Tag Archives: Economy

Interns: The Whole System is Wrong

One of the more worrying American imports in recent years is the so-called ‘internship’. Nick Clegg launched an attack on them yesterday, and has opened himself up to ‘hypocrite’ charges as a result.

For anyone with no idea what a internship is – basically employers offer a program that gives students, new graduates or ‘gap-year kids’ the opportunity to get ‘work-experience’ for the company, unpaid, often for a University summer, sometimes for much longer. The argument goes that that the company is doing the kid a favour – these aren’t real jobs, really just admin – but it gives the interns a ‘foot-in-the-door’, a ‘network of contacts in the industry’, the chance to check it is really the right industry for them and most importantly the magic ‘experience’ to add to their CV. This helps escape the job-seeker’s paradox that you can’t get a job without experience and you can’t get experience without a job. The employers are often so impressed with interns that at the end job offers may be made. When presented like that it sounds like the company is doing a great social good. ‘Helping job-seekers!’. Very worthy. The reality isn’t quite so straightforward nor is it the win-win for all it first appeared.

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I am a huge advocate of the importance of both meritocracy and competition (see my philosophy page). Meritocracy is key to social mobility, which in turn is key to attaining social justice. As we drift to internships becoming a ‘cultural norm’ in the UK we’re creating a blocker to meritocracy. In the long run this will harm our economy and society.

When you listen to the work that interns really do they are typically not ‘work-experience’ in the sense of shadowing someone doing their day-job or having a go while the incumbent looks on. No, more normally they have interns doing ‘real jobs’. They’re expected to arrive and work set hours, and often kicked out of the program if they do not. They have set administrative duties to perform which keep the business going. To me this crosses the line from ‘work experience’ to outright exploitation. If the interns weren’t doing this work then somebody in paid employment would be. That person would then be off the unemployment register and paying tax and NI and pumping those earnings back into the economy. Instead we have them still on the dole whilst the student extends their debt and works for free with no guarantee of any reward at the end. I can only spot one real winner in the arrangement.

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We need to consider who has the means to take internships: Who can offer three months of their lives working without pay, living in a big city? Only people with alternative financial support. Straight away that excludes a whole chunk of society. The kids from the estates to who we’ve been preaching if they work hard they can achieve anything; who then put their heads-down, ignored the peer-pressure, worked hard, got the GCSEs and A-Levels, went to Uni and got the 2-1 or first degree’s now find themselves stuck in the old job-seeker’s paradox and flipping burgers, angry and disenchanted with society and saddled with university debt. Meanwhile, the well-to-do kid who scraped through their GCSEs and A-Levels thanks to the kind of one-on-one educational attention you only get at the best independent schools, who drank their way through uni but pulled their socks up just enough to get an OK 2:2 sails into the intern post because they can stay with Mum and Dad and have an allowance. They get the magic experience on the CV, they get the contacts and the reference, they get the end job. Now, they may well be ‘able’ enough to do the job, but the ‘better’ candidate has missed out. That stinks to me every bit as much as those well meaning, misguided affirmative action plans companies have in place. Both spit in the face of the idea of meritocracy.

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The trend is embedding. In some industries it is almost becoming a pre-requisite to entry that you have done an internship. We must level this playing field. It pains me to say it, because by nature I’m against regulation but to get proper meritocracy and competition working we should legistlate that if the internship has the characteristics of real employment then legally it must be treated as such with a formal contract, fair selection process, and at least a minimum wage salary. In the long run this will be a real win-win for every player in the economy.

Rather than wait for such regulation I hope the companies realise now that they are being short-sighted by saving pennies here which could cost them pounds later. The barrier to entry means they’re potentially missing out the very best, hungriest talent. The outlay of paying minimum wage for administrative support is minimal. The return on genuinely recruiting the best people into your firm for the long-run will pay back that tenfold. Meritocracy is not just good for society – it is good for business too.

[This is a rehash of an article on the subject I first wrote in Nov 2009]

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The Daily Cost of Servicing Our Debt

This diagram graphically represents the size of our daily spending on servicing our debt in comparison with our daily spend on other areas.    It is a sobering reminder ahead of today’s budget of why eliminating the structural deficit must be a priority.   The depressing thing is that controlling the deficit will not change the daily interest on the existing debt – it’ll just stop it getting bigger and bigger.   We’re going to be paying for the party in the 90s for a long, long time to come.

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Put the armour on. 2011 is going to Hurt

Happy New Year.   Or is it?  The reality is that 2011 is going to be pretty miserable for the whole country.   Any honeymoon period for the Coalition (if there was one) is up.  The reality of austerity measures are kicking-in.  Turning the economy is like turning an oil tanker.  Things will get worse before they get better.  We will see more public sector redundancies, we will see more cuts to other services,  the VAT rise will trickle to the till,  we wont see pay rises in the private sector, even the employed will feel  -and actually be in real terms – poorer this April than April two years ago.  Health and education reforms will spook the Unions.   Protest will spread.

The Government has to accept this and hold its nerve.   It cannot do what it needs to do and be popular in the immediate or short term.  It needs, in the national interest, to do the right thing rather than the popular thing.  With eyes wide-open it needs to understand that its popularity will fall this year and it needs to carry on regardless.  The instinct and philosophy of this government is the right one.  The challenge now is to be competent in delivery.   The quicker we get the pain over, the quicker we start the recovery.  If we start the recovery then the short-term unpopularity will dwindle and we have a fighting chance of re-election in 2015.  Dither and spread the pain over the whole five years and even if the objective of shoring up the economy is met it will just gift the country back to Labour to mess up again.

Labour will blame the Coalition for the pain. They’ll say: “They’re in Government.  We’re not.  It is their choices, it is their fault”  This is a bit like blaming a doctor for making you ill with chemo rather than the fags you only gave up six months earlier.  Nevertheless, while the pain is there the public will buy their argument.  The Coalition needs to see its program through and see it through quickly.

The lessons are there in History.  Those who remember the 1981 budget may spot certain parallels with today.  For the whole period between of 80 and 82  it was inconceivable that the Conservatives would be returned to power.  Nerve was held.  The budget worked.  Britain, after the pain, prospered.   Thatcher would have won even without the Falklands.   But we must also learn from that period.  Nobody would want to see the likes of the Brixton or Toxteth riots again.  That’s why it is so crucial that we don’t just deliver on the miserable austerity side of the program –  but also on the social side – IDS has made his case well for welfare reform – he needs to be allowed to now get on and deliver .  This is the year to get moving.   It’s also critical that we strike the right balance in the way we police inevitable protests.  Get that wrong and the Government could doom itself.

So on that dour note, I say again:  Happy New Year.  Put the armour on, 2011 is going to Hurt.

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Why George Osborne is an Optimist – and Why He Needs to Be

at Birmingham Uni

The knives are well and truly out for George Osborne.  The Observer reports that Labour are going to target him as the shadow teams ‘weakest link’.  The polling data (referenced in the Observer article) confirms that the public are averse to him – and I’ll add to the evidence with a less scientific straw-poll of my own ‘vote undecided’ mates all of whom see him as a liability.   To pick out the key words from their objections to him he apparently lacks ‘experience’, ‘credibility’ and ‘gravitas’.

It is maddening there is any doubt in the electorate’s mind  who is the safer pair of hands for the economy.  The economy should be an ‘Open Goal’ for the Tories but somehow they seem intent on blasting over-the-bar from close range.  Osborne is finally realising that he’s got to turn this public perception around.  There is no room on the front bench for someone who wants to be a back room strategist – if he wants one of the ‘Great Offices of State’ he has to get out there  and land his message in the minds of the public.    Is he really up to the task?

I like to judge politicians in the flesh so on Friday I went along to the University of Birmingham to listen to him deliver a speech there.   He spoke with only hand scribbled notes, not quite a sharp as Cameron who can manage these things without any reference material, but certainly better than most current politicians who wouldn’t dare step up to a lectern without a fully typed speech and/or autocue.

He spoke of three central themes the Tories wish to land:

  • That they have a credible plan for the deficit.  He delved into some of the detail making clear that it is the structural deficit he has to target and that we are in the bonkers position that the State is still spending £4 for every £3 it receives.  That we need to make the cuts ‘not on the backs of the poorest in society’.  He hinted any tax cuts would come from NI before he aimed at the 50% tax band – and indeed the NI cut seems to have been made official policy this morning.  He was more open about where he would cut income than where he would cut expenditure and I know that annoys people.  They do have to add this detail to the public domain soon.
  • That there are plans to ‘get business’ going again.    He gave some detail on the help to be given to small businesses.  As the owner of a small business myself there is real gold in these proposals.
  • To create a more balanced economy.  Again, he delved into a little detail on how Tory policies on education reform, welfare-to-work, energy policy and broadband infrastructure would pull together to achieve that end.

All the content of the speech was fine – he certainly pushed all the right buttons for me.   If there was a problem it wasn’t the content – it was the delivery.

It is hard to put your finger on what is ‘wrong’ with the delivery.    Some people are blessed with a presence , voice and stature that commands an audience to cling to every word .  They could frankly read out the dry text of a European Directive and keep an audience fully engaged.   George Osborne is not one of those people.  Politics should not be like that, it harms our democracy that it is.  To make the leap from manager to leader you need this X-factor.   I guess the point of the phrase ‘X-factor’ is that the ‘X’ is impossible to define.  Whatever it is: he hasn’t got it.

I guess the plan was always that he could cling onto Cameron’s coat tails to get the job then the missing ‘experience’, ‘credibility’ and ‘gravitas’ would grow by default as he made the job his own.  The calculation must have been that whilst he isn’t an electoral asset he wouldn’t be a liability and would be good at the job.  That ‘wouldn’t be a liability’ part of the assumption is now being tested.

We did get a five minute glimpse that it is within him on certain themes to strike the right chord.  In response to a question about the possibility of a double –dip recession he suddenly went a bit off-piste and talked about his personal optimism for Britain.

His point was that despite the global woe when you look at the global business cycle, and you look at the surge of economic activity in India, Brazil, Turkey, Russia, China and so on, as the manufacturing and service base they have created over the last few years settles down (which has been to a certain extent at our expense) so their new middle-class begins to embed middle-class spending habits.  When we look at the industries Britain still excels at – pharma, aerospace engineering, media, financial services, prestige brands, tourism etc – these are all things that this new global middle-class will push their new found wealth into.   We are poised to be big benefactors of that shift.  With the right policies to support our economy whilst the global cycle swings to this next stage – there can and should be great hope for the UK.

As he warmed to his optimistic theme he relaxed, his shoulders visibly dropped an inch, he smiled, his hands moved – there was passion there.  He had a compelling, well articulated narrative which he believed in.  In response the audience sat up straighter, leaned forward, listened closely – they were with him – they were engaged.  The moment ended as quickly as it had started when he then fielded a question about his role in managing both fiscal and monetary policy.  The spell was broken.

Cameron isn’t going to change horses this close to the finish line.   Osborne is the man and he has to drag himself out of this rut where he is being cast as a liability.  He needs to find something else on top of the depressing detail of what needs to be done to get us out of the economic hole – if you’re asking people for pain now, you have to have them believe that there will be less pain tomorrow.  The optimistic message is key – he should develop it and shout it from the rooftops.

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