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by John Brian Shannon | January 1, 2017
Like all developed nations, Britain has a government-backed unemployment insurance scheme where workers pay fractional amounts of every pound sterling they earn to a national unemployment insurance fund during their working years.
Consequently, whenever a British worker becomes unemployed due to lay-off, that worker begins to collect unemployment insurance which pays them a portion of the wage they earned while they were employed, as a weekly benefit.
It’s a system that prevents millions of workers from experiencing the worst financial duress during periods of unemployment, or from spending their life savings during extended periods of unemployment.
In the interests of helping British workers, were the British government to pass legislation requiring the national unemployment insurance scheme to pay British workers a full 90% of a worker’s normal wage during his/her unemployment, there would be howls of protest from various quarters and the present unemployment insurance premiums paid by British workers would rise dramatically.
Though such legislation would benefit hundreds of thousands or even millions of British workers (at any given time there are likely to be 1.1 to 2.0 million unemployed people in the UK) many more millions of citizens would rail against such a plan — even though (unbeknownst to them) their own employer might be writing out their pink slip at this very moment. Which is to say, you never know what the future holds.
Almost everyone becomes unemployed at some point in their life. For seasonal workers it can be a few weeks to a few months every year. And it can occur suddenly, to anyone.
But none of the foregoing precludes the British government from passing legislation allowing private insurance companies to sell optional, additional, private unemployment insurance coverage to workers — over and above the national unemployment insurance scheme which pays only a small portion of a worker’s wage as benefits during times of unemployment.
In the interests of writing ‘a simple blog’ instead of ‘a large book’ I have dramatically simplified the Swedish example below, as it could be a complicated explanation, as different plans are offered by different companies over and above the legal minimums required by Swedish labour law (2007)
In Sweden, beyond what is mandated by Swedish law to be paid to workers during periods of unemployment (80% of the worker’s previous employment income) workers can buy any amount of optional, additional, private unemployment insurance for any amount of coverage (up to 99% of their normal wage) and as the insurance premiums are automatically deducted from their monthly wage, there’s no need for them to worry about forgetting to pay their private unemployment insurance premium payments.
- To provide a hypothetical example, Swedes can opt to pay the equivalent of one cent per dollar while employed to the private unemployment insurance provider, allowing them to receive up to 90% of their normal pay during unemployment
- Again, (a hypothetical example) to move up to 99% coverage, Swedes can choose to pay the equivalent of two cents per dollar.
It should be noted that actuaries for each private insurance company choose their particular factors, meaning that these things are never calculated by the equivalent of exactly one or two cents, etc. but rather by fractions of cents.
NOTE: In Sweden, the private insurers pay on a weekly schedule due to decades-long tradition there. Also, the Swedish government don’t care where private insurers are investing unemployment insurance premium revenues, as long as every unemployed worker gets his/her payments on time.
In Canada, a simple to understand and administer unemployment insurance system (called EI) provides government unemployment insurance that pays workers some 66% of their previous wage after getting laid-off (but not fired) from their job.
In Canada, both employers and employees contribute to the EU scheme and the per dollar contributions are set at a high enough rate to allow the entire scheme to earn a small profit for the government. In fact, Canada has again revised the rate downward as the scheme was too profitable! (It’s the second time in recent years that the rate has been revised downward as the entire EI scheme was embarrassingly profitable for the Canadian government)
It would be so easy for private companies in North America to offer optional, additional unemployment insurance coverage for only pennies on the dollar.
In fact, there has been some baby-steps toward that goal in the U.S. However, in the United States, optional, additional, private unemployment insurance coverage is a new thing, consequently, insurance companies are extremely cautious, are charging high rates, and have few applicants. At least until they get some experience with the new-ish business model.
For Canadian and U.S. insurance companies, it would be simple to add optional, additional, private unemployment insurance coverage (on top of the government unemployment insurance scheme that usually calculates benefits based on 66% of the worker’s previous wage) thereby allowing workers to top-up their unemployment insurance coverage at their discretion — to 80%, 90%, or even 99% of their previous wage. As each worker’s financial situation is different it must be the workers’ decision how much additional insurance coverage they purchase.
It might cost 1 or 2 cents on the dollar for each worker to obtain such additional coverage for themselves during periods of unemployment. But in an era when it seems everyone is spending every dollar they earn just to stay afloat, it makes sense to boost unemployment insurance benefits up to 99% of a worker’s previous wage when combined with the government benefit, and to do so via private insurers so that governments don’t need to spend more on unemployed workers. And all of that for only pennies on the dollar.
At first blush, workers might ask; ‘Why would a company want to sell additional unemployment insurance to workers over and above the national unemployment insurance plan?’
And the answer is; It’s profitable for them for two reasons.
One, the worker premiums (payments) allow the insurance company to make a small, but respectable profit.
Two, all the money paid to the private insurer by workers is invested in the stock market where the private insurance companies can make very significant profits.
It’s a business that allows private insurers to ‘have their cake and eat it too’ — the cake is the revenue generated via the normal payroll deductions of workers enrolled in the private insurance plan — and the icing is the revenue that private insurers earn by investing that huge pool of money in the markets. Which adds up to a great business model.
To Build a Better Britain, it behooves the UK government to allow private insurers to sell optional, additional private unemployment insurance over and above the government unemployment insurance plan, as it would allow workers (who have no control over the unemployment rate, nor of the overall economy) to continue to pay their bills on time, to live their lives normally, and to continue with their particular life plan — with much less personal upset and financial distress during periods of unemployment.
Building a Better Britain means strengthening worker supports during times of unemployment without it costing the government a single pence.
It signifies responsible government that places the needs of workers and their families at a higher level, while concomitantly creating a new, useful, and valuable product for British insurers to sell, thereby adding billions of pounds sterling every month to the London financial sector.
See, it really is ‘Win-Win’ when government places the needs of workers and their families first.
by John Brian Shannon | November 29, 2016
Some things are expected, and some things sure aren’t. And one of the things that wasn’t expected even by the most vociferous Brexiteers prior to the June 23 referendum, was the strength of the UK economy.
In the run-up to the referendum, Bremainers used the fear of an economic crash in the UK to good effect, lowering support for Brexit from a high of almost 70% down to 52% in the final two weeks of the campaign.
Even so, Britons ‘knowing’ in their hearts there would be high economic costs to exit the EU (because famous Op/Ed journalists told them so) they still voted for more democracy, more sovereignty, and more control over immigration
The latest OECD report, informs us that GDP growth in the UK next year will be a healthy 2% — beating major Western and developing nation economies, and the following year is estimated to be in the 1.5% range. Not bad, considering the doom that was supposed to be upon us and considering that the OECD itself had earlier predicted UK growth to be at 1.5% and 1.2% (at best) over the same two-year period.
Sure, some things need to be carefully navigated. Raising the minimum wage for UK workers over age 25 (called The National Living Wage) could be an additional cost for some employers and could thereby increase the unemployment rate among workers. But it’s an overstatement to say that could happen in a growing economy however, if the economy begins to contract it becomes incrementally more serious.
Something else that bears watching is the fall in the value of the pound — which is seen as a desirable thing by economists as it increases exports in almost every country where currency devaluation has ever occurred — but if it doesn’t happen, a speedy remedy must be found. A falling currency with no appreciable increase in exports has no value at all, and only serves to make foreign goods and foreign travel for Britons, more expensive. Government intervention must therefore be instant and right on target in order to rectify the problem.
The UK economy is largely service based (due to the historical high valuation of the British pound) and with a falling pound manufacturing exports should rise in tandem with the falling currency (with plenty of lag time, as it isn’t an instant process) yet if it carries on for too many months, government must intervene to help exporters.
Help is not ‘help’ unless it is actually help.
Providing the right kind of assistance to British manufacturers is key here. There’s no use having the international trade office providing help to access foreign markets if transportation bottlenecks are the problem! Likewise, if limited access to rare-earth metals is the thing restricting manufacturers, lowering the corporate tax rate won’t help.
It’s about listening carefully to the needs of exporters
It’s about meeting every manufacturing CEO and giving them a full and fair hearing in regards to their corporate needs. And then, solving the problems surrounding their inability to export in huge volumes.
It’s doubtful that a one-size-fits-all solution is going to work in Britain’s case. It’s likely that a range of issues need to be addressed. Certainly, companies have a different challenges. For example, some have never exported railway steel (due to the historically high pound) while others that export designer clothing (the high pound just isn’t a factor in this particular market) but face competition from nations which allow ‘knock-offs’ of Britain’s famous clothing brands.
In previous decades, governments threw money at corporations or give them massive tax breaks to allow them to take care of the problems, themselves. But those days are past.
In our time, governments simply don’t have multi-billions to hand to industry as the massive economic growth that was a consequence of massive population increases (courtesy of the baby-boom generation) are long past — and massive corporate tax breaks just aren’t possible as the present corporate tax rates can only be termed ‘marginal’ compared to the ‘heavy’ corporate tax rates of the 1950’s – 1990’s.
All of this means that the British government must begin to see UK companies as ‘part of the solution’ to Britain’s economic future as opposed to ‘part of the problem’ — which is how the corporate world was viewed by government in the pre-2000 era.
High growth is a wonderful thing for senior executives, it’s a great thing for a sitting government, but it means the people in the bottom-three quintiles face ever-lower wages, more unemployment, resulting in a lowered standard of living for those citizens. And let’s not forget, lower standards of living directly and always equate to higher healthcare costs so there’s no savings anyway. At least, not for governments or families.
While the days of fixing everything with one silver bullet are over, there is still plenty the UK government can do to boost GDP; By assisting manufacturers to re-learn how to export and find new markets, helping industry to boost productivity by redirecting education towards the always changing needs of industry, by providing additional R&D tax breaks for companies — and to provide decent jobs for those left behind via massive and ongoing infrastructure spending programmes, rather than have them rely on eternal government support.
It’s clear that Building a Better Britain begins and ends with Building a Better Economy
Therefore, as important as every other matter before government is (including Brexit!) it’s all for naught if the economy begins to fail, because when the economy fails, so does industry, society, and governments, which tend to fall… hard. Just ask any former politician.
by John Brian Shannon | September 15, 2016
Prime Minister Theresa May says she wants Great Britain to become the world’s Great Meritocracy and one of the ways she intends to accomplish it, is by raising the priority given to education.
Which is brilliant! Of all the ways to spend taxpayer money to Build a Better Britain, equipping young minds to become all they can and should be must rank highest of all.
Much has been vocalized via the anecdotes of those who attended Grammar schools in Britain in the 1950’s-1980’s era who had decidedly poor experiences. In that era, education (and other parts of society) weren’t all that they could and should’ve been, and some schools, whether Grammar, Comprehensive, Modern, Academy, Faith, or Private, were downright terrible. And that is a shame.
But because a minority of students were badly educated or badly treated (or both) in various locations across the country, does not mean that Britain should close all schools or demonize certain kinds of schools.
Rather, let’s roll up our sleeves, find out what needs to be fixed and how to fix it, and Build a Better Britain
On that note, Grammar schools must be doing something right as the current Prime Minister and three members of her cabinet were educated in Grammar schools. Other PM’s and cabinet ministers over the years have likewise attended Grammars.
Due to the focus put on Britain’s education system by PM Theresa May, the comment forms at several UK websites show many people railing against the so-called 11+ exams (that’s the age the children take the exam) saying that they put undue pressure on students and parents, and that the result of one series of exams can turn a student’s entire future for the worse.
Accordingly, any blame for the pressure felt by students and parents in regards to the 11+ gets transferred onto the Grammar schools which, not incidentally, are performing wonderfully.
Clearly, the problem is the 11+ exam system itself, where parents feel they must hire (perhaps expensive) tutors to prep their child for the exam, and where the cost of failure breeds fear among students.
Miserable and over-pressured students do not learn well
Some children are late-bloomers and might fail the 11+ exam, but those same kids could hit their stride by age 12 or 13. For some students, it just takes the ‘right teacher’ to make learning fun and and they begin to excel for no apparent reason.
Once you have that going for you, exams are just enough of a challenge to keep your interest but not knock you off the planet with dread.
Therefore, let’s keep the 11+ exam, but normalize it by requiring one every subsequent year. To ensure that children get the best chance in life, let them take a 12+, a 13+, a 14+ and so on, until they have completed their primary and secondary education. Students could move to a Grammar when they are ready, while other children could leave Grammar school, returning to their Comprehensive or other school if they find that a Grammar isn’t working for them.
In that way children will find the school that is most appropriate to them, at the time they’re ready for it
There’s room for improvement in the British educational system and a simple course correction might be all that’s needed.
Here are three ways to improve educational outcomes for students:
- Instead of 11+ exams taken at age 11 (and only age 11) that can determine a child’s entire educational future based on one exam, add 12+, 13+, 14+ and 15+ exams to the mix. In that way, children will find the most appropriate school for them.
- Increased funding for schools, particularly at the pre-school and early development stages.
- Vocational schools that teach the academic programme, but are geared to appeal to those kids who know they want to work with their hands; The future home builders and skyscraper constructors, the automotive, rail, and aircraft manufacturers and maintenance staff of the 21st century. And so much more.
Instead of shooting for a minimum standard, Britain’s government should be empowering all of Britain’s students to become all that they can and should be whether they choose to become an Accountant or a Zoologist, or anything in between.
But whatever path they choose, let’s give them the ability to be the very best Accountant or Zoologist they can be.
That’s what it will take for Great Britain to become the world’s Great Meritocracy.