Since this crisis hit in 2008 I have been telling our own staff to sit tight. All recessions and downturns come to an end. By mid-2009 I thought the worst was over. By early 2010 things got bad again. And stayed bad.
At the end of 2012 every newspaper and commentator was talking about an unprecedented triple dip recession. I, along with others, began to think that perhaps this was a never ending recession. Then came the news that in fact the second dip (double dip) recession hadn’t happened after all and then came the news that the risk of triple dip had passed altogether.
In fact, the economy grew by 0.4% in the first quarter, 0.7% in the second quarter and a thumping 0.8% for the third quarter. Barring disasters or extreme weather, a reasonable growth figure for the final quarter is anticipated, bringing the annual growth rate to 1.4% — not exactly sparkling but nevertheless well clear of the dreaded recession.
Most commentators think that the economy will grow by 2.4% next year. Not far below the trend.
You do the maths
Many readers will look at these numbers and think they are so tiny, does it really matter?
After all, if your salary went up by 1.4% you would hardly be popping the champagne corks. But actually, these figures are hugely important. The UK GDP (Gross Domestic Product) was valued at £1,525bn in 2012.
The GDP is the total sum of all goods and services provided during the year. You buy a car for £10k you have just added £10k to the GDP. You buy a bar of chocolate for 50p, you have just added 50p to the GDP. Therefore, if the economy grows by 1% it has grown by £152bn.
That is an awful lot of economic activity. That’s an awful lot of jobs. If it drops by 1%, that’s an awful lot of value gone, with a very serious effect on jobs.
Although there are still dangers in the world economy that could knock us off course, these dangers are now receding and soon we can hope that the dreaded “R” word (recession) will be a thing of the past. Until the next one, of course.
The role of retail
Retail employment grew by 1% in the third quarter and by 3.7% in the second quarter. This is hugely significant for the economy as a whole. Retail is already the UK’s largest employer at 2.9 million. One percent growth on that is really a lot of jobs - 290,000 to be exact. Imagine what the unemployment figures would look like were it not for retail?
It is interesting to note that even before the recession there were those predicting a fall in retail employment because of the internet. In fact, online shopping is increasing retail sales and increasing the jobs in the industry. Our industry does more to keep the economy on track than any other and, certainly does more to keep people in work.
It is not all good news. There has been a sharp increase in the number of people who are working shorter hours and also those earning below the living wage. The industry has often been criticised for low pay. This is likely to become a very hot issue in the run up to the next election, which will almost certainly be fought on living standards.
However, it must surely be the case that having people in work is a better situation than having people on the dole. As the economy picks up and demand for workers continues to increase, there is no doubt that more full time work will be created and market pressure will increase salaries.
There is now almost a consensus amongst politicians that the low paid still pay too much tax and I wouldn’t be surprised to see a race to be the first party to abolish tax on the minimum wage altogether.
Peter Burgess is MD of Retail Human Resources Plc. He holds an MBA from The London Business School and is a Fellow of the CIPD.