John Lewis Partnership – socialism in action

As capitalist-owned enterprises lay off workers and cut wages, the worker-owned store John Lewis – consistently voted one of the best for customer service by consumers – pays out a 13% bonus to staff. Why? Because they own the business – they won’t be asking themselves to take a pay cut!

I’m not saying that John Lewis is some kind of paradise in a sea of exploitation – it isn’t, but clearly, workers owning the enterprises in which they work is no impediment to building successful businesses (sales are up!) and responding to consumer demand (Waitrose are brining out a budget range, for example) whilst at the same time “sharing the proceeds of growth”, to coin a phrase.*

From Wednesday’s Guardian:

The annual bonus paid to John Lewis’s 70,000 staff has shrunk by almost a third after profits at the partnership were hit by the recession.

But staff still cheered the news that they will receive a bonus of nearly seven weeks’ pay, down from 10 weeks’ pay a year ago.

Because John Lewis is owned by its staff, every one of them – from the boardroom to the shop floor – receives the same percentage payout. This year it is equal to 13% of basic salary for staff at the Waitrose supermarket chain and John Lewis department stores.

At the John Lewis store on Oxford Street this morning, more than 1,000 shop staff hung over the balconies to learn what their annual bonus would be.

In the well of the atrium, Noel Saunders, managing director of the store, worked the crowd like a game show host, hinting the highest partners could expect was a 12% payout.

At 9.28am, as partners counted down from 10, his assistant Paul Thomas – who has worked in the floor coverings department for 20 years and was selected for scoring excellent results from mystery shoppers – fumbled with the envelope before pulling out a giant card bearing the figure 13%.

As customers peered through the doors, partners erupted, celebrating the bonus payment after a tough year on the shop floor.

The total bonus payout for 2008 is £125.5m, down from £180m for 2007.

“The key difference is this is a genuine bonus based on profit-sharing,” said Andy Street, managing director of John Lewis. “The word ‘bonus’ has become discredited in the economy, but for us it is something to celebrate. Our partners have worked harder than ever to achieve these results.”

The feel-good atmosphere pervaded all six floors with no grumbles from partners that the bonus fell short of last year’s bumper payout.

“Last year, 20% was a fantastic result, but in the current climate we are really happy to get a bonus as we see people around us losing their jobs,” said Charlotte Deane, who will use her bonus to catch up with her sister, who is travelling in California. “However much it is, it is a bonus, not a benefit, and I feel lucky to get it.”

Most staff canvassed expect to use the extra cash on a holiday. Indira Vakeria said she was planning a trip to India to visit her parents. “We are really pleased with 13%,” she said.

The company reported that its profits fell by 26% in 2008 to £279.6m. Chairman Charlie Mayfield warned that 2009 would be “another very difficult trading year”.

“Trading conditions worsened markedly during the year as the problems in the financial sector reduced consumer confidence to a low level,” he said.

The partnership conceded it would no longer be able to hit its target of opening 10 stores in 10 years. It has already opened four, including branches in Liverpool and Cambridge, but beyond its new Cardiff store this autumn, and a shop at the Olympic site in Stratford slated for 2011, it said its aggressive growth plan would be “delayed”.

The company said it remained optimistic that two stores across the Irish Sea, one in Lisburn in Northern Ireland and one in Dublin, would open as planned but warned that other projects, including stores in Crawley and Portsmouth, might be held up. Retail schemes around the country are being mothballed as property developers grapple with funding shortfalls and collapsing asset values. Mayfield said the retailer was “working actively with developers to maintain our rate of growth” and remained committed to the expansion plan.

It is just over a year since John Lewis first admitted that its sales were being hit by the high street downturn. By the autumn, when the UK economy was contracting, the company was reporting double-digit falls in weekly sales.

* Please, don’t misunderstand me, I doubt that the Tories – expected to win the next UK election – will fulfill their promise of “sharing the proceeds” by forcing Tesco to become a cooperative. This is something the unions need to take up with New Labour, though…

Manufacturing meltdown! Productive economy faces catastrophy

It’s a funny old world. At the moment, I mean.

The Chinese saying goes: may you live in interesting times. I’m not sure if this is a friendly or unfriendly wish. Certainly the times are interesting, but also worrying.

Job “losses” are coming thick and fast. The old economic orthodoxies are being abandoned as the free market goes into free fall.

We’ve had a bailout of the financial sector – the government acting for the banksters, rather than for workers and customers.

But will there be a similar bailout of the productive economy?

After years of deindustrialisation we need to rebuild the manufacturing base of our economy with the aim of full employment, environmental sustainability, and workplace democracy.

A weak pound alone won’t save manufacturing…

The FT reports that:

Manufacturers are expecting the sharpest contraction in output in 30 years, according to a CBI survey published on Wednesday, which noted that the only time that a deeper decline had been expected was for two months in 1980 as the UK entered a recession.

The CBI Industrial Trends Survey, which covers October, came as the EEF, whose members are largely manufacturers, reported that one in four companies which had negotiated a pay deal in three months to the end of September had either deferred a decision or elected to freeze pay.

Separately, the Bank of England’s Agents’ Survey showed that companies last month pared back their investment plans to cover only essential expenditure as reports of small-scale redundancies and plant closures became more widespread.

Together, the three surveys point to a rapid deterioration in Britain’s manufacturing sector in recent months as the UK heads into a recession.

Commenting on the EEF and CBI surveys, David Yeandle, EEF head of employment policy, said: “The severity of these changes over such a short period of time indicates the extent to which companies are having to take immediate action to control their costs. It seems hard to believe it is only a few months since fears about wage inflation were so prevalent.”

Yeah, and it’s hard to believe that anyone took seriously the government claim that if public sector workers didn’t get a pay cut, there’d be rampant inflation…

Why the City’s not scared of the publicly-owned mega-bank

Auntie’s economics wonk Robert Peston explains the motives behind the world’s newest banking group, UKFI plc:

The great fear in the City about the Treasury taking stakes in three of our biggest banks is that this partial nationalisation will turn them into non-commercial public services.

No bad thing, some might say.

But it’s not what the chancellor and prime minister want.

So they are putting the shares that will be acquired for taxpayers in Royal Bank of Scotland, HBOS and Lloyds TSB into a new company that will be owned by the Treasury, but will be managed at arms length.

That company will be chaired by a former finance director of Lloyds TSB, Sir Philip Hampton, who is currently chairman of the supermarket group Sainsbury.

So Sir Phil’s an Establishment figure, and he figures that he’ll be able to both increase cheaper lending to business AND quickly return money given by taxpayers.

No doubt New Labour wants to help the banksters get back to their normal business of fleecing workers, consumers, and small businesspeople.

But that promise of helping out the local businesses that provide so much employment has been made loudly and repeatedly.

Since Sir Phil is likely to side with the City over this issue rather than with the general public, New Labour are delaying a conflict – just as Brown’s policy of the credit bubble was designed to stall industrial conflict.

Robert Peston goes on to say,

And there’s a further risk in its decision to create the vehicle for owning the bank stakes as a formal Companies Act company.

How so?

Well as the chairman of a proper company, Sir Philip could not be formally directed to take this or that action by ministers.

So that promise of helping out small businesses was just that – a promise and no more…

Which begs the question, will the promise to ensure that public money isn’t used to fund lavish pay-offs?

At a time when ordinary people are being asked to show restraint and businesses across the land are preparing lay-offs, the inability of the government to keep these promises could be as haunting as the 10p tax affair.

That’s to say nothing of the HBOS/Lloyds job losses and the future of the Scottish Labour party…

And to think it all started with a former building society called Northern Rock.

Why JCB workers voted for pay cuts

From this weeks’ issue of The Socialist:

JCB – Why should we accept redundancies and pay cuts?
Workers at JCB’s UK factories have voted by a two thirds majority to move to short time working, from 39 to 34 hours a week. This will mean a pay cut of over £50 a week.

A JCB worker
Short time will last a minimum of six months. The ballot conducted by the GMB gave workers two options. Either vote to stay at 39 hours and see 500 redundancies or vote for short time and only 170 redundancies. Death by hanging or the firing squad.

430 jobs have already been lost since August this year. It is not surprising that given these options, workers have chosen to keep their jobs. JCB chief Matthew Taylor said: “The ballot shows the tremendous unity amongst the workforce. They have looked after the needs of one another rather than the needs of the individual”.

Many workers asked if the directors were prepared to take the equivalent pay reduction. It seems that the unity does not stretch that far. The result does not reflect the real anger that exists amongst the workforce at having to pay for the present economic crisis with job and pay cuts.

Much of the anger is directed at the role of the GMB. In some cases no meetings were held with the workforce at all. Workers have had no chance to discuss the issues let alone put forward any alternatives to job and pay cuts and in protest many are now saying they will pull out of the union. Demands for the joint shop stewards’ committee to stand down have been raised.

The joint shop stewards’ committee said it was pleased with the outcome of the ballot. And scandalously it is now calling for the office staff who are salaried and not affected to follow the lead and take a reduction in hours and pay. The situation could worsen in the months to come as manufacturing industry could be devastated by the unfolding recession. What will the position of the GMB be then?

Why should we accept redundancies and pay cuts? JCB has made millions in profit in recent years as a result of the economic boom. Where has all the money gone? Workers at Ford in Southampton and low-paid civil servants are fighting back in the face of the economic crisis. Where there is a fighting leadership workers will feel confident that they can defend themselves against the attacks of the bosses. And real unity can be forged.

Why don’t civil servants get a bail-out?

Why is it that there’s billions to be flung at struggling bankers, but nothing but cuts for struggling workers?

The News Line reports:

Hundreds of thousands of civil servants, members of the Public and Commercial Services Union (PCS), have voted overwhelmingly for strike action over pay.

A PCS statement said yesterday that ‘a prolonged programme of industrial action, hitting civil and public services across the UK moved a step closer today.’

It added that PCS members have ‘overwhelmingly backed strike action in a dispute over the government’s 2% public sector pay cap.’

The union said: ‘54% of those taking part in the ballot backed union plans for industrial action, which includes national civil service-wide strikes, targeted strike action and overtime bans.

‘The union’s National Executive Committee (NEC) will be meeting on Thursday 23 October to finalise plans and decide on dates for the programme of industrial action which could stretch over the coming months.

‘An announcement confirming these plans will be made on 23 October.

‘The ballot result comes as civil and public servants across the UK face mounting pressure on their finances as a result of the government’s public sector pay cap.

‘With a quarter of the civil service earning less than £16,500 and thousands earning just above the minimum wage, the government’s policy of capping public sector pay has hit some of the lowest paid in the public sector the hardest, leading to real terms pay cuts and pay freezes.

‘Pay in the civil service is worse than other parts of the public sector because “progression” (moving from the minimum to the maximum of the pay range) is included in the government’s pay cap.

‘Hence there is less money available to fund basic pay awards.’

This year has already seen pay strikes hit jobcentres, passports, immigration and coastguards across the UK, as well as strikes in the Scottish courts service, museums and sportscotland.

PCS members have also co-ordinated their industrial action over pay with other public sector unions, including NUT, UCU and Unison.

PCS general secretary Mark Serwotka said: ‘The hardworking people who keep this country running, from passports, immigration and justice, to coastguards, tax and jobcentres, face increasing financial hardship because of the government’s public sector pay cap.

‘Pay freezes and real term pay cuts are simply not sustainable when you are earning a pittance and experiencing double digit rises in food, fuel and housing costs.

‘Bailing out bankers should not be at the expense of those who deliver public services or those who rely on them.

‘Members feel betrayed and this ballot result illustrates that they are prepared to stand up for fair pay.

‘The union’s NEC will be meeting next week to take forward that result and finalise plans for a programme of industrial action.

‘The government have a window of opportunity to avert industrial action and to recognise that their public sector pay cap is compounding the financial misery of hardworking families in these unstable economic times.’