How rising household debt could slow industrial action this year | Pro IQRA News

Pro IQRA News Updates.

After decades of low real wages and deteriorating working conditions, strike activity has picked up over the past year, particularly in the UK. From nurses and teachers to railroad and postal workers, employees demand higher wages and better working conditions – and leave if they believe their employer’s offers won’t prevent the cost of living from rising.

However, my research indicates that many workers may increasingly feel unable to strike due to mounting family debt.

This current wave of strikes is the largest in more than a decade, but it is nowhere near the heights reached by the UK during the 1970s. September 1979 saw the peak of industrial activity in the post-war era, with more than 11 million working days lost due to the strike. The latest numbers for November 2022 show 467,000 days lost.

Work days lost due to strike activity

The line graph shows days of work lost due to strikes (UK, in thousands) from January 1931 to November 2022. According to the equality above, the graph shows a significant rise in 1979.

Office of National Statistics (ONS)

The recent resurgence in manufacturing activity has been driven in part by the ongoing inflationary crisis that many countries are facing right now, including the UK, where workers are struggling due to slow wage growth recently. Public sector unions have also become stronger in recent years. But the broader reasons for the recent peaceful era of industrial relations may tell us more about the prospects for the current strike.

Read more: UK Strikes: Six Milestones in Britain’s Industrial Labor History

My recently published research indicates that the rapid increase in personal indebtedness has been a major factor in the suppression of industrial action over the past four decades. The decline of social housing and the liberalization of the financial system in most developed countries during this period encouraged workers to borrow heavily.

Thus, financing personal debts became a major priority, and the fear of losing their jobs and defaulting on their debts made workers more self-disciplined in the workplace. In other words: doing badly is better than nothing.

Since at least the early 1980s, debt-to-income ratios have been increasing exponentially. Household debt consistently exceeds 100% of disposable income in most advanced economies – and in some OECD countries it is at least 300%.

While the accumulation of household debt leveled off and decreased slightly after the 2008 global financial crisis, the current cost of living crisis and the impact of the pandemic on people’s finances has caused outstanding debt to start rising again for most households – particularly the poorest. And because many governments and central banks are treating the current inflation crisis as demand-driven and raising interest rates to combat it, household debt and debt service costs are likely to continue to rise for the foreseeable future.

My research examines the relationship between the long-term increase in household debt and strike activity over the past 50 years in the USA, UK, Japan, Korea, Sweden and Norway. I used historical data from the statistical databases of the International Labor Office (ILO) of the United Nations, the International Monetary Fund and the World Bank, among others.

I found evidence that a steady increase in personal indebtedness is strongly associated with a sharp decline in the number of organized strikes, strike participation, and days lost due to strikes in the vast majority of these economies. Inflation and changes in the strength of trade unions also played a role, but personal debt obligations were central to the suppression of industrial labour.

UK strikes 2023

As a result, the very thing that sparked today’s strikes—the cost of living—could also lead to the termination of this measure. It is unlikely that workers whose personal debts are high will be able to take part in an indefinite strike.

Since the main increases in consumer prices now relate to fuel consumption, the energy-related debt accumulated during the cooler months of the year may prompt lower-income households to forgo the strike out of necessity. While the government has introduced limited energy subsidies, they are unlikely to lift the most vulnerable families out of poverty.

Read more: Energy crisis: The UK is still heading towards widespread fuel poverty – despite government price caps

A father and daughter are not satisfied with the central heating problem and they sit on a sofa at home and it freezes.  Freezing warm beds blankets looking at the camera while sitting on the couch in the cold kitchen
Fuel shortages have been a growing concern for many workers in recent months.
Nenad Kavowski/Shutterstock

Therefore, if trade unions believe that strikes are the best way to successfully achieve the demands of their workers, there are some steps they can take. First, because the strength of worker disruption varies widely across sectors, coordination and collective demands for nationwide wage increases and workplace reforms can enhance the impact of strikes.

Trade unions should also use pre-strike donation drives to offer striking workers more generous compensation. They can also cooperate with debtors’ unions. These associations represent highly indebted families and demand reforms or even cancellation of certain debts.

So, mobilizing more workers to achieve their goals of better wages and conditions, would mean coordinating union demands and incorporating debt relief measures so that workers could strike without fear of financial ruin. Given the government’s general reluctance to negotiate wage terms, a short but sharp burst of industrial action – a general strike – could be the way forward.


- Advertisment -

Latest News & Updates

- Advertisment -