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Bedford Roughyed

Spending review

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in the "civil service"  - and i'm not sure if  this includes the NHS, police, local govt etc  etc, I think there are many people on low incomes that should not suffer. However, I do know that there are also many who are on a decent package, too. We we told there had been a pay freeze and at that time I suspected that this did not cover "increments" . So clearly there wasn't   a pay freeze after all.   

 

As for professional services companies, it is equally wrong at present, and working for them must be like working in the Civil Service, only the owners, investors and shareholders can do something about if they wish. 

On the professional service companies, it's an area where the companies really can't do too much about it.  The legal industry is one I know very well, most of the top 50 firms in the UK publish their new trainee, trainee+1 year, newly qualified solicitor, NQ+1 year and NQ+2 year salaries and it's almost a willy waggling contest, the US firms in London do the same and often pay more but with fewer opportunities to progress than in the UK firms.  These firms cannot cut their salaries in this area as their competitors certainly won't and it's such an ego driven environment that it would be a massive PR blow to do so when others don't.

 

Performance related pay is in evidence though as from NQ level (newly qualified) most firms offer 25-50% bonuses.

 

It has always struck me as an indicator that lawyers get far too much money if someone can get their practising certificate as a lawyer and within days be earning over £60k basic plus £30k bonus in what are fairly boring, middle-ranking firms.  That said, at the top 5 firms you are expected to nearly sacrifice your youth working 16+ hour days in pursuit of a 50/50 chance of being made Partner and getting a boost into the £1m per year income bracket.

 

If law firms moved away from the fixed salary industry then the wages would probably go up.  When the civil service moves away from automatic progression then you'll see their real-term pay go down long term as I can't see any government in the next decade or so approve above inflation pay rises.  One year of a pay freeze that's not compensated by the next year being higher means a permanent pay cut.

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From what I've seen of it we're basically up the creek and no-one has the slightest clue where to find a paddle.

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I don't think that is true. I think we are in that balanced see saw position where very slight influences  may cause that balance to change. A percentage point or less here or there can make all the difference. In any case, this is all 18 months to 2 years off and depts have quite a lot of time to look at how they do things.   I certainly don't think things are as bad as the media portray - their interest comes from having something to say and god news doesn't really make for good headlines in any media left or right.

 

Alternatively we could just borrow our way out and leave a time bomb for future generations.

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I don't think that is true. I think we are in that balanced see saw position where very slight influences  may cause that balance to change. A percentage point or less here or there can make all the difference. In any case, this is all 18 months to 2 years off and depts have quite a lot of time to look at how they do things.   I certainly don't think things are as bad as the media portray - their interest comes from having something to say and god news doesn't really make for good headlines in any media left or right.

 

Alternatively we could just borrow our way out and leave a time bomb for future generations.

I agree with you.  The FTSE100 and 250 indices are on seriously strong runs, the 250 has risen every month for 19 months now.  Profits in companies in London are skyrocketing as they're still running on austerity level back-ends with business back to where it was in 2007.  Executive level salaries are also skyrocketing, I regularly see updates of directors in my field getting 10-20% pay rises plus additional bonuses beyond their normal one.

 

The bit where it all falls apart is that they're all holding it together quite well at portraying downwards that the economy is still too flaky to offer any pay rises to those in the trenches.  Again, what I've seen this year is plenty of companies giving 0% pay rises with statements that by next year they should be in a position to offer more.  It's really not a good place to be for most employees who have seen their wages decrease in real terms each year since 2008 along with benefits and working conditions.  I read one briefing earlier this year that many companies would have to give 15%+ pay rises to bring wages back to real terms parity with 2007.

 

The contractor market has more jobs on offer than ever at the moment as companies aren't completely lying when they say that the economy is still too flaky.  Many companies really don't want to risk bringing in new employees just in case the market crashes again and they have to go through the painful process of redundancies.  The problem with the market is that there are masses of previously laid-off people in that market applying for every job that's out there fairly swamping the agencies with their CVs.  This has a knock-on effect of driving down the rates for most roles, with many companies putting out roles at permanent employee salary with contractor level lack of job security.

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Re "professional services" do your comment also apply to KPMG, Accenture, Bearing Point?  I'd also have thought that ARUP, Atkins, Balfour Beatty etc would be the first to benefit from infrastructure investment, with the design, planning and finance stages requiring qualified and experiences engineers and there are not too many of those around. It only later in the construction phase when large numbers of site workers may be needed - so the effect on unemployment may not happen until well into the project. 

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Re "professional services" do your comment also apply to KPMG, Accenture, Bearing Point?  I'd also have thought that ARUP, Atkins, Balfour Beatty etc would be the first to benefit from infrastructure investment, with the design, planning and finance stages requiring qualified and experiences engineers and there are not too many of those around. It only later in the construction phase when large numbers of site workers may be needed - so the effect on unemployment may not happen until well into the project. 

 

The first thing the HS2 project will do if it follows the path laid down by CrossRail will be to set up shop in some of the most expensive office space in London (CrossRail currently occupy two floors of the City Group building in Canary Wharf) and employ an army of four figure a day contractors to fill it.  :dry:

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Re "professional services" do your comment also apply to KPMG, Accenture, Bearing Point?  I'd also have thought that ARUP, Atkins, Balfour Beatty etc would be the first to benefit from infrastructure investment, with the design, planning and finance stages requiring qualified and experiences engineers and there are not too many of those around. It only later in the construction phase when large numbers of site workers may be needed - so the effect on unemployment may not happen until well into the project. 

It's not quite as regimented in those places as law firms but the same principles generally apply.

 

On the other points about where the money and jobs would go... it may be me being a cynical old sod but I wonder how much of the money will stay in UK taxable companies and bank accounts and how many jobs will be taken by British nationals.

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US corporations? Japanese train companies? Indian design offices?  European offices of  Consulting Engineers cos they need the jobs too? Actually, I think that in places like Atkins anf Arup, most money will stay in UK, but a lot of the detail drwing production will be done overseas - the paperless site office is a myth and mobility solutions for site work have a long way to go.

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