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How rising household debt could slow UK labor strikes this year

Strikes: how rising household debt could slow industrial action this year
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After decades of declining real wages and deteriorating working conditions, strike activity has spiked over the last year, particularly in the United Kingdom. From nurses and teachers to railway and postal workers, employees are demanding wage increases and improved working conditions—and walking out if they believe employers' offers won't stave off the rising cost of living.

However, my research suggests that many workers may increasingly feel unable to because of their growing household debt.

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

The recent resurgence of industrial action has in part been driven by the ongoing inflation crisis that many countries face right now, including the UK, with workers struggling because of recent slow wage growth. Public sector unions have also become stronger in recent years. But the wider reasons for the most recent peaceful era of industrial relations might tell us more about the outlook for current strike action.

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

Consequently, financing personal debt has become a major priority, and the fear of losing their job and defaulting on their debt has made workers more self-disciplined in the workplace. In other words: a bad job is better than no job.

Since at least the early 1980s, household debt-to-income ratios have been increasing dramatically. Household debt is consistently over 100% of disposable income in most advanced economies—in some OECD countries it's at least 300%.

Strikes: how rising household debt could slow industrial action this year
Office for National Statistics (ONS)

While household debt accumulation stabilized and even slightly declined after the 2008 , the current cost of living crisis and the impact of the pandemic on people's finances have caused outstanding debts to start to rise again for most households—particularly the poorest. And because many governments and are treating the current inflation crisis as demand-driven and increasing interest rates to fight it, household debt and debt servicing costs are likely to keep rising for the foreseeable future.

My research looks at the relationship between the long-run increase in household debt and strike activity over the last 50 years in the U.S., UK, Japan, Korea, Sweden and Norway. I used 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 steep decline in the number of strikes organized, strike participation, and days lost to strikes in the vast majority of these economies. Inflation and changes in the power of trade unions have also played a part, but personal debt obligations have been key in suppressing industrial action.

UK strikes in 2023

As a result, the very thing that has has triggered today's strikes—the cost of living—could also bring about an end to this action. It is unlikely that workers whose personal debt is rising will be able to participate in indefinite strike action.

And since the main consumer price increases right now relate to fuel consumption, energy-related debts accumulated during the coldest months of the year could push lower income households to abandon strike action out of necessity. While the government has introduced limited energy subsidies, these are unlikely to save the most vulnerable households from poverty.

So, if think strikes are the best way to successfully achieve their workers' demands, there are some steps they could take. Firstly, since the disruption power of workers varies substantially across sectors, coordination and collective demands for country-wide pay increases and workplace reforms could strengthen the impact of strikes.

Trade unions should also use pre-strike donation campaigns to provide more generous strike compensation to striking workers. They could also collaborate with debtor unions. These associations represent indebted households and demand reforms or even the cancelation of certain debts.

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

Provided by The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.The Conversation

Citation: How rising household debt could slow UK labor strikes this year (2023, January 26) retrieved 30 May 2024 from
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