Tuesday, 6 October 2009

The scales won't balance because they're broken ...

Right, I'll start this blog off by making a statement: the Conservatives are going to win the election in 2010. The only way that they could lose is if every candidate buggered a nursery class. labour isn't doing itself any favours at all, and I'm inclined to agree with the many claims that it became all a bit too cosy for the Labour leadership, and now they're paying the price.

But what I really want to talk about is Conservative policy, namely in the area of jobs and education. This morning George Osborne announced that to save jobs in the public sector, the Conservatives would freeze public sector pay - in other words, not allow for rises in earnings - except to those earning under £18,000, which is not an unfair proposal. Desperate times, desperate measures, and it seems that over the summer the rhetoric of 'social mobility' has been dropped by the major parties. Coupled with this is the plan to raise the retirement age to 66 years old, which saves the state a bit of cash in the long run.

An interesting counter-point to these proposals, however, is the announcement yesterday of the "Conservative plans for an extra 10,000 new university places next year to help tackle youth unemployment", including "ntroducing an early repayment bonus for existing graduates repaying their debts to the taxpayer ahead of schedule." This seems to jar somewhat with proposals to raise the retirement age and stopping pay increases.

If staff are unable to leave work i.e. retire, positions in the public sector will not be available for these graduates to take up work, leaving a significant proportion unable to find employment. I will point out here that people retire either when they reach retirement age and their pensions become available, or when they have saved enough to retire early (again, supplemented when their pensions become available). In order to retire early, earnings need to increase to allow greater savings. I hope you follow the kind of loop I'm suggesting.

So, in essence, I'm suggesting that these plans are not only not complimentary, but counter-intuitive to the other. Without employees moving out of their positions, new employees cannot move in to fill them. That's not to mention that the luxury goods (those that depend upon expendable income from consumers) will also not grow and take on new employees if expendable cash-flow isn't increased, either through pay rises or new consumers (i.e. newly employed individuals) joining the consumer market.


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