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Vol. 72/No. 48      December 8, 2008

 
Workers in Britain hit
with layoffs, wage cuts
 
BY JONATHAN SILBERMAN  
LONDON—Bosses in the United Kingdom are cutting jobs and wages of workers as the economic crisis deepens and the economy contracts.

Official unemployment in the three months prior to September stood at 1.82 million, or 5.7 percent, up by 140,000 from the previous quarter. Younger and older workers experienced the brunt of the job cuts. During the early 1980s, unemployment reached 11 percent. “A real pay squeeze is adding to the jobs crunch,” commented John Philpott of the Chartered Institute of Personnel and Development.

The economy contracted by 0.5 percent in the third quarter. The Office for National Statistics said that September’s was the seventh consecutive monthly drop, the longest run since 1980.

Retail sales are down 1.5 percent from last year. Prominent stores including Argos, Currys, Homebase, JJB Sports, Marks and Spencer, PC World, and Top Shop have recorded drops this year. Car sales have plummeted, falling in October at their fastest rate in 17 years, down 23 percent from a year ago.

Industrial production is also slowing. Auto production is hit hardest. Some 6,000 workers at BMW plants in Oxford and Swindon are to be laid off for four weeks in December, and their monthly pay packet cut by £250 (1£=$1.48). Truck maker Leyland has announced 250 job cuts and an extended Christmas shutdown. Nissan is working its flagship Sunderland plant on a three-day week.

Ford has cut back to a four-day week at its Transit van plant in Southampton, as has Land Rover at its plant in Solihull. Ford is also laying off workers at its plant at Bridgend, South Wales. Toyota has halted the night shift at its Derby works.

Jaguar has announced an extension of a voluntary redundancy offer to hundreds of workers at its plants in Merseyside and the Midlands. On top of 198 workers who have already taken a buyout, another 400 jobs will be cut. LDV, a Russian-owned van-making company near Birmingham is cutting 95 jobs.

The majority of cars built in the United Kingdom are sold abroad. Production cutbacks reflect not just the recession in the United Kingdom but the global economic slowdown. Germany, the largest economy in Europe, and Italy, the third biggest, are now officially in recession as is the whole of “Euroland,” the countries that use the euro as their currency. Overall these economies contracted 0.2 percent in the three months from July to September on top of a similar contraction the previous quarter.

Announcements of job cuts and short-time working are becoming a feature of news bulletins. Some 20,000 job losses were recorded in the United Kingdom in the week ending November 14. Among the major companies announcing job cuts were BT, the largest UK telecommunications company, shedding 10,000 jobs, 6 percent of its global workforce. Virgin Media has announced cuts of 2,200 jobs from its 14,600 total. Construction company Taylor Wimpey has axed 1,000.

GlaxoSmithKline, the biggest UK pharmaceutical company, is to close its manufacturing site in Dartford, near London, with the loss of more than 500 jobs. Yell, the company which owns Yellow Pages and yell.com, is cutting 1,300 jobs. Tetrad, a furniture maker employing 500 people in Preston, has moved to a four-day week. Budelpack COSi, a cosmetics plant in Maesteg, South Wales, is cutting 200 jobs. Altogether, the number of manufacturing jobs has fallen to the lowest figure in 30 years.

House prices are also continuing to decline, down by around 15 percent from a year earlier. “Prices are now falling at a faster pace than in the recession of the early ’90s,” reported Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors. Home repossessions rose 71 percent in the second quarter from a year earlier. Individual bankruptcies are up 7 percent.

In an attempt to slow the contraction, on November 6 the Bank of England cut short-term interest rates by 1.5 percent, from 4.5 percent to 3 percent. The move is the latest in a series of measures taken by the government and the bank to address the financial crisis and economic downturn. Last month, the government announced a £500 billion package to shore up banks hit by the international financial crisis.

Despite the measures aimed at increasing liquidity, stimulating interbank lending, and recapitalizing major banks, lending continues to stall. “I can’t borrow the money … because nobody’s lending,” Nicholas Goss, managing director of Goss Components, which makes car components, told the Times.

Trade union officials have for the most part charted a course of collaboration and accommodation with the bosses and the government. The Trades Union Congress has unveiled an “economic action plan.” Congratulating the prime minister for showing “global leadership,” TUC general secretary Brendan Barber called for cuts in interest rates and government-issued “green bonds” aimed at a “green industrial revolution” which, he said, would “create jobs and help rebalance the economy.”

Unite general secretary Derek Simpson argues a nationalist “defend British jobs” course describing as “an absolute scandal” a decision by companies contracted to build a new power station at Staythorpe to employ foreign labor. “The country is in the grip of a credit crunch… . It will be a disgrace if UK workers are shut out from building their own power stations,” Simpson said.

Leaders of the GMB union hailed a decision by 2,500 workers at JCB to agree to their recommendation to accept a £50 per week pay cut. The employers were threatening to cut 350 jobs. They were then stunned when, hard on the heels of the pay cut, JCB announced a cut of 400 jobs.

Meanwhile leaders of the Public and Commercial Services Union called off a scheduled strike by 260,000 in protest of a below-inflation 2.45 percent pay offer. Inflation was, at the time, running at 5.2 percent.

A campaign of days of strike action over outsourcing of work by port workers at Dover in Kent is ongoing.
 
 
Related articles:
Bailout for Citigroup, more layoffs for workers
Port workers in England prepare strike  
 
 
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