame of mind the First Minister would be in. The past year has not been especially kind to her or the SNP. While the party is still Scotland’s most popular by a significant margin, and Sturgeon continues to be its dominant politician, the warning lights are flashing. In the 2015 general election, the SNP went from six seats out of 59 to 56, a remarkable result. However, in Theresa May’s snap election in June this year, it lost 21 of those seats (including those of Angus Robertson, the SNP leader at Westminster, and Alex Salmond), as well as half a million votes. Much of the blame has been placed on Sturgeon and her call for a second independence referendum following the vote for Brexit. For critics, it confirmed a suspicion that the SNP only cares about one thing and will manipulate any situation to that end. Her decision also seemed a little rushed and desperate, the act of a woman all too aware of the clock ticking.

But if I expect Sturgeon to be on the defensive, maybe even a little downbeat, I’m wrong. Having just come from a feisty session of First Minister’s Questions, where she had the usual barney with her Tory opposite number, Ruth Davidson, she is impressively candid. “When you come out [of FMQs], your adrenaline levels are through the roof,” she says, waggling a fist in my direction. “It’s never a good idea to come straight out and do an interview, for example.” Adrenalised or not, for the next hour, she is thoughtful, frank, funny and perhaps even a little bitchy.

Sturgeon’s office is on the fourth floor, looking out over – and down on – Holyrood Palace, the Queen’s official residence in Edinburgh. As we talk, a large artistic rendering of a saltire adorns the wall behind her. She is similarly in blue and white, and there are books about Burns on the shelves. This is an SNP first minister’s office.

She tells me that she and her husband, Peter Murrell, the party’s chief executive, took a summer break in Portugal, where his parents have a share in an apartment. “We came home and Peter went back to work and I spent a week at home, just basically doing housework…” I raise an eyebrow and an aide, sitting nearby, snorts. She catches herself. “Not really… I periodically – and by periodically I mean once a year or once every two years – decide I’m going to dust and hoover and things like that. So I did that for a morning. It’s quite therapeutic when you get into it. And then I spent a week at home, reading and chilling out.”

In a recent Guardian interview, Martin Amis had a dig at Jeremy Corbyn for having “no autodidact streak”. Amis said: “I mean, is he a reader?… It does matter if leaders have some sort of backing.” One of Sturgeon’s great strengths is that she is a committed bibliophile. She consumes books, especially novels, at a tremendous rate and raves to me about Gabriel Tallent’s astonishing debut, My Absolute Darling, as well as Bernard MacLaverty’s Midwinter Break. She has just ploughed through Paul Auster’s daunting, 880-page 4 3 2 1 (“It was OK. I don’t think it should be on the Booker shortlist.”) She also reread the works of Chimamanda Ngozi Adichie before interviewing her onstage at the Edinburgh International Book Festival in August.

The First Minister is now reading What Happened, Hillary Clinton’s book about her defeat by Donald Trump. “I’ve never been able to read any of her [previous] books because literally every word is focus-grouped to the nth degree,” Sturgeon says. “This one, there are moments of frankness and raw honesty and passages where it’s victimhood and self-pity, but that’s kind of understandable and very human. The thing that fascinates me about Hillary, apart from the politics, is just her sheer bloody resilience.  Given what she’s gone through and everything that’s been chucked at her, I genuinely don’t know how she keeps coming back.”

***

Speaking of resilience, does she have any fellow feeling for Theresa May, humiliated by the electorate and, for now, kept in No 10 like a racoon in a trap by colleagues who are both power-hungry and biding their time? “At a human level, of course,” she says. “When you’ve got an insight into how rough and tough and, at times, downright unpleasant the trade of politics can be, it’s hard not to feel some personal sympathy. Her position must be pretty intolerable. It’s tempered, though, by the fact that nobody made her call an election and she did it for purely party-political interest.”

How does she get on with May – who is formal and restrained, even off-camera – in their semi-regular meetings? Sturgeon starts laughing. “The Theresa May that the country ended up seeing in the election was the one I’ve been dealing with for however long she’s been Prime Minister. This is a woman who sits in meetings where it’s just the two of you and reads from a script. I found it very frustrating because David Cameron, whose politics and mine are very far apart, always managed to have a personal rapport. You could sit with David and have a fairly frank discussion, agree the things you could agree on and accept you disagree on everything else, and have a bit of banter as well.

“I remember just after May came back from America [in January], when she’d held Trump’s hand [Sturgeon starts laughing again], she’d also been to Turkey and somewhere else. This was the Monday morning. We sit down, it’s literally just the two of us, and I say, ‘You must be knackered.’ She said, ‘No! I’m fine!’ And it was as if I’d insulted her. It was just impossible to get any human connection.”

Given this, and the weaknesses exposed during the election, Sturgeon is scathing about how the Conservatives fought the campaign, putting May’s character and competence front and centre. “The people around her must have known that vulnerability,” she says. “God, we all make mistakes and we all miscalculate things, so this is not me sitting on high, passing judgement on others, but don’t build a campaign entirely around your own personality when you know your personality’s not capable of carrying a campaign… Even if you can’t see that yourself, somebody somewhere around you should have.”

Sturgeon might not be in May’s beleaguered position but she has problems. Her demand in March, at a press conference at Bute House, Edinburgh, for a second independence referendum by spring 2019 was a serious mistake and it has left a dent in what had seemed her impermeable personal popularity. Polls show support for the SNP and independence now share a similar downward trajectory. Over the next three years, the First Minister must persuade a sceptical electorate that her party deserves a fourth consecutive term in government.

Does she regret demanding another vote on separation?

Here she gets as close as she will go to a mea culpa. “Obviously I’m thinking pretty deeply about it. I think Brexit is a complete and utter car crash – an unfolding disaster. I haven’t changed my views on that, and I think it’s deeply wrong for [Scotland] to be taken down that path without the ability to decide whether that’s right or not.

“I recognise, as well – and it’s obviously something I have reflected on – that understandably people feel very uncertain about everything just now, partly because the past few years have been one big decision after another. That’s why I said before recess that I will not consider any further the question of a second referendum at this stage. I’m saying, OK, people are not ready to decide we will do that, so we have to come back when things are clearer and decide whether we want to do it and in what timescale.”

Will she attempt to hold a second referendum? Could it be off?

“The honest answer to that is: I don’t know,” she says. Her expression of doubt is revealing.

Would she, however, support a second EU referendum, perhaps on the final separation package? “I think it probably gets more and more difficult to resist it,” she tells me. “I know people try to draw lots of analogies [between the EU and independence referendums], and there are some, but whatever you thought of the [Scottish] white paper, it was there and it was a fairly detailed proposition.

“One of the beautiful things about the independence referendum was the extent to which ordinary folk became experts on really technical, big, macro­economic positions. Standing on a street corner on a Friday morning, an ordinary working-class elderly gentleman was talking to me in great detail about lender of last resort and how that would work. You can say the white paper was crap, or whatever, but it was there, people were informed and they knew what they were voting for.

“That was not the case in the EU referendum. People did not know what they were voting for. There was no proposition put forward by anyone that could then be tested and that they could be held to account on. The very fact we have no idea what the final outcome might look like suggests there is a case for a second referendum that I think there wasn’t in 2014. It may become very hard to resist.”

Sturgeon hasn’t found the Brexit process “particularly easy”, especially when the government at Westminster is in the grip of what is becoming an increasingly vicious succession battle. The SNP administration has repeatedly clashed with the relevant ministers at Westminster, whom it says have given little care to Scotland’s particular needs. Sturgeon’s view of David Davis, Liam Fox and Boris Johnson is not rosy.

“Probably not a day goes by where I don’t look at them and think, ‘What the hell’s going on?’” she says. “That’s not meant as a personal comment on their abilities – although [with] some of them I would have personal question marks over their abilities. But they’re completely paralysed, and the election has left them in a position where you’ve got a Prime Minister who has no control over the direction of her government, and you have other senior ministers who are prepared to keep her there only because it’s in their short-term interests to do it. If you’re sitting on the European side of the table now, how can you have a negotiation with a government where you don’t actually know what their position is, or whether the position you’re being told across the table is one that can carry support back at home? It’s a shambles and it’s increasingly going to be the case that nothing other than Brexit gets any bandwidth at all. It’s really, really not in the interests of the country as a whole.”

***

This is an accusation that is directed at the SNP, too – that the national interest takes second place to its constitutional imperative. It is undoubtedly something that Sturgeon considered over the summer as she sought to rebalance her administration. As a result, the programme for government unveiled earlier this month was impressively long-term in places: for example, its promise to create a Scottish national investment bank, the setting of some ambitious goals on climate change and the commitment to fund research into a basic income.

Most striking, however, was Sturgeon’s decision to “open a discussion about… responsible and progressive use of our tax powers”. With the Scotland Act 2016, Westminster passed control over income tax to Holyrood, and Sturgeon intends to use this new power.

“For ten years,” she says, “we have done a pretty good job of protecting public services as best we can in a period of austerity, while keeping the taxes that we’ve been responsible for low. We’re now at a stage where austerity’s continued, we’re going to have economic consequences from Brexit, we all want good public services, we want the NHS to continue to have strong investment, we want our public-sector workers to be paid more, we want businesses to have the right infrastructure. How do we progressively and responsibly, with the interests of the economy taken strongly, fund our public services going forward? Most people would think right now that there is a case for those with the broadest shoulders paying a little bit more.”

I wonder whether the success of Jeremy Corbyn has influenced her thinking – many expect that a revival of Scottish Labour would force the SNP to veer left (it will also be interesting to see how Westminster reacts to Scotland raising the top rate of income tax). “It’s not particularly Corbyn that’s made me think that,” she insists, a little unconvincingly.

Isn’t Sturgeon concerned that making Scotland the highest-taxed part of the UK could undermine its competitiveness, its attraction as a place to live and as a destination for inward investment? “We should never be in a position where we don’t factor that kind of thing into our thinking, but you talk to businesses, and tax – yes, it’s important, but in terms of attracting investment to Scotland, the quality of your infrastructure matters. Businesses want good public services as well, so it’s the whole package that determines whether Scotland is an attractive place to live and invest in and work in,” she tells me. “It’s seeing it in the round. The competitiveness of your tax arrangements are part of what makes you attractive or not, but it’s not the only part.”

As for the immediate future, she is upbeat. She believes that Ruth Davidson, her main rival, is overrated. “I think Ruth, for all the many strengths people think she might have, often doesn’t do her homework very well,” she tells me. “From time to time, Ruth slips up on that… Quite a bit, actually. I know what I want to do over the next few years, and I’m in a very good place and feeling really up for it. After ten years in office, it’s inevitable you become a victim of your own success. What’s more remarkable is that, after ten years, the SNP still polls at least 10 and usually 10-15 points ahead of our nearest rivals.”

Author's note: Shortly after this interview went to print, the SNP got in touch to say that Nicola Sturgeon’s comment, ‘the honest answer to that is: I don’t know’, was about the timescale of the next independence referendum and not whether there would be one. The misinterpretation was mine.

Chris Deerin is the New Statesman's contributing editor (Scotland). 

This article first appeared in the 01 December 2008 issue of the New Statesman, How safe is your job?