Tuesday, 19 April 2011

Retail to the rescue...or not?

As well as crowing about 'winning' the election, David Cameron occassionally likes to imitate the real grown-up politicians he's seen by announcing what he calls 'policies'. Unfortunately these policies are less carefully thought-out and workable point-by-point solutions to the problems he identifies in politics so much as shallow wish-fulfilment. Perhaps the definitive Cameron policy is his vision of 'the Big Society', which essentially boils down to a heartfelt sight that gosh, chaps, wouldn't it be spiffing if people were just a little bit nicer to one another? and pretends that this is an effective basis for running a welfare state in 21st century Britain. Another of Cameron's flagship brainfarts ideas is that we can gut the public sector needed to stop society tumbling into a Hobbesian nightmare of all-against-all and this will not be a problem because the private sector will rush into the void, create jobs for all the newly-unemployed and run everything super-efficiently - because, as anyone who's spent three hours on the phone to their mobile company to ask why their brand new Blackberry only works if they lean out of a window in their knickers can tell you, the private sector is an absolute paradigm of efficiency.

The following piece by one of our You Didn't Win bloggers looks in more detail at the flaws in Cameron's 'Tesco will save us all' utopia:

The recently released consumer spending figures serve to confirm what most of us already know.

In retail terms, spending is down - the biggest drop of like-for-like (LFL) since records began 16 years ago. Various excuses have been trundled out; the weather, that Easter's much later this year. But anyone who's worked in retail management will likely know that comparing figures isn't as simple as 'on March 1st last year, we made X money; on March 1st this year we made Y.' More often than not, March 1st falls on a different day from one year to the next (actually; every year it's different). A Friday's takings will differ to a Saturday's and a Sunday's. Mondays are often quiet, though most returns come back that day.

(If I may digress, I'm concerned by the creep of retail opening hours. I'm old enough to remember when most shops were shut by 5.30pm. Supermarkets used to close about 7pm. Now, I have heard someone complain that where I currently work opens too late in the morning [8.30am] and that our closing time of 6.30pm is too early. The big supermarkets and chains do have a lot to answer for - a few years ago Debenhams too the decision to open on New Year's Day. As I understand it, the staff were offered triple time and no-one had to work it if they didn't want to. What would happen if the entire staff of one store refused? Would the store stay closed? Probably not. Working elsewhere in a shopping mall that hosted a Debenhams, it was a worrying precedent. There will likely come a point at which people expect retail outlets of all sorts to stay open to their convenience without considering the human cost, never mind the costs to small, independent businesses. At least extending opening hours will create jobs, assuming people can afford to work part-time night shifts for Tesco and Asda Wal-Mart.)

But if people aren't spending money, how many jobs will really be created, even in the big food retailers?

Running a retail business, there are two main costs that you can exert influence over; money spent on buying in stock to sell and payroll. Given that you'll lose customers if you don't have the item they're looking for, it would be foolhardy to cut stock levels too much. So that leaves the staff. There are few full-time (35 hours/week and above) positions in retail - usually management and upwards. A part-time employee may only have a 4 hour contract, even if they regularly work a 20 hour week. A reduction in hours as punishment for some transgression is not unheard of - not the most thoughtful response to a situation, but it happens. If you're already on the knife edge, one shift of 4 hours less can be the difference between being able to manage for another month and getting behind on the rent, or not being able to buy food. Even if you have a lovely, even-tempered boss who would never do such a thing as punishment, the possibility of a reduction of hours during quiet periods (such as between Christmas and Easter) is ever-present. It all depends on the nebulous phrase "the needs of the business". So retail staff are often students, or people who need the flexibility to do something else. It doesn't require much qualification, just the ability to be endlessly patient with rude, unthinking people who are entirely self-absorbed and seem to think that if you're working in a shop, you might not actually qualify as a human being, with the benefits and privileges that brings. For example, the woman who approached the counter on her phone (to her Dad, as it turned out) and continued her conversation without acknowledging my existence. She did, however, apologise to her Dad for interrupting the conversation when I asked her if she needed a bag and to tell her how much she was to pay.

There's little going for a retail career - the pay is usually the legal minimum ('we'd pay you less, but we can't!'), the weekend generally doesn't exist in the 'heyhey, Friday night!' sense, and some people make assumptions about you, allowing them to be fantastically rude because you're not doing a Proper Job. It may come as a surprise, but I fully support Charlie Brooker's suggestion that retail staff be encouraged to give as good as they get.

All this said, retail makes up the largest employer in the private sector, the private sector that is key to the current government's plans. The main idea is that, as public sector jobs are cut, the private sector will take up the slack and employ the newly unemployed. Some of them probably will. Though it probably will be quite a pay cut for those new employees - as I mentioned, retail usually attracts the minimum wage or just above - and there generally isn't so much in the way of pension schemes, probably because staff turnover can be so high as to make it unworkable. People in the public sector now, if they are just managing to make ends meet, will quite possibly go under if they are forced into a part-time retail job. And forced they will be, if they don't want the Job Centre to cut off their benefits.

But the minimum wage is to increase in October. That should make it all better, right? (I need to check back on this, but wasn't one of the Tory manifesto points abolishing the age discrimination in minimum wage levels?)

For how many small businesses will this be the final straw? If someone has already cut their staffing levels to the barest minimum required to keep their shop open, will they have any realistic alternative to either letting go of staff or closing altogether? How many will reconsider their opening hours (say, closing Monday all day and reducing the hours to 10am - 5pm), leading to a downward spiral of everyone going to Tesco and complaining that all the small shops have closed? Just today, a kindly visitor to my place of employment asked if I knew that Safeway (really, that's what he said - maybe he meant Morrison's.) were selling the same item about 60p cheaper. Where I work is a stand-alone independent shop. We cannot sell that item 60p cheaper because it probably costs us that to buy it in and while we're not after massive profit, my employers like to be able to pay the electricity bill and their staff wages; also the tax bill. Sainsbury's (or whoever he meant, assuming he didn't step through a time warp and really mean Safeway's and the price they charged for something 5 years ago) can afford to charge less for their stock because of economies of scale. Another important economic concept to keep in mind is the race to the bottom. If everyone takes this attitude, we'll all be shopping in Asda, because they and the other big supermarkets will be all that remain. At least we'll all be able to get a staff discount.

And one last thought on the endless growth that capitalism is predicated on; once any given company has that holy grail of 100% of market share, what would happen?

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