An ode to odious Fred the Shred

Spare a thought this week, if you will, for Fred the Shred, also known as Fred Goodwin, the erstwhile boss of the Royal Bank of Scotland.

Not too many years ago, Goodwin was the sharpest British banker around, so much so that he was knighted for his services to banking. But then it all went nasty and Royal Bank of Scotland had to be rescued by the British taxpayer, who came to own 80% of the bank.

And now, indignity of indignities, Shred, so named because he was known as a jobs slasher, has been told by Queen Elizabeth that he has been stripped of his knighthood.

The problem is that the collapse of Royal Bank of Scotland under his watch precipitated the financial all-fall-down in the United Kingdom, leading to massive bailouts, budget cuts and austerity. He could hardly be allowed, as the cause of so much trouble, to swan about as Sir Fred.

(As an aside, I would like to know how this is done. Knighthoods are surely conferred by a monarch who touches you lightly on the shoulder with a sword. How are you unknighted?)Goodwin’s successor, Stephen Hester, has in recent days declined a £963 000 bonus following public outrage at the continuing excess of bank executives’ pay while austerity bites.

Across the channel European leaders will spend €22-billion on schemes specifically aimed at combating runaway youth unemployment. Nearly 5.5-million young people are unemployed in Europe and the percentage of people younger than 25 who are unemployed in countries such as Greece and Spain is as high as 50%. Eight member countries have youth unemployment rates above 30%.

In France President Nicholas Sarkozy has announced a set of measures, including mandating large companies to hire young people, aimed at creating youth jobs as part of a strategy to ensure his re-election later in the year.

I hear talking heads on television and the internet speaking about the need to regain competitiveness and improve productivity. The idea is to work harder and smarter to make more things that can be sold to other people who do not work as hard or as smart.

There will have to be a lot of this smarter, more productive work. The International Labour Organisation estimates that, globally, 600-million jobs will have to be created over the next 10 years to combat unemployment.

There will be little solace among South Africans knowing that some countries in Europe now have unemployment rates similar to those here.

Our various growth plans and strategies have the combating of unemployment and poverty as their goal, but these are largely plans to grow the economy, rather than specific interventions targeting, say, youth unemployment.

The treasury held a high-level discussion last week to discuss inequality and how it can be combated, but the only specific proposal to combat youth unemployment was that of introducing a youth wage subsidy.

Finance Minister Pravin Gordhan has been keen on the subsidy for some years now and has regularly raised it in his budget, even setting aside money last year for the purpose. But the measure remains stillborn.

With the exception of the Southern African Clothing and Textile Workers’ Union, the unions are opposed to the measure because they regard it as a way of undercutting the wages of organised labour.

A strong lobby in South Africa regards this to be at the core of underdevelopment. The labour market is too regulated and insufficiently productive. Deregulation shall set you free. The idea is that a freer labour market will create more jobs and greater productivity. We could work harder, smarter and cheaper, making more things than other people. We can sell them our stuff.

If the whole world does this, we could create the 600-million jobs we need. Everyone will be able to buy other people’s stuff. But maybe not. A generation ago, employment meant a single job until you got your gold watch and pension.

Work is now much more flexible. Many people have multiple careers and employers. More create their own work.

Maybe the nature of work is changing again and there will be less stuff to make and less to do. Fewer people may have the luxury of having a job and may find themselves taxed accordingly. Work could be a thing you do a few days a week, spending the rest of the time growing vegetables, learning stuff, making art or just chilling.

One commentator who thinks things are not going to be as they were is Bill Gross, co-founder of one of the world’s largest bond-trading companies.

Noting that a 30- to 50-year virtuous cycle of credit expansion is at its end as investors continue to reduce their exposure to debt, he writes: “We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time.”

Sir Fred, a creature of abundance, is just plain old Fred now.

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Kevin Davie

Kevin Davie is M&G's business editor. A journalist for more than 30 years, he has worked in senior positions at most major titles in the country. Davie is a Nieman Fellow (1995-1996) and cyberspace innovator, having co-founded SA's first online-only news portal, Woza, and the first online stockbroking operation. He is a lecturer at Wits Journalism. In his spare time he can be found riding a bicycle, usually somewhere remote.

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