The FT includes an article on the personal debt crisis in the UK today. It makes clear the misery this creates. But it also makes clear that systemically we have little way of addressing this issue now. That is because in overall terms people in the UK can no longer meet their needs and save. This chart shows we are now net overall borrowers, and to a greater degree than other, equivalent, nations:
It is a pre-requisite of managing debt that there must, overall, be periods of net saving. Periods of rising income assist that. And these phenomena are not happening in the UK now, on average. The result is a rising debt problem as people borrow to make ends meet.
And that, the article makes clear, is what most of the borrowing is about. The era when personal debt crises were created by profligate spending has gone: this is now about simply inability to pay basic rent, utility and food costs.
So what is to be done? Of course Universal Credit has to end: it is known to be exacerbating this problem, by design.
But most of all, the UK needs a pay rise. At a time when profits continue to rise as a proportion of GDP, and stock markets continue to hover near record highs, what we have in this country is massive economic injustice. Millions of people are stuck in debt. Millions more have no margin for error when it comes to unforeseen but predictable crises. And that is happening in a wealthy country.
We can afford a pay rise. The minimum wage is still too low. Benefits are too mean. But neither solve the crisis for the middle income earner. For them the solution is systematic change. And if government will not act then they need to. The UK needs effective trade unions geared to the needs of the modern economy. I fear it has not got them. And that too is part of this problem.
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During austerity I can tell you that many a Council has essentially walked over their unions in order to make savings. My local union reps are feisty and stick up for us but even Labour councillors push measures and redundancies through.
Unions are in a tough place. Austerity has undermined the public sector ethos and turned Councils into behaving like any other employer in these matters.
We need to resurrect Barbara Castles ‘ In Place of Strife’ and see what we can learn from that.
So I agree with you.
return to normalised non-negative interest rates?
Read Keynes
Then tell me why
And this is against a background of climate change, Brexit and a possible economic shock due soon by some predictions.
Your graph the other day showing income over the years exactly mirrored my experience, and I thought it was just me that was suffering.
It is not helped by the distortions/omissions in the media such as how we have the highest rate of employment, lowest unemployment etc when comparing apples with oranges. When I had an issue at work, thankfully there was union support, they were not able to help directly but the moral support was priceless.
I know for a fact that internships, that should be classed as employment, are abused far and wide by mega-rich organisations, but what do you do? Blow the whistle and get black-listed or put up with it and call in the HMRC after you leave. I very much doubt that they will have the staff and expected returns to chase these cases up. In my local paper, someone said we would be lucky to find a tax office between Bristol and London soon.
Apologies for the ramble, just a background to the situation with zero-hour contracts, lack of career paths, micro-management and much much more I could relate. This blog is a fund of knowledge BTW.
I am not so sure that Barbara Castle’s “in Place of Strife” is really a good model for guiding trade union policy, even though overall Barbara Castle was a good progressive. It was a right-wing Labour idea and was bitterly opposed by the left. It paved the way for the Tory anti-union laws of the 1980s and the disastrous consequences that weakened the unions and caused the disastrous lowering of living standards of workers and for society as a whole for that matter by the demonising of unions that is so popular today in certain quarters (no prizes for guessing who). Slightly off topic but relevant I think regarding unions, Greta Thunberg (see Guardian 24/4/19 Greta Thunberg is right – only a general strike will force action on climate change McEver Dugan and Evan Chorleton and 6 co-authors from Earth Strike International) is advocating a world-wide general Earth Strike on 27 September 2019. For this strike to be effective it will mean a major effort by all trade unions and concerned organisations and individuals countrywide to cooperate and to ensure this is a success to save the planet. There has not been a UK general strike since 1926 which ended in defeated miners going back to work on lower pay, lets make sure that this one will receive the enormous support that has begun with the Extinction Rebellion protests.
Bill H
Fair enough – but if you also read Tom Brown’s book ‘Tragedy & Challenge’ you will get a picture of a very adversarial labour relations system that existed in British industry and there was a lot of reliance on ‘piece work’ which was quite expensive (although it helped my late father have a family of 5 and pay off his first house before 1972).
I’d also ask you to consider that what really paved the way for the Thatcherite anti-union bias that came later was that the Unions did not really listen to Castle and ended up getting something much worse in the long run. Remember that by the time of Castle, Germany was outperforming the UK even though we had apparently won the war.
However, the biggest failure of British industry at that time was both Tory and Labour Government’s failure to protect it from transatlantic asset stripping of the likes of Jim slater, Tiny Rowland and James Goldsmith and which saw the end of my family’s fortunes when Dad’s work place was closed down and sold off.
We were never so secure again after that and Dad had just bought a new house and struggled to get work at the time of the oil crisis. My Mother ended up on anti-depressants and had to go out to work and we became latch-key kids.
Pilgrim, you have raised some valid points and I commiserate with you for the unfortunate economic circumstances your family faced in the 1970s. My judgment at the time was strongly influenced by anachist/left wing politics so I saw things as a extreme capital versus labour confrontation, especially after the success of the coal miners strike and the fall of the Tory Heath government in 1974 due to this. Since joining the Ecology Party in 1983 I do try to look at situations in a less blinkered and more holistic way.