I hate to say it, but Paul Keating was right – there are certain times when a recession is necessary; and this is no more prevalent than now.
The world has been living on borrowed money, quick riches and empty promises for far too long and it’s time we all had a reality check.
This is going to leave a bitter taste in the mouths of some people affected by the current crisis that have lived conservatively and yet have been affected by job cuts and the like – to those people I genuinely feel sorry.
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However, there are also plenty of people outside of this who have borrowed to the hilt, bought every “toy” they could imagine, and made risky decisions with money that wasn’t theirs in the first place. It’s for these people as well as the Government, public sector and private sector that the current recession is a must.
One of the strangest things that I have seen in this whole mess is the number of organisations coming out and openly declaring that they are “tightening their belts” and “slashing their cost base”. So Moët and crayfish are out for racing carnival and slabs of Carlton Draught and meat pies are in.
But this is the exact point of all the lunacy. Why would it take all this trouble to make a business or person become more frugal? Whether times are good or bad, you should always be lean on expenses – it’s business 101.
It baffles me that from the average person right up to corporates and the Government, that when times are good we lose our values and act like 15 year old school boys with their first pay cheque.
The only difference in this case is not only have we spent the first pay cheque, we’ve also leveraged that and future pay cheques to multiply our purchasing power. This works well on the way up; hurts like hell on the way down.
So, we now find that we have to clean out the cobwebs, get back to basics and spend like paupers. For Gen-Ys this is even more of an interesting concept. As I’ve said before, Gen-Ys have had an easy run so this current turmoil will be a good test of this entire generation.
We are now shifting to a climate where the employers are in the drivers’ seat and the years of chopping and changing jobs, demanding ridiculous salaries and choosing “work-life balance” over hard work all appears to be over.
In addition to this, plasma screens, iPod’s and flash cars are all “no-no’s”. Is this a bad thing Gen-Y? I am genuinely asking you the question, but my honest feeling is no, it’s not.
This whole mess is a reality check for us all, whether it be our approach to work, family, life or money – it never pays to chase the easy options.
As far as I’m aware, there is no substitute for achieving success other than through hard work, conservative spending and a strong dose of humility. The world knows the formula, it just seems that we don’t seem to follow it.
Government, business and certain individuals are too focused on short term wins and forget the long term ramifications. So, it’s time to learn from the current downturn, tighten the belt and focus on the important things in life. Once we’ve done that, we should maintain these values until our last breath.
Michael Phillips is a 30-year old CPA managing a business full of Gen-Ys. He’s the commercial manager of Cremorne Group which wholesales and retail mens and womens apparel, including the Tommy Hilfiger, Blazer and Perri Cutten brands. He offers his experience as a pioneering Gen-Y managing Gen-Ys, covering issues such as how to recruit, retain and get the most out of Gen-Y – the notoriously difficult younger generation of employees aged 15 to 30.
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