What recession means for us

What recession means for us

An analysis of the likely impact of the coming recession on workers' lives and a rallying call for collective action to mitigate that impact.

The recession is here. We're told to tighten our belts and brace ourselves for redundancies, wage and service cuts. Politicians and business leaders are united in saying we should pay for a crisis not of our making [see box for a brief history of the crisis]. A recession is simply when the economy shrinks for 6 months in a row. What this means for individual firms is a squeeze on profits, and we can be certain that unless we do anything about it, that’s going to mean a squeeze on us, as our employers try to protect those profits.

Even public sector workers will feel the squeeze as the government tries to recover the billions already spent on bailing out the banking system, and to make ‘efficiency savings’ in the face of falling tax revenues. But wait, isn’t Gordon Brown going to make the rich pay with higher taxes? You’d certainly think so from the press. The Times, on its front page no less, even pictured Brown waving the red flag of communism. Alas, reality is rather different.

The Financial Times reassured its affluent readership with a more honest take on matters. Of £104bn worth of clawbacks the government is expected to make, just £2bn is expected to come from taxing the rich. That’s less than 2 percent of the total, and even that doesn’t take into account that the rich will try and pass on their burden by increasing their incomes at the expense of our wages. It’s also quietly forgotten that the top rate of income tax is still nearly 20 percent lower than under Margaret Thatcher’s pro-rich government.

A further £18bn is planned to come from regressive taxes. These are taxes that affect you more the less you earn. No trouble for the rich here. The rest is scheduled to come from public service cuts and wildly optimistic forecasts for a rapid economic recovery – when the recession has only just officially started! [Jan 09] So behind the headlines the plan is clear; they want to make us pay for their crisis. So how is the recession going to affect us?

Redundancies
One way in which the cost of the crisis is passed onto us is through redundancies. Unemployment is predicted to increase to as much as 3m in the next couple of years. This means over a million people will lose their jobs. Already the news is full of layoffs, and it’s set to get worse. Obviously redundancy hits those laid off in the pocket. This is especially the case if they’re agency staff or haven’t been in the job long, which means they don’t get much, if any, redundancy pay. But redundancies also hit those ‘lucky’ enough to keep their jobs as they have to work harder to make up.

Unemployment
Not content with mass layoffs, just when the economy is proving incapable of keeping people in work, the government is planning to cut benefits bills by punishing unemployed people for not finding jobs! A recent report recommended that unemployed workers should be made to either look for work or do community service “from 9 to 5” in order to earn their £60 dole money. That works out at £1.50 an hour! A whole host of other attacks are planned, such as forcing single parents with children over the age of one and many people currently signed off sick to look for work or have their benefits stopped. Of course, the whole point of a recession is there’s not many jobs to look for.

Wage cuts
Those of us who keep our jobs can’t expect to escape the punishment. Wages will be attacked directly; workers at JCB factories recently voted to take a £50 a week pay cut to avoid redundancies. The company then made some more redundancies anyway. This kind of ‘between rock and a hard place’ offer is likely to become more common with workers nervous about losing their jobs; althought the JCB example makes it clear that bosses can't be trusted. But wages can be cut in less visible ways too. If workers can be made to work harder and faster, or longer days or through their breaks, we end up doing more work for the same pay. This will often be making up for the work of colleagues made redundant, saving the boss cash. Whenever your boss asks you to “give 110 percent for the team,” this is what they have in mind. Of course we pay the price in stress and burnout, but at least we’ve got a job, right?

Public service cuts
A further £35bn of the government clawbacks are scheduled to come from public sector spending cuts. This will mean cuts to public services and further attacks on public sector workers pay and conditions. Front-line services are expected to be hit, so alongside the attacks on unemployment benefit, the health service is expected to be hit particularly hard alongside cutbacks to schools, social housing, energy efficiency programmes, GP surgeries and flood defences. Of course if you can afford private healthcare and to move out of flood-risk areas, this probably won’t bother you. For the rest of us it’s bad news.

Repossessions and evictions
Another way the recession will hit us is through a rise in home repossessions and evictions as people fall behind on mortgage repayments and rent. Repossessions are already at record levels, and set to rise further. The government is encouraging banks, including those it now owns, to go easy on repossessions, effectively tolerating squatting. No doubt they’re conscious that chucking families out on the street is not likely to be popular. But they’re in a bind. If they don’t repossess people, why should anyone pay their mortgages at all? If the government steps in to nationalise the homes of mortgage defaulters as has been suggested, this just raises the amount they have to claw back through the other means discussed above. The absurdity is we could see people being chucked out on the street while houses stand empty and can’t be sold.

So is it all doom and gloom?
It doesn’t have to be! If we’re honest, we’re not in a very strong position and we’re likely to take the brunt of this crisis unless we set about changing that. There are various things we can do, ranging from simple things you’re probably doing already to daring acts of collective action to win the things we need. So…

Talk to your workmates - on your breaks or in the pub after work. We’re all in the same boat, just realising this is a step towards doing something about it. When you realise your problems aren’t personal but social, all sorts of possibilities for mutual aid open up. Beware bosses claiming they’re in the same boat too; who do you think they’d throw overboard first?

Network with other workers - in your area or sector. Do you have friends or friends-of-friends working locally in the same sector as you? Consider going for a coffee or a pint to swap experiences and find out if there’s anything you can learn from each other, or ways to help each other out (like handing out leaflets at each others workplaces so the boss can’t victimise you).

Consider collective action. Collective action covers a whole range of things, but the principle is that while on our own we are weak, when we act together we can achieve more than the sum of our parts. Examples include going in a group to the manager's office to support colleagues being made redundant or pressured into working longer or harder. There’s safety in numbers. Or deciding with your workmates to ‘work-to-contract’ - taking your breaks and leaving on time in response to pressure to do more work. It’s easier to say no to the boss when you know your workmates are doing the same.

More dramatically, things like occupations can win major concessions. When workers were laid off at a factory in Northern Ireland recently they occupied the plant for 48 hours demanding improved redundancy terms. They won. By acting together they turned the tables on the bosses, who expected them to go home alone and ‘think things over.’ Instead they showed the inevitable wasn’t so inevitable. It isn’t always easy to take collective action, but it starts from realising what we have in common with other workers, and what we don’t have in common with the politicians and bosses trying to shift the costs of the crisis onto us. We can’t fight back on our own, but together we have a chance.

Written for the Tea Break bulletin in December 2008.

Posted By

Joseph Kay
Dec 11 2008 07:26

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Comments

Ne00
Jan 31 2009 14:58

JOSEPH K
of course taxes remain the most visible form of this 'surplus value' that is stolen from us, but i think it is a mistake to see taxes as exclusively responsible for our relative poverty, because the whole way society is set up is to accumulate wealth produced by workers for a class of parasites, and that would happen even if taxes were cut massively (which like i say, is always a call that comes from the private sector parasites, since it means more of the surplus accrues to them instead of the state, but not to us).

ne00
of course you are correct, so the parasites have created stealth taxes the lottery is one charities are another the NHS, Housing Associations etc. is how the parasites embezzle tax payers money, by being wasteful they can command greater taxation therefore greater margins for embezzlement.

Ne00
Feb 7 2009 16:51

radicalgraffiti wrote:

Ne00 you seem to be missing the point, the problem isn't that the rich are doing it wrong, the problem is that a minority own everything and the majority of us own nothing. we aren't trying to get them to run the world better, we want to do it for our self.

Ne00 believes contrarily, and that the rich and powerful are hypocrites, and only got that rich and powerful immorally, by not adhering themselves, to laws which they make, which is hypocracy, and tantamount to anarchy!

FascistKiller
Mar 3 2009 00:16

I think part of the problem is that we lack the language to describe the current situation. To call this simply a 'recession' is to view the current crisis like previous events that go by that term. It will be seen as a temporary economic contraction. But this crisis is very different. And assuming it will be simply a temporary state of affairs before economic growth resumes is to overlook one of the root causes.

Economic growth necessitates growth in production which in turn means a growth in energy supply. And it's the energy supply that's the problem. Oil production has been unable to increase for the past 3 years which lead to a massive spike in prices in July last year.

Whilst 4 out of the last 5 global recessions were caused by oil price spikes in each case oil production was able to not only resume at the previous level but surpass it. And growth in the energy supply allowed for growth in production.

But this time growth in the oil supply won't resume. The reason is that unlike previous oil shortages, which were human induced (the Arab oil embargo for instance), this time the shortage is simply down to the fact that we've used so much of the stuff we can no longer increase production. From now on oil production will enter a period of permanent decline. People wrongly take the drop in oil prices to suggest a plentiful supply. This is deceptive. The price of oil has dropped because of the drop in demand not from increase in production. Demand has fallen because the economy is contracting.

In the unlikely event that there is any kind of economic recovery you can be sure it will only be temporary. Because pretty soon once again the limits to growth in oil supply will be reached and the world will be plunged back into recession. And this is not a temporary state of affairs. From now on in the global oil supply will shrink year on year making matters worse as time goes on.

The idea of developing alternative energy sources is just a dream. Currently there's not even enough money to fund existing oil projects let alone new fangled untested technologies.

So where is this taking us? In the short term unemployment will rise and it's likely the global economy will collapse. But following in the wake of the economic crisis is something far more serious: a food crisis.

Expecting the government to sort this mess out presupposes they know what they're doing and they can sort it out. Given that they've failed to see the economic crisis despite many years of warnings, the likelihood is that they won't see the food crisis either. The government's overriding priority will be the same as it always has been only more so, to try maintain the status quo. The best option for ordinary people is to start learning how to grow their own food now. This is not just a matter of survival. It also takes away power from the government.

But more serious than food is the threat of war. The US, whose way of life is not negotiable, is the world's biggest consumer of oil. Russia is currently the second largest producer. Maybe this will usher in a new period of peace and cooperation and amicable agreements will be made on world's remaining supplies of oil. But history suggests that's unlikely. And given the high cost and probably shortage of transport fuel the urge to press nuclear button may seem more attractive.

In short then we're not simply in a recession. This is the beginning of a whole new era in history and if we don't grasp that fact any responses we make could be very misguided.

Ne00
Apr 13 2009 19:50

HiFascistkillerthere is a serious threat of war, but please understand any plant oil can be burned as fuel, I think the problem we are facing is that Governments have become too rich and powerful and this is causing them paranoia, they fear revolt so they are bludgeoning us poor with propaganda taxes and laws causing civil unrest wich makes them paranoid and so they bludgeoning us poor with greater taxes and laws causing greater civil unrest a vicious cycle, this paranoia is not specific to our times but written throughout history which is why all great civilisation have all fallen imploded

Armageddon a new beginning lets hope so!