The UK Economy - Research Paper Example

Introduction: The UK economy grew for the over 63 quarters prior to the third quarter of the year 2008. At the same time, the GDP grew at an averageof 3% which is quiet a reputable growth rate. This growth has been increasingly been financing the unproductive sectors of the economy. It is also quite clear that there has been retraction and a flattering out of growth through this whole period. London for quite some time has been depending so heavily on the success of it local businesses together with the financial services. This health financial as well as business service has constituted almost a third of all the available job vacancies in London, whereas all forms of manufacturing represents only 9%. Therefore, gradual recession has been a vast topic of discussion in analysing economic and labour market developments as well as change in the entire economic sector. For the past years the financial crisis has been a major crippling issue, especially on the investors, manufacturers, businessmen and the middle men, as can be evidenced by the alarming rate that the employment and labour market have been changing at. The rapid expansion of the budding economies, a progressive global labour market and the innovative technologies have considerable impact on the demand and supply of talent, organisational structure, efficiency and development. In UK as a whole, a number of procedures have also been instituted by the central bank in order to maintain interest rates to as low as 0.5%. As a result of these measures, the government has been witnessing much of the fiscal limitations that are threatened the predictability of potential cuts in public sector expenditure. a) Section One: Features and Characteristics of UK Economy: Economist would consider an ambiguous measure of the economic welfare but not necessarily those measures which exist as an approximation of the gross domestic product as well as the National income which is only achieved when the overall personal income increase. Looking at UK situation, gross income has not been in tandem with other developed countries. Here in UK, there has been both the cyclic fluctuation and change in trend. Some of the changes experienced that can help show that the amount of national income produced by various sectors of the economy at an interval of ten years over the past periods include; an agricultural sector that has already accounted for 4 % of the total national input as can be seen in 2001, as at now accounts for less than 1% of the overall national production; this results reflects a very long standing trend which is believed to cause so much concern though the fall of manufacturing industry which in turn affects all the other sectors of economy. These economy is characterised sector is extremely fragmented in environment, characterized by a great amount of small and micro companies. The ability to react quickly to emerging opportunity contributes to achievement in the sector. However, in a swiftly altering environment, it can be complex for less important or medium sized companies to cope up with skill and market developments. The recession was characterized by the word ‘de-layering’ of management Supervisor role senior up the structures of organizations. The possessions boom distorted and many youthful professional people established they were in unenthusiastic equity. Women’s service was not as defectively hit as men’s. Service in the lower-paying sectors remain comparatively stable and the recession had less than standard collision in areas such as food retailing, fast food, “One fundamental change causing rising inactivity is the dramatic weakening of demand for unskilled labor since at least the mid-1970s. This is mainly due to technological change, which has favored the more educated – for example, computer use – and, to a lesser extent, globalization – exports from countries with many unskilled workers” (Vaitilingam 2006). Changes that affected the UK market considerably much vast for describing the changes that have happen throughout the recent recession, it is positive to appear at the relative positions of each group previous to this. Several groups are significantly better than others. The changes in the economic conditions of the UK market are in the various forms and they are like the changing the labour market, changing organizations and the changes in the education and the skills. The nature of the labour Market: Employment in UK is characterised by age, gender, ethnicity as well as physical fitness, a growth of workforce in the United Kingdom for the last century has been so unstable, for example considering the graph shown bellow, which illustrates the employment rate based on age and gender in the year 2007. This trend affects organizations labour as one of the factors of production. This clearly reflects the pattern of employment in UK. The figure above shows employment rate for men and women in London by age, as seen, working age women have lower rate than men i.e. 63% and 77% respectively, where as employment rate of women with children and that of women without children is the same. This trend is consistent with the fact that gender gap rate is so wide for age group 25-49. Besides the different employment trends, the nature through which organizations participate in the economy reflects the performance of the market, this brings about unfair competition where there is a much globalization and the micro economic climate. It mainly includes the interactions within the employees in organizations. The changing organizations depend on the impact of severe competition in the performance. The management also plays an important role in the organization change and the business schools play an important role in the performance of the firms. The changes in the education and skills also contribute for the vast changes in the demand for the supply of skills; they mainly depend on the school effectiveness and the higher education in the upcoming generation. The vocational training is also much important for the vast changes in the economic sector. The policies implemented by the Human Resource department: Human resource department in every organization do play a major role in hiring ensuring proper code of conduct as well as retrenching employees, considering the case of UK which provides mainly a high level standards of the, this department i9s also concerned with solving any employment disputes which might have occurred in an organization. For this to be successful, the there is a need for it to be conduct which is inclusion in the local environment. The HR policy is mainly for recruitment, retaining and the development of the employees. Some of the main challenges which are so important to HR department are as follows: The impact of all kinds of organization due to collapse of the global banking system thereby saving and pension funds have been serious eroded. Loss of the moral and erosion of traditional loyalties in the workforce, resulting into a combination of redundancies and a substantial number of plant closures as well as closure of pension scheme. Growing public concern about the environmental and social impact of the actions as well as policies of the business organization. Very considerable performance and moral difficulties in the UK public sector as well as the health sector not forgetting the education and crime prevention aspects. Assessing the economic circumstances in the recent second quarter: During the second quarter, the UK economy has undergone depression rather than booming throughout due to lack of unemployment as well as other key economic stimuli. In this recession period, the labour market was not a lagging indicator. From peak to trough, real output fell by 6.4 per cent. By the second quarter of 2010 GDP had developed 1.9 per cent from the lowest part. This was expected that the measures would have labour market cost. In previous recession, mainly that of the early 1980s, the UK labour market takes a long time to improve from demand shocks. Yet UK is now identified as containing an extremely elastic labour market, at least in relation to other Western European economies. UK government strategy over the route of the recession recommended, at least absolutely, a receipt that labours market elasticity would play a major role in returning the labour market to symmetry. As one of the members of the European Union, UK is part of a solitary market that make sure the liberated movement of people, goods, services, and capital inside associate states. The United Kingdom is the sixth largest economy in the world in the year 2010 according to GDP, current prices and USD. In its glory days the British kingdom was the biggest and most powerful economy in the world. UK’s economy was seriously distressed by the world wars, world wars has affected many countries economy seriously. But in this case more focus is given to the UK economy. Even though the United Kingdom’s economy has recovered from that deep trouble and is now in a good position now. But the fact we have to mention is, it is unable to get back the earlier position as the supreme economic power. The 2008 financial crisis have affected United Kingdom’s economy too. The 2008 financial crisis has created a global financial disaster, “in 2008, a series of bank and insurance company failures triggered a financial crisis that effectively halted global credit markets and required unprecedented government intervention. Fannie and Freddie Mac (FRE) were both taken over by the government. As a result of this financial crisis in 2008 many professional have lost their jobs, many organizations shut down their business, Car manufacturing giant such as GM collapsed into deep financial crisis. The same situation was found in UK economy also, inflation stress remained powerful. Bank of England had sturdy pressure because of inflation. Oil price hike and break records and reached amazingly high, this impacted on increasing other cost like production and manufacturing costs. Same like oil prices, food and property prices also had an unexpected rise in the price during this time. UK’s economy was going through an official recession during that time. Looking at the overall performance in the year 2010, UK’s inflation rate threatened to damage the government’s sternness plans to maintain interest rates under control. In 2008, the level of unemployment has started to get higher as shown in the figure1. Unemployment frequently delayed probability in the economy. Main reasons of increasing of unemployment was retrenchment of credit, this has impacted in a decline in consumer expenditure, lesser investment and poorer economic growth. The global economy is coming down, which leads to poorer exports and global trade. During the global crisis, jobseekers all over the world were ignored because no new opportunities were created or given. Certain sectors were mainly defectively hit by the financial crisis, sectors such as banks, construction industry. The graph bellow shows the trend of unemployment level since the 2008 to 2011 UK unemployment rose by 129,000 in the three months to September to 2.62 million, as youth unemployment rose above a million” (UK Unemployment Increases to 2.62m 2011). Jobseekers and youths have been seriously got hit by the financial crisis in the form of unemployment. But when comparing with other European countries, UK is in good position, while the position of Spain, Greece, Italy etc were worst that this in the case of unemployment. In reviewing the current performance of the UK labour market, we have to regard as both the general macroeconomic concert and some of the basic micro problems, mostly those facing inexperienced workforce. The macro side, the news is somewhat fine. An ongoing decline in unemployment down to its lower level is visible for a new generation exclusive of extreme inflation stress and pressure. The data we collected and observed shows that the financial crisis and the after effects of it has caused high rise in unemployment. b) Section Two: Analysis of the London economy and labour market: London is the one of the earth’s leading centres for global business, monetary services and apparent world leader in monetary services. Success of labour market of the London consists of availability of well-experienced employees, right of entry to marketplaces and transport infrastructure and in effectively competing in the worldwide financial system over the past 15 years and, offered it remains a place where companies desire to locate, it can be expected to remain successful. “London has an increasingly highly skilled workforce. Already 43% of jobs require qualifications at Level 4 or above. By 2020 this will increase to around 50%, when the UK average will be around 42%. The demand for low skilled service jobs is expected to remain stable, but there will be a reduction in the proportion of jobs. The future projection of the population of the UK is that it will increase 70 million by 2025. So that it will leads to increase in ratio of life dependency and expectancy. Some of the challenges of labour in the UK market include; Some types of inequality among various groups have narrowed. On the other hand, some groups are more likely to fare badly in work, in public life and in even in education. Regardless of legislation labour marketplace outcome vary noticeably by sex, race, customs, disability, age and social class. Disadvantages related to ownership of proper skills. Disadvantage experienced by persons in retaining and finding jobs. Absence of skills. A critical discussion of the causes of inequality and challenges within this region and an assessment of the potential impact of the Single Equalities Act in eradicating disadvantage, and ensuring equal opportunity in the labour market and in the workplace. London has benefited significantly over the ears from growths in universal business and trade in the labour market of London which is characterized by extremes of inequality and therefore noticeable disparities in Labour market practices with most Londoners not equipped with the necessary skills to compete with the rest in the job market. The subject of cultural diversity is one of the defining characters of the labour market in London. Although consistent with other major cities, the cultural diversity of London distinguished it considerably with much of the rest of Britain. Some of the disadvantages of UK labour market experienced by: Disabled people (45% of disabled people are NEET) Black Afro-Caribbean men (significantly higher incidence of unemployment) Pakistani and Bangladeshi women (only 1 in 4 works) Muslim people have lowest rate of employment of any religious group (27% of men 24% of women) Young Muslim people (42% are NEET) Workers over the age of 50 Overall objective of Single Equalities Act is to reinforce, make simpler and combine existing legislation in a single law thereby enlarging the state protection in some the areas that still have gaps. One of the major provisions executed 1st October 2010. And also Positive action in staffing and promotion and the general public segment equality obligation came into force April 2005. Government has decided not to execute provisions connecting to: ccombined bias and responsibility on public authorities. Based on the equal opportunity everybody should be treated uniformly and given the equal opportunities. Causes of inequality and disadvantages are raised due to main reasons. Due to the impact of Single Equalities Act it will helps to eradicate the disadvantages and guaranteeing the equal opportunity labour market. The act, rectifies shortfalls in respect of disability discrimination, etends the power of Employment Tribunals, ppositive action can exist under existing law but Act will allow employers to favour candidates from an under-represented minority where candidates are equally well qualified – positive discrimination” (Labour Market Disadvantage and, slide 15). Key future developments in the London economy and labour market London is a main financial centre for global business and trade and is one of three "command centres" for the international financial system. London has the fifth biggest city economy in the earth, uniformly with Paris, New York City, after Tokyo, Chicago and Los Angeles and with a GDP of about $565 billion in 2008. “London has come second in an annual international survey that measures, the strength of a city's brand ahead of Paris, Rome and New York. However, the capital did fall from the top spot, which is now held by Sydney, in the latest City Brands Index. London was ranked as having the greatest future potential and was also placed highly in terms of public amenities, entertainment, finding work and doing business” (Lewis 2007). Current shifts in the financial system and the impact of reorganization the international supply chains have straightly impacted the London Metropolitan Census. Since 2008, provide the uncharacteristic fluctuations in our unemployment levels and have questioned the certainty of our development.  Through all of this, the London Economic Development Corporation sustained its mandate to help local companies with development, while attracting global investment. The influence on the London economy from the US sub-prime housing crisis and the following credit crunch is still uncertain. Early implication suggests that the influence in the UK, in terms of customer expenses has not had much consequence. However, in the future there may be a number of influences on mortgage borrowing, maybe as an outcome of tighter lending criteria adopted by a quantity of banks and building societies, mainly towards first time consumers and those considered high risk. The implications for organisations located in London and for HR departments: As a globalization of industry, a lot of firms now must compete on an international basis before on the area basis previously used so as to survive. “Human resource (HR) management (sometimes referred to as personnel management) includes the overall responsibility for recruitment, selection, appraisal, staff development and training, understanding and implementing employment legislation and welfare” (Human Resources (HR) Management). Therefore human resource management in this London context needs focus not only on the policies, functions and systems of human resource management but also on the policies, functions and practices of human resource management but also on the issues facing international ventures. Differing national cultures have various human resource management implications. One of the transforms that face organizations as they globalize their process is the alteration of their HR practices to the fresh set of cultures in which the organization is operating and the formation of a method of operation that is both comfortable to the organization and suitable for those cultures. Critical Analysis: Other than all the constraints, various debates relating to the nature of financial crisis and strategy intervention have intended in reshuffling economic activity. Considering UK, strategy discussions and interventions mainly focus in monitoring the banking sector, finance sector like insurance, mutual funds particularly by the efficiency of the government administration in understanding the levels of liquidity in the economy. “An important consequence of the hegemony of the notion of policy credibility around contractionary macroeconomic policies (higher interest rates and lower government spending to keep their budget deficits low) and reducing the role of the state in the economy has been lower growth in many countries” (Mohamed 2008). By understanding the macro economic trends in UK and reviewing the impact of the financial crisis on service strategies in production is a demanding task, they are not considered as a slightest task because of the suspicions adjacent to the nature of financial crisis and as prominent forecasters about trajectories. The covering nature of administrator statistics concerning the labour market also recommend that mathematical understanding of the appearance of the financial crisis could be an ineffective exercise. Recommendations: Equal opportunities should be given to the workforce without bias. No discrimination should be showed to the workforce, Such as caste, race, religion, gender etc. Equality is the most important thing in an organization’s workforce. Labour laws should be amended for the sake of labourers. Employment rate is getting increased year by year, so the laws should be modified in a particular way, so that both the employment rate and laws are matching. Future development should have priority, and then only the economy would be stable and would show good performance Reference: Current developments in the UK and Europe Power Point Slide 7.Print 2008 Financial Crisis, 2008 Wiki vest, Available at [Accessed22Nov 2011 Alan, M, & Janna, S, 2005, the gender Gap in early career growth, CEP discussion paper No. 700 Read More