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New Communist Party of Britain


With the start of the crisis in 2008 companies sacked workers, introduced short-time working and reduced inventories by £12 billion by selling goods at discount prices. There was a 50 per cent increase in unemployment rising to 2.6 million by April 2011 and is expected to continue to rise through to 2016.

With this level of unemployment and with more than one million 18 to 24-year-olds unemployed, the Government’s policy on increasing retirement age must be regarded as absolutely nonsensical.

It is the workers in the lowest paid jobs who have borne the brunt of this rising unemployment. Since 2008 the retail, service and administrative sectors have been responsible for 41 per cent of the total rise in unemployment, even though they comprise less than 20 per cent of all workers. The retail, hotel and restaurants industry, a huge employer of young people, has lost 221,000 jobs since 2007 whilst the public sector has lost 300,000 jobs with a lot more jobs still to go. Since 2007 at least 1.2 million new public sector jobs have been on a part-time basis, which is in effect concealing a further 600,000 lost jobs.

Although productivity in manufacturing fell initially, it regained its 2008 level by the first quarter of 2010 and is currently six per cent higher than at the start of the slump. With manufacturing output still five per cent below its 2008 level, combined with the rise in productivity, the decline in employment will accelerate. With demand still low and an increasing supply due to increased productivity gains, inventories are now back to their 2008 level and more cuts can be expected. Productivity in services has still to reach its 2008 level mainly because sales-orientated workers are not able to sell the same volume of goods per worker as they did in 2007. For the economy as a whole productivity is about four per cent below its 2008 level.

In manufacturing the increase in productivity has been brought about by the introduction of more sophisticated robotic tools, so much so that factories in Britain are employing fewer workers producing more and are starting to become “competitive” with others across the world. Nissan decided, in March 2012, to invest £125 million to build a new small hatchback in Sunderland instead of in India.

Like all manufacturing the car industry has always suffered from periods of over-production; in 2007 just prior to the crisis there was feverish expansion in car production. This reversed, and by 2009 production was 500 thousand vehicles fewer than in 2007. The industry then “recovered” from the low of one million in 2009 to almost 1.3 million vehicles in 2011. With the continued economic slump the likelihood is that production will again decline in the foreseeable future.

The British Society of Motor Manufacturers and Traders reported that purchases of new cars in 2011 had dropped by 4.4 per cent. At beginning of 2012 Deloitte, the professional services firm, had predicted that car sales will drop by a further five per cent during the year. By June monthly sales had actually increased because heavy discounting had slashed prices by on average more than £2,000 per vehicle. Even with this intervention sales were still 15 per cent lower than their pre-slump peak.

Eighty-five per cent of British car production goes to the European Union (EU) where sales have also fallen by five per cent. Some manufacturers there are discounting prices so much that they are losing money on every car they sell. They are also cutting shifts and working days to compensate for the reduced demand and excess capacity. Fiat has already closed one factory and is threatening workers with closure of another unless they agree more “flexibility”. General Motors plan to close a factory in Germany.

For every job lost in the car industry another four is lost elsewhere, reducing demand yet again.