Tuesday, 28 October 2014

Lloyds: sacrificing workers for profits

Andrew Fisher, author of The Failed Experiment ... and how to build an economy that works, looks at Lloyds and argues there is a better way to run banks

Lloyds Bank continued its asset stripping of itself with the announcement that 9,000 staff would be thrown on the scrapheap and 150 branches sold off to boost profits.

The bank is still 25% owned by the government, and was formerly 43% publicly-owned following the bailout that saved it from oblivion. Taxpayers bailed out Lloyds bank, taxpayers like the 30,000 Lloyds staff already sacked since the banking crisis.

Of course the bailout was not about preserving jobs for ordinary bank workers - the people least culpable for the collapse - any more than it bailed out defaulting debtors or mortgage holders. No, the bailout was about safeguarding executive pay and bonuses, shareholders and high end depositors.

So why now - when Lloyds is back in profit, the government has begun the process of full re-privatisation, and it has scraped through the European bank stress test - is the bank sacking another 9,000 staff?

Maybe its management knows something we don't - perhaps the full extent of the bank's fragility in the event of the looming downturn?

However, according to the Telegraph, the good times are back at Lloyds with the bank making £1.61 billion profit in the last nine months or £18,295 for each of its 88,000 staff. Its profits for just these nine months would be enough to give each of the 9,000 of its staff about to be laid off a £178,000 redundancy payment.

Of course no such payment will be forthcoming - that money is strictly for shareholder dividends (due to resume soon) and executive bonuses. The rich shall get richer. The poor get laid off.

Lloyds might argue that it has recently had to set aside another £900 million in PPI compensation payments. But that simply represents the repayment on ill-gotten gains - products mis-sold on an industrial scale by a ruthless and corrupt culture that permeated Lloyds and several other banks.

Ordinary cashiers, admin staff and call centre workers are paying the price for historic mismanagement and for the continuing (even accelerating?) rapaciousness of finance capitalism. "We will grow the business in a way that will deliver increasing and sustainable returns for our shareholders" said Lloyds Chief Executive Antonio Horta-Osorio, "and if that means fucking over our loyal workers, so be it" he added only implicitly.

Even the usually timid Labour had something to say about it, with Treasury spokesperson Cathy Jamieson MP saying:
"Frontline staff will feel that they are being made to bear the costs of mismanagement that took place at a senior level - especially given that bonuses at Lloyds increased by eight per cent over the past year."
There is an alternative, which would involve two key changes. Firstly, on workers rights to make it illegal for a profitable company to make staff redundant. That means companies take on another duty, beyond just maximising profits or shareholder returns, they must provide jobs. So companies should have a built-in duty - as strong as any other the company serves - to provide and protect jobs. That should extend beyond the banking sector, but experience shows that the banking sector is a necessary starting place (see Barclays and the Sack Race 2, Feburary 2014).

Secondly, we should nationalise the banks - to make finance the servant of the real economy, rather than the other way around. This would mean prioritising investment in the real economy over ever inflating housing bubbles - and safeguarding jobs and people's homes rather than sky high pay and bonuses.

Banking for the many, not just the privileged few (as Labour might say if it believed its own rhetoric).

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