Credit crunch means workers’ living standards are under attack worldwide

Printer-friendly version

With the ‘sub-prime' credit crunch, the world economic recession stands out clearly. Throughout the world hundreds of thousands of workers have been simultaneously and brutally hit by the economic crisis. Among the first victims are the families evicted from their homes because they cannot pay their debts or have lost their jobs. In the US the rate of repossessions has doubled in a year, with 200,000 repossession proceedings in the second half of 2007 creating ghost towns. Runaway pauperisation is making much greater demands on existing food aid programmes: ‘Kids Café' distributes children's meals in 18 counties; and in New York soup kitchens have increased 24% in a year. Furthermore, 27,000 building workers are due to be made redundant, 12,000 jobs are due to go at Ford factories, and General Motors has asked for 74,000 ‘voluntary' redundancies. Already in 2006 the sacking of 30,000 hourly paid workers showed the bosses determination to emulate the productivity of Asian construction workers. The same motives are involved in today's plan to hire new workers paid a third of the previous rate: $25 an hour, including benefits, instead of $75 an hour currently (reported in Libération 23.2.08). We should add that there the great difference between this plan and previous attacks are that the workers must agree to give up their health insurance and pensions on leaving. There are also increasing job losses in manufacturing industry and elsewhere. Clearly this devastation will spread to the service sector. In the financial sector 26,000 redundancies are planned in previously untouched concerns such as HSBC, UBS and Citigroup envisage between 17,000 and 24,000 job losses.

The effect of the credit crunch is just as visible in Britain where repossessions rose 21% last year, to 27,100, with those behind on mortgage payments up 8.6%. And the Council of Mortgage Lenders has warned it will get worse this year with food and fuel price rises and over a million homeowners coming off their fixed rate mortgage deals, and lenders taking fewer risks. In addition to the ubiquitous relative pay cuts (below inflation pay deals) local government is imposing horrendous cuts in pay presented as ‘single status' or equal pay policies, such as bin men in Waltham Forest who stand to lose up to £8,000.

Today the frontal attacks linked to the crisis cannot just be pushed onto the peripheries of capitalism, the poor countries of the third world, and now the heart of the capitalist system and the most concentrated proletariat in the world is affected. In Europe Germany, a country whose export performance and the dynamism of its enterprises has been extolled, there are more and more redundancies: 35,000 planned for this year at Deutsche Telecom; 8,000 jobs to go at BMW to maintain profitability; Siemens intends to throw 3,000 employees into the street from its Enterprise Network division. Nokia is getting ready to move to Rumania in order to cut costs and prices. The telecommunications sector elsewhere is also cutting jobs with 2,000 to go from KPN in the Netherlands in addition to 8,000 already announced in 2005. In France, 23,000 public sector job losses are anticipated, 18,000 from Peugeot between now and 2010. Many bankruptcies are also leading to redundancies, particularly for the most vulnerable workers, immigrants and especially illegal immigrants without papers, but ‘legally' employed in public building works, restaurants, electronics etc. This disaster is only at its beginning, and affects all the countries in Europe and the rest of the world. Even in the China, which is presented as the new El Dorado, the contraction in the world market is leading to numerous bankruptcies and redundancies. In Shenzhen in the South one enterprise in ten has shut (see and a new ‘right to work' introduced on 1st January has provoked massive redundancies.

We should have no illusions, poverty is increasing everywhere! What the bourgeoisie presents as a ‘leaner' healthier economy or a ‘necessary correction' is in reality one of the most significant expressions of the bankruptcy of the capitalist economy. WH (adapted from RI 388)

Recent and ongoing: