State of the Nation

Osbourne

Today I appeared on BBC Radio 5 live giving some commentary around the Chancellors speech around the economy and the need to save a further £60bn in spending over the next four years.

Reading through his speech, some key words initially jumped out at me which were things like “Confronting truths”, “dangerous new complacency”,  ”hard truths,” and “brink of collapse.”  These words were being used to position the further difficult decisions that would have to be made and implemented to balance the public finances.

My job within the short time was to give some response from a business perspective, as usual there is never enough time for everything, so here’s my thoughts in random order: -

  • Business has already been doing much of the above since the crash in 2008 in terms of confronting truths, eliminating complacency and adjusting to the new new. 
  • Business has adapted and healthchecks itself regularly with brutal honesty .  High performing businesses have this as part of their regular dialogue.  The ones that do fall asleep at the wheel fail – Blockbuster, Woolworths, HMV etc.
  • Small business access to finance is still an issue for many, many banks would argue that money is available for financially sound businesses.  Key is the approach and appetite by the banks to risk hence why more businesses being crowd funded or funded via EIS.
  • Britain must compete on a global stage.  Costs must be right sized, skills must be developed, new industries developed. opprtunities for young peope created.  Agree with the Chancellor on that one.
  • Business confidence is positive, but realistic.  At the Telegraph Festival of Business a straw poll of 300 business leaders and entrepreneurs showed a positive outlook for the future.
  • The debt size is still £10 trillion, so relatively speaking £60bn is still not tackling the scale of the issue.  We don’t really know what austerity looks and feels like in the same way as a resident of Portual, Greece or Spain might.  Consumer consumption continues here in the UK.
  • Any economy is a bell curve of success and failure at the extremes.  Businesses in specific sectors are having a harder time than others, equally other businesses continue to grow like crazy.  The businesses in the middle of the bell curve are figuring out ways to ensure they stay where they are or move right of the curve.
  • Any business leader would look at their balance sheet or cashflow and look to repair it if it were in a terrible state, the question is just how long will the stakeholders give them?  A failed CEO would be fired, a failed politician invariably gets to fight another day.
  • A small government has to be one of inevitable outcomes of the need to reduce costs.  More productivity, efficiency, automation, /Information Technology, Smart services and Smart Cities will mean fewer people.  A brave move for a politician.

The bottom line is that business is just getting on with it.  Business has little need for politics, other than to create the best possible landscape for business to thrive within.  Businesspeople see that the balance sheet is in dire need of repair and just want more honesty and transparency, so that they aren’t blindsided.

Kids these days…..

Ask a cross section of adults about kids these days and you’ll get a multitude of responses including everything from “they want everything on a plate for them, they don’t know the value of money to, the lost generation.”

The UK Commission for Employment and Skills released a report yesterday highlighting the challenge that school leavers have in obtaining jobs now, particularly 16-17 year olds. The national media picked it up and focused the story around Saturday jobs.  I was asked to go on BBC News to talk about what influence the Saturday jobs I had on my pathway to running a large company.

A Quick History of My First Job(s) 

I started out helping my step-father, who was a milk-man, from as young as around ten from memory. Getting up early and running the milk to the steps, you wouldn’t be allowed to do it in today’s day and age. From there I went to collecting golf balls on a local municipal golf range, which was one of the plum jobs in the area – £1.00 a bucket.

I also held down a paper round, so by the time I’d reached sixteen, I’d already had three jobs. From there, I got my first proper employed job stacking shelves in Waitrose, Bracknell. I had total responsibility for the biscuit aisle and I can honestly say they were two very happy years as I made it my personal mission to ensure that the shelves were correctly filled, faced and stock rotated at all times.

I eventually left Waitrose and went to work for arch rival Sainsburys in the warehouse as they paid more, whilst I continued my college studies. On leaving college, I went straight into a new job. Twenty-seven years later, I’ve never been out of work. I look back and absolutely credit that work ethic with the encouragement to get out and earn my own money, even prior to the legal age of work. From my Saturday jobs I learned at least ten key things: -

  1. Punctuality
  2. Responsibility
  3. Customer service
  4. Communication
  5. Team-working
  6. The value of money
  7. Working for a manager
  8. How large companies work
  9. Prioritising work
  10. Stock management principles

In my view, having a Saturday job gave me grounding in the principle of working for the things you want. I saved up my earnings religiously for a Technics separates system for over a year, with the occasional part for my BMX bike.

A Perfect Storm

Things aren’t the same today in the job market for 16-21 year olds, for a number of key reasons: -

  1. We have 3M more people in the UK population in 2012, than in 2002. Lots of factors including economic immigration.
  2. There are 500,000 more graduates in the economy in 2011,than there were in 2001. Due to the lack of overall jobs, “credentialism” is taking place. That is, graduates are taking jobs which they are over-qualified for.
  3. There are less what’s called “elementary” jobs in the market. Elementary jobs are things like retail sales assistants, waitresses and bar people. With the demise of the high street, lower numbers of these types of businesses exist. 
  4. The shift of employers has moved more to SME’s than large businesses. SME’s tend to take on more experienced staff as they may have less resources (time/training money) to invest in young staff. You can see the decline in the number of elementary jobs by looking at the data for the number of students who work whilst studying. The percentage has dropped from 40% to 20% since 2001.

 Other Influencing Factors

  1. 41% of businesses don’t have a requirement for 16-17 year olds in their business.
  2. 27% of roles that get filled come solely via word of mouth. For 16-17 year olds, this rises to 38%.
  3. Parents are highly influential in finding first time jobs for young people.
  4. Employers cite the following as some key reasons they don’t take on 16-17 year olds. Poor attitude/lack of motivation (18%), Lack of Experience (23%), Lack of Common Sense (6%), Lack of Skills (10%). Interestingly the poor attitude lack of motivation drops to 5% for higher education leavers.
  5. The longer you stay in education, the stronger your network of contacts becomes and the higher the probability of achieving a job by word of mouth.
  6. The report doesn’t focus on social issues so much, but clearly they will be of influence.

Recommendations for Employers

  1. Ensure that the vacancies you have are made available at the the Job Centre. 
  2. Be Positive towards youth and develop a pro-youth policy, particularly relating to work experience.
  3. If you are one of the 41% of employers that don’t have a requirement for young people in the business, contribute in other ways. In particular, get involved in ways to engage school children in enterprise through charities such as UK Youth or enterprises run by young people such as The Skill! Programme.

If a teenager at school participates in at least four of the activities below before they leave school, they are five times less likely to be a NEET (young person categorised as “not in education, employment or training”).

  1. Career counselling.
  2. Work Experience.
  3. Enterprise initiatives.
  4. Visits to local businesses.
  5. CV writing workshops.
  6. Visits to universities or further education colleges.
  7. Mock interviews.
  8. Mentoring.
  9. Hearing a talk from a business leader in school.

Predictions are that things are going to get tougher unless there is a step change in the way we support our young people. It’s for us, Generation X, to show the way through our actions.

We’ve got to open up some opportunities, get our hands dirty and give some inspiration or stand by as we see them become the lost generation. I for one won’t be a bystander. I see excellence, opportunity and a generation presented with different challenges, I’ll continue to spend some of my time helping how I can by contributing to the activities highlighted to increase chances of employment for young people.

I sat on a dragons den style panel for secondary school children last week and was inspired by the energy and ideas from the young people participating. It goes to show that the idea works, we encourage them and they step up, so don’t stare up the steps, step up the stairs and do something