The life and times of a corporate ant.
PS: I have no idea who to credit this to – but they are a pure genius, and they have my sincere gratitude for a thousand laughs this evening!!!
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Still making the most of redundancy.
I know that this is usually an incredibly stressful time for most people – but we doing our best to make the most of the situation. We are finding a sense of humor (sometimes slightly dark it has to be said), and making the most of the enforced time off is making it easier to cope with.
When Hubby was last made redundant – from Unisys – he created this “De-motivational” poster to send to his friends who hadn’t been booted. (They have the same slightly warped sense of humour).
Well, we were having one of our relaxing days out the beach earlier last week, and thought it was time to make an updated poster.
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Contracting Vs Employment.
The great thing about redundancy is that you get to look with fresh eyes at your options. This is a big mind set change though, and a lot easier said than done.
While I’ve toyed with the idea of becoming a licensed immigration adviser (!), doing some barrista training, or just bumming on the beach for a few months working to improve my currently non-existent surfing skills, a gainful occupation is called for.
So becoming an MP is out too.
Three years ago when I was out of Unisys, the focus was very much on ‘finding a job’. Salaried employment with a company. We’d started looking at property investment at the time, so were fixed on needing a salary in order to get a mortgage. While having read through the Robert Kiyosaki Rich Dad series (highly recommended), I wasn’t convinced starting a company was for me. I’d also never been out of work – apart from a couple of months directly after graduating, and the month moving from the UK to NZ. In the latter case, I had a job to come to. Being ‘out of work’ was an unsettling experience for me.
Avalon was used to being self-employed as a locum pharmacist, and used to setting her own hours, working where and when she wanted. But we always felt that one of had to have a “steady paycheque”.
This time round looking at the wider options, rather than just looking at a job, is different. How you may ask?
Three years ago;
There was the allure of a role at IBM to go to. A bit like returning to a childhood home, somewhere I felt was just right. A company I knew well, believed would not have a glass ceiling to potential achievement, where I’d be working with other ‘top talent’ that I could look up to and learn from. It started out like that, unfortunately with a few key people leaving, it changed a lot.
I didn’t know many people in Wellington. Not many people knew me. Or at least it seemed like that.
Plus there was all the stuff about needing a regular income to get a mortgage etc. and feeling that we needed the “security” of knowing how much was coming in each month.
Now;
We’ve got the companies already set up to handle contracting and consulting work, with some good advice from lawyers about ensuring they were flexible. Although they were set up for property investing, one of our companies is set up specifically for trading activites – including selling the book and contracting work.
With five years NZ experience under my belt, I’m more confident about my skills in the market place. To the point where my UK experience is relegated somewhat on the CV.
The networking helps a lot, feedback from people at this point is that senior managers in companies elsewhere in NZ & Australia have heard of the good work I do, (even though I’ve not necessarily heard of them by name) and want me to come in for an interview. So that’s all good. There are options on the table.
I’ve got it clear in my head that people are going to have a bee in their bonnet about high salaries. And while we’ve joked about doing three days work for the laughable salaries on offer, it was always a bit of a joke. Working part time is an entirely viable option. After all, if I only need to work an average of three days a week at a decent contract rate to maintain my current income level, why would I work five days a week to take home 30% less??? Just to be in a ‘secure’ job, with a ‘good’ company.
Now I should say, I don’t think that a salary of $100k is laughable in itself. Yes I know a number of people who would jump at any job paying that money. However, it’s laughable when you look at the experience, skills & qualifications that companies are asking for. The level of job they are expecting you to do, the amount of work ($$$) they want you to bring in for the company, for which your ‘compensation’ will be a pittance.
You wouldn’t expect any decent brain surgeon to only work for $60k a year. They’re going to have your life in their hands, and you want them highly skilled, with up to date training. To have lots of experience. Not just read a book on the topic, sat an NCEA in anatomy and be pretty handy at sharpening a meat cleaver. If you want that experience, you have to pay for it. Simple really. I may not always like paying money for a plumber, electrician, solicitor, mechanic etc., their skills are just as valuable to them as mine are to me, they’ve invested in training, have experience and fundamentally can do a professional job that I’m not trained to. So I pay. Lots.
Contracting allows me to invest properly in advancing my skills. Now of course, I’m paying for the training, plus travel costs and I don’t earn money while I’m being trained. So you’d think that a big draw back – except it isn’t. While an employer will cover all those costs, and pay you while you’re on the training – that assumes that they understand the need to invest in you, your skills and your career. Which is worth precisely $0 to you if they wont pony up the money.
Contracting allows me to pick and choose a little more what I want to work on, and if I want to work on it. While I had the flexibility originally with IBM, identifying opportunities, working with the client to close them, and then deliver them myself or hand on to a colleague – that was another thing that changed. I’m sure there probably won’t be a constant stream of interesting things to work on when I’m contracting. If I judge things well, keep money aside for any dry work periods, I wont have to accept the first piece of work which comes along when I’ve got nothing on the radar for a couple of months. Which gives me the time to identify something better, discover new clients, or invest in my education a bit more.
Interestingly, while it is the fact that we have come to New Zealand that has screwed up my career from a training and advancement point of view – it is also the fact that we came here that has allowed the huge shift in thinking that means I will now look at freelance work. We have met so many people with what can only be called “entrepreneurial spirit” and a willingness to work outside the box. We know so many more people who are their own bosses, who spend thousands of dollars a year training themselves. It a very odd parallel world sometimes.
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Discussions on LinkedIn
I was recently invited to put forward some blogs to BusinessBlogs and PropertyBlogs, both owned by Marc and Donna who also run the PropertyTalk Forum. As I am a huge fan of PropertyTalk, I was chuffed to bits.
Besides – its always nice to know when someone thinks you are actually worth reading.
Like many Kiwis, Marc and Donna are huge believers and users of social media and networking (and I’m slowly but surely becoming used to it myself – though I still can’t stand Twitter). Marc published my blog about the CV differences and the affect on Hubbies Career, to a LinkedIn group:
New Zealand Business and Professional Network
As a result of that, theres quite and interesting discussion going on about what I said, and one of the posters has formed a sub-discussion about how to try and improve things.
While one or two comments are of the “well if you don’t like it go home” variety, most tend to agree that this is indeed happening, and is a problem we need to solve. I wish I knew how to.
Immigration procedures are something that can be fixed, with enough will and someone in charge who is prepared to make some tough changes. While getting INZ to publish their complaints procedure was in itself a very small change – it was something that got done – and it will make a difference.
Unfortunately – Tall Poppy Syndrome is there because of human nature and personal attitudes, and that’s a lot harder to change.
If you are on LinkedIn, I encourage you to join the group and have a look at the discussion. If you are not on LinkedIn, I encourage you to consider it. I really do feel that willingness to network is one of the things that sets Kiwis apart in a very positive way. It can certainly seem a bit “ott” for us reserved Brits – but it has been hugely beneficial to us since we came here. At the very least – Hubby is getting some interesting options to think about because he takes time to Network.
You can find me on LinkedIn at
http://nz.linkedin.com/in/avalonsguide
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Is this why so many people leave New Zealand?
You know – despite all the ups and downs of the past few years – we still really love living here, but lately I have had cause to realise just what it has cost us to do so. Not just in terms of damage to our health and sanity dealing with Immigration New Zealand, but in a direct cost to Hubby’s career.
As part of being made redundant from IBM, Hubby of course has to review and update his CV. At IBM you have to do this regularly anyway –it’s one of those “mandatory time wasting exercises” they make the staff do regularly. It’s just a pity no one at IBM NZ actually bothered to read his. Hubby has had to make some fairly major changes to it this time: partly because much of his UK work history is basically irrelevant now as it was over 5 years ago, but mainly because he is looking to move from being an employee to be a contractor.
Our opinion is that if as an employee he has to deal with tossers who resent his salary, managers who lie ever 5 minutes and want him to take the blame for their ineptitude, and he’s going to get scammed out of bonuses and benefits – what’s the point? You may as well contract, be in control, get paid more, and have more flexibility.
But that means a different kind of CV, hence the re-write.
So, take a look at a section of his CV for the past 3 years
Client facing work has focussed on the Government and Finance sector recently, where he has lead the delivery of a number of key engagements. He has undertaken the assessment and development of enterprise wide information risk frameworks for multiple clients, including with one media organisation to develop their five year risk management strategy. Capability implementation engagements have included a major bank, where he led the delivery of a project to completely update and revamp their email security management systems. This success lead to follow on engagements to implement the same solution with another bank, a financial services organisation and a utility company.
(Okay – I know that’s complete gobbledygook for us non-techy peeps). But compare and contrast with working for the same company in the UK.
Customer projects included a University outsourcing and infrastructure migration program, BS7799 security assessments for financial and telecommunications clients, various Government projects and multiple MSS bids. These ranged from small (NZD) $50k consultancy engagements, $45m+ dedicated security infrastructure projects through to $250m+ outsourcing engagements. Hubby contributed to the CBI Business guide “Protecting your business,” published December 2001 and various IBM technical white papers on security.
Numerous presentations were made to customer audiences at conferences, breakfast briefings and focus groups. Presentations to IBM groups ranged from the annual UK Technical conference, to an elective presentation at the 2001 IBM Services Institute which had to be run three times and drew over 250 people. The presentation was so popular it was re-run the following year as a plenary session for 500+. Other presentations included IBM UK Technical Consultancy Group symposium, and security Special Interest Group meetings of the British Computing Society.
For three years Hubby was a member of the IBM UK Technical Council, a group of 60 technical leaders brought together to work in multidisciplinary teams solving business wide, customer and IBM technical challenges.From July 2003 Hubby was also the lead instructor for IBM world wide CISSP education, and tutored a total of 200 students through to the CISSP exam. By the end of 2004, 97% of students had passed the exam first time.
Bit of a difference huh?
And that ignores the fact that IBM have actually had him doing donkey work for the past few months anyway. Yes – the guy who managed to do that in the UK has been – wait for it – filling in spreadsheets for the past few months.
I think there are two warnings here; one for potential immigrants: you run the risk of trashing your career in order to get that “lifestyle”. On the face of it, from where you are now that may not matter to you – but be prepared to take an honest look at how you would feel. I, for example, walked away from my career as a Pharmacist quite happily when we emigrated, and don’t regret it for an instant. But Hubby has missed out on numerous opportunites for training, conferences and speaking engagements because IBM wouldn’t invest in it or him, and he’s not happy to do that. If he freelances – we can pay for the conferences and the training (one course booked already for November in Sydney that IBM wouldn’t pay for last year when it was run in Wellington, and a trip to AusCert on the Gold Cost in May all sorted). It’s a great feeling not having to be beholden to needing to get 20 signatures for flight approval. He now just needs mine.
The other warning is for New Zealand companies: there are two reasons New Zealand is losing skills – you pay crap salaries and your managers resent the few people who get paid decent salaries. Pack it in and get over it! It’s small minded and you are pushing out all the people that New Zealand needs – not just the immigrants who get sick of it and go home where they don’t have to put up with it, but born and bred kiwis. More of them leave New Zealand than Immigrants, so it’s not just a bad attitude towards immigrant salaries (though too many of you also con immigrants into taking artificially low salaries because they are immigrants).
There’s actually an article in the herald today that backs this up – 53% 0f employees here move on within 2 years, at huge cost to your company, because you will not allow them to progress their careers.
Until NZ companies get rid of this slack “Tall Poppy” syndrome, you will not keep your best employees. Those are the ones that make money for you – rather than those who “manage” the ones who make money for you right out of the company.
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The Power of Networking; Social & Drinking
It took coming to NZ five years ago before I really started doing the coffee (well, tea – Earl Grey) socialising thing.
Just over 18 months ago I joined Facebook, about a year ago I joined LinkedIn. I’d sort of avoided the whole internet social networking thing up until that point – being paid to think about risks of identity theft meant I’d kept a low profile. But Avalon was on there, and kinda cajoled me into it. You try arguing with her is all I can say!
In the last couple of weeks I’ve come to benefit from all the networking.
- You’re very welcome – Avalon
As soon as I came out of the first ‘your role is possibly redundant’ meeting, having been ambushed with the news that I had 3 days to consider my options – I was not crying in my tea – I was on the phone setting up coffee meetings for the next morning with other people who do similar jobs in different companies. We all know each other, regularly meet up and we all keep an eye on what’s happening with different companies.
So in less than 24 hours, I’m finding out what options are available, and getting new names to contact about possible jobs. (And somehow I still managed to find the time to fix yet another management screw-up and get an important piece of work done to meet a deadline while 5 managers who were not losing their jobs were nowhere to be found. Some things never change.)
The day I had my official ‘your role is definitely redundant’ meeting, there was an article about redundancy rumours in the paper. This meant Avalon could officially blog about it, without revealing anything that wasn’t public knowledge.
So that evening two things happened, Avalon’s blog post was published, it automatically fed through to LinkedIn and Facebook page via a nifty widget, plus lots of other sites like Technorati. I also updated my LinkedIn status with just five words.
Within an hour I’d had contact from someone about contracting work.
Another contact having read the blog put me in touch with their companies recruitment specialist.
By the morning three emails arrived to meet up for coffee. Two more emails followed that afternoon.
I had a call from someone pointing me to three different jobs he knew were going in the field, and checking whether I knew the people who were recruiting. (The next day he rang back about a role at his current organisation too).
That evening a former manager, currently travelling in Europe, had made contact. He’d find something.
The coffee chats resulted in two further options for contracting work.
Emails were asking if I wanted a job in Sydney, or Melbourne.
My as yet not updated CV was heading off to a variety of contacts in Melbourne, Sydney, Perth, Christchurch, Auckland, Singapore and of course Wellington – all of whom know someone who is interested in my skills & experience. This included a couple of people who are moving on to new jobs of their own choice, and are putting me in touch with their soon to be former employers. That’s quite a recommendation, “I’m leaving, but here’s someone good enough to replace me”.
And this is before I actually update my CV and proactively send it out to recruitment agencies, or respond to job adverts that I actually see on TradeMe or Seek.
All within two days of formally being told my services are no longer required by my current employer.
Who funnily enough, is competing in the market place for exactly the same custom from the same clients that most of the opportunities I’ve been told about are also looking to win.
Then one of Avalon’s contacts also wants to hear from me – he can put me in contact with a lot of his fellow business owners.
It’s now taken me two weeks to get my CV updated properly. I firmly believe it’s worth getting feedback from others on your CV, and taking the time to look at it with a fresh mind and different perspective. It may seem a little superfluous, since I’ve already had all these meetings and I’m likely to find out from people I know that roles are available.
You never know though, a friend of a friend who has just been passed your CV could be that fantastic new opportunity you didn’t realise you were looking for.
Redundancy Tax Credit – make sure you know about it.
This is particularly for those people at IBM NZ who have not been told by the company that they are entitled to it.
Way back in 2007, seems like another century sometimes, the IRD came out with a little sweetener if you lost your job. A redundancy tax credit. This was because many people who were being made redundant were being pushed up into a higher tax bracket, because for reasons that confound me personally, redundancy pay is not tax free. It just adds insult to injury in my opinion.
Official information can be found at IRD website.
So what are the basics?
- Everyone gets it, not just those pushed into a high tax bracket because of a redundancy lump sum.
- It’s worth 6% of the redundancy payment. (So, no round the world cruise to get over the loss of your job is on the cards)
And the 6% only applies to the ‘redundancy’ portion of your final pay – not to any holiday pay owed, pay in lieu of notice etc. (weekend away at a bach then?)
And then it’s capped at a maximum of $3,600 i.e. $60k redundancy payment. (bottle of coke & two straws please)
3. Claim it now, because it gets paid straight away.
No waiting around for your end of year tax return or anything. The IRD pays direct to your bank account. Although keep in mind that your employer will have taxed the payment at source, so at the end of the tax year, you may still qualify for a tax refund if you’ve not got another job, or have not earnt as much as you did last year.
4. Payments deferred or split across tax years don’t matter that much.
If your company, out of the goodness of their hearts keenness of their own interests, pays you the redundancy in the next tax year, or splits it across tax years – it doesn’t really matter that much. You get the 6% credit on the full amount of the redundancy portion, irrespective of taxable income earned in either year.
So if a full redundancy payment made this year tips you into a higher tax bracket, it may be worth asking if you can defer some of the payment to next year. Otherwise your 6% credit is used bringing your current year tax payment back down to it’s normal level, instead of giving you a straight 6% reduction.
If you already earn more than $70k a year, then it doesn’t matter, since you are already paying the highest rate of tax on your income. Or if in leaving the company you get the juicy pay rise your old employer just wasn’t going to fork out for. In which case you may want all the money now.
Splitting the redundancy payment across tax years would only be a factor if you don’t intend to work for the next six months. You may not have the emergency fund to be able to do that, or your beloved spouse may be tearing their (or your) hair out well before that with having you under their feet all day!
Here’s a quick example;
Say you earn 60k a year, and your redundancy only portion is 20k. This means that where you would normally be paying 33%, as you will go above $70k, you will pay 38% tax on $10k of the redundancy payment. Lets assume you’ve used all your holiday and have to work out your notice, so you get no extra cash.
If you take the payment in the Current Tax Year
Salary = 60k @ 33%
Redundancy = 20k;
10k @ 33% = 3300
10k @ 38% = 3800
-20k @ 6% = 1200
Total tax paid on redundancy = $5,900
Total redundancy in your pocket = $14,100
If you split your redundancy, so the 2nd lot of 10k is paid next year, and lets assume you pick up a job earning the same amount of money.
Current Tax Year
Salary = 60k @ 33%
Redundancy = 10k @ 33% = 3300
-10k @ 6% = 600
Next Tax Year
Salary = 60k @ 33%
Redundancy =10k @ 33% = 3300
-10k @ 6% = 600
Total tax paid on redundancy = $5,400
Total redundancy in your pocket = $14,600
So, splitting redundancy payments means you don’t pay $500 in tax that you don’t have to. Which at 60k salary, is over half a weeks take home pay.
Of course since this is your money, any amount however small, you legally get back from the tax man is worth getting. However, the inconvenience of waiting for some of your redundancy pay may be out weighed by the potential benefit of having all that money sooner.
In any event, make sure you pay the right amount of tax and get every cent of redundancy pay you are supposed to get.
And make sure that company making you redundant doesn’t screw you out of funds you are entitled to because they don’t even have the decency to tell you your rights.
How redundancy in New Zealand should be handled.
With wonderful timing, theres a really great blog on the Herald Website from employment lawyer Bridget Smith. She went to see the film Up In The Air with George Clooney – which funnily enough we also went to see the other day. Its about a guy who fires people for a living as a consultant, because the bosses are too cowardly to do it.
In it she highlights the important points you need to know about how the process should work here.
Which is different in every way to what happened to hubby last week oddly enough.
While there is no set process for a redundancy, the Employment Relations Act 2000 requires consultation with potentially affected employees about a proposal, before any final decisions are made.
In addition, the common law makes it clear that consultation is more than notification and the process must not be a sham.
Basically, the process under New Zealand law requires an employer to provide potentially affected employees with a memorandum which outlines what is proposed and why.
The employees should be provided with sufficient information in order to be able to provide feedback on the proposal, including possible alternatives and this feedback, including any possible alternatives, must be considered by the employer prior to any final decisions being made.
Hmmm – mustn’t be a sham.
A memorandum explaining what is proposed and why? Nope – didn’t get one of those.
Sufficient information provided? Nope – not yet.
So, New Zealand employees can breathe something of a sigh of relief. The chances of a Corporate Downsizing Expert (or Mr Clooney for that matter) beaming into your office, out of the blue, via video conference, and advising that you have been made redundant, are slim to none.
Not so slim it seems.
Certainly if your employer has any familiarity with employment law in New Zealand and wants to avoid litigation in the form of a personal grievance. Because the reality is, in that situation, even George Clooney would struggle to soften the blow.
I agree: the people in charge of these redundancies (and hubby hasn’t actually been told who was going to make the decision) should have spent a bit of time asking a lawyer what they needed to do instead of messing it up so badly. I cant help but hope they lose their jobs when the next lot of heads have to roll.
It seems management hasn’t quite figured out that if you get rid of all the staff that actually do teh work and make the money, they won’t need managers.
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IBM New Zealand redundancies – they are not rumours.
IBM New Zealand has refused to comment on rumours it is making 34 staff redundant in Wellington and merging its northern and southern region sales teams.
Spokeswoman Courtney Allen said IBM “continuously re-balances skills and capabilities to meet the changing needs of clients. While many of our competitors were contracting in response to the global financial crisis, we hired consistently throughout last year with over 80 appointments,” she said.
The leadership team was continually changing to meet the needs of clients and business, Ms Allen said. “This is business as usual for IBM.”
The subsidiary employs about 1000 staff. It last reported a reduced profit of $13.7 million on sales of $391.4m in 2008.
IBM’s United States parent this week cut nearly 1000 jobs from its worldwide work force of 400,000. The New Zealand subsidiary of its biggest global rival, Hewlett-Packard, this week reported a $8.9m loss and a 10.5 per cent drop in sales.
Dismissing the crap from the spokesman as absolute BS, which is what it is, I can confirm that IBM have made 30+ people redundant, with almost no notice and an appalling lack of anything approaching the legal standards for doing so.
Hubby is one of those people.
They were told on Wednesday (the same day believe it or not that we got confirmation of my brother’s residency), and were given till just Monday as a “consultation period”. Although there is no statutory legal minimum period that employers need to give for this “consultation” – 1 week is the standard that has been formed by case law. 3 days is unreasonable, and is grounds for seeking a Personal Grievance.
I cant say too much, as oddly enough, hubby is one of several people it seems who are doing just that. Its been a hatchet job: badly handled by people who really shouldn’t be allowed to keep their jobs, and basically its one almighty cock-up.
We understand that this has been done so quickly to keep the news out of the paper. So glad that didn’t work (and no – it was NOT me that told the Dom Post!)
And this isn’t business as usual for IBM. IBM New Zealand operates in a world of its own, and one that is frankly an embarrassment to the rest of IBM, if it was actually important enough for the rest of IBM to care what was going on down here. IBM as a company has always been clear that technical staff are not treated as lower class workers than management. If you are a technical specialist, which lets face it – IBM does kinda rely on – you can rise in the company as far as your skills will take you. Not so in New Zealand, where managers get easily offended at technical staff getting paid more then them, and and are not above lying through their back teeth to cover up their own lack of effort and skill.
THAT is what is “Business as usual” in IBM New Zealand. We have seen so many people shoved out in the last year or so because a manager didn’t like them: their “face doesn’t fit”. Hubby himself got a bad personal review last month for no other reason than a manager of his was upset over his high salary, and the fact the he wanted a pay rise.
All in all its a shambles. IBM NZ has been becoming more and more toxic as a workplace, and to be honest we knew it was only a matter for time before something like this happened.
Its things like this that mean so many people leave New Zealand. Working for people who just don’t know what they are doing can be very depressing. While there is a huge amount to come to New Zealand for, screwing up what was a brilliant career really wasn’t the plan, and should not be a cost of emigrating here.
So, now what do we do?
Well, not much really. We have an emergency fund which will cover 2 months worth of bills and living expenses, on top of another months pay and nearly 2 months pay in redundancy (at a reduced payment because IBM is not being exactly fair and honest about hubbies salary. Again.)
I cant stress enough the need to make sure you have these funds behind you, especially if you are taking high paid work in New Zealand. Tall Poppy Syndrome is a huge problem here, and if you are good at your job, and/or get paid a lot of money, there are some very short poppies here who will do their best to get rid of you.
We are far from the only ones that have been affected by this: its actually fairly standard. And certainly in high paid IT circles – it seems to be pretty much the only way to get a pay rise. So be prepared. Then if or when it happens, you have the distinct pleasure of being able to sit back and not in any way beg for a job from the people who just shat all over you.
Trust me – that is a nice feeling!
So, hubby has already started the process of having endless coffee meetings, phone calls and interviews. No point in waiting around! Oddly enough although IBM NZ claims it doesn’t need hubby any longer – they still expect him to work out his notice. Again, very different from IBM UK who have the sense to get disgruntled staff off the premises pronto.
And we wait for the lawyers to do their thing.
If you happen to be affected by this – we recommend an employment lawyer in Lower Hutt: Mike Gould at Gibson Sheat. He’s not cheap, but he’s good, and it really is worth every cent if like in this case your employer has not followed the expected process or has bullied you in any way. You are entitled to seek legal advice if you are being made redundant, and if anyone in management claims you are making a threat by saying you will be seeking legal advise, please make sure you tell your lawyer this. If you really cannot afford a private lawyer, don’t forget Citizens advice, who can offer you information for free.
BTW – while NZ staff were given three days “consultation”, UK Staff were given 90 days. Says it all about how New Zealand companies are run.
Mike Gould: Gibson Sheat:
04 569 4873
mike.gould@gibsonsheat.com
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What’s the effect of the global financial mess?
Having some spare time in the house with the slightly crappy weather, I’ve been watching some of the TED talks that have been sat on the iPod waiting patiently for me.
One in particular was from John Gerzema, talking about the ‘post crisis consumer‘. Beyond some of the academic/economic waffle, and the ‘America is the world perspective’ it did contain some interesting observations.
First off is the (US) savings rate over the last 70 odd years from 1935 to 2005 (sorry the graphics are a little fuzzy), giving us confirmation that it’s in the last few years that average households have negative savings – i.e. no savings and money oweing on credit, while since the 1950′s it’s been in the 5-10% band
The blip in the early 1940′s is of course the war. But only because there was nothing to buy, rather than a patriotic drive to save money into war bonds as there was in the UK. It is interesting though, even when there were almost no consumer goods to buy, savings rates only averaged 20-25%.
Anyhow, while these numbers are now four years old it begs the question – ‘What are people doing now?’. Well the (startling) observation is that people are paying off debt. Because they don’t want to be beholden to the banks as much anymore. Which is good news. And more people are using debit cards to access money in their bank accounts, rather than using credit cards and borrowing the money. Again good news.
Of course, neither the banks or the credit card companies are happy with this – since they don’t get to bleed us all dry with interest rates and charges. But still, they’re not hurting yet and it’s early days in the whole economic recovery thing.
More interesting was the information about how people are dealing with the stress. While it doesn’t say what the sample population was here (Wall St executives still in jobs, as opposed to homeless families in some Detroit ghetto), and the percentages are more than 100%, so people are obviously doing a number of things, it does make interesting reading;
5% of people are dealing with the stress by buying more stuff. This is taken as a good sign, as we’re getting more savvy about what we buy, and we aint’ buying any old crap the marketing people want us to buy.
Still, draw your own conclusions. Good news for Nintendo, where people are playing video games and exercising (Wii), possibly with their family. Really good news for ISP’s and TV broadcasters.
Avalon’s Guide On Facebook
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