By Judith Orr
Downloading PDF. Please wait... Issue 332

Economic crisis: making us pay

This article is over 13 years, 6 months old
To read the papers in recent weeks you might be forgiven for assuming that car workers' wage levels and public sector pensions caused the financial crisis currently wreaking havoc across the globe.
Issue 332

In an unrelenting effort to make working class people pay for the crisis, the fat cat bankers are forgotten as workers in the US, Britain and across the rest of Europe are told the only way out of the crisis is to accept pay cuts, three-day weeks and unpaid “holidays”. One proposal to 2,200 workers at the Vauxhall plant at Ellesmere Port was that they take a nine-month “sabbatical” on 30 percent of their pay. How anyone is meant to pay their mortgage and support themselves and possibly a family on 30 percent of their pay is not examined.

At the same time, 25,000 Corus steel workers were asked to take a 10 percent pay cut to save jobs. But any guarantee the company gives on future job security may not be worth the paper it’s written on as the recession bites deeper. Even as negotiations were taking place, Tata, the Indian steel company that owns Corus, was threatening to cut costs in British operations by £350 million, putting thousands of jobs at risk.

The banks, despite the pleas from the government whose bailouts kept many of them afloat, are still refusing to extend credit to many businesses caught by the economic downturn. It was Woolworths’ loss of its credit line that sealed its fate – and that of its 30,000 strong workforce.

Meanwhile the bosses have been building up a propaganda campaign against public sector pensions. The bosses’ CBI joined in last month, calling the cost of public sector pensions “truly eye watering”. The regular description of them as “gold-plated” is obviously meant to give the impression of firefighters and nurses basking in untold wealth in their old age. You wouldn’t know that the average pension in local government is £3,800 a year.

All this is part of the age-old strategy to shift the burden of economic crisis from the pockets of those who caused it. In the US the bosses of the big three car companies put aside their private jets for their second attempt at extracting a bailout from the US government. The sticking point was not their profligacy but instead the pay, healthcare and pension levels of the car workers.

There is a section of the ruling class in the US that wants to allow at least some of the car industry to go to the wall, whatever the cost to working class communities or the wider economy, as they see it as going “cold turkey” to speed up the prospect of economic recovery.

Debates within the ruling class in Europe about how best to respond came out in the open when German finance minister Peer Steinbrück denounced Gordon Brown for “tossing around billions” and using “crass Keynesianism”. But this is only one side of the story, as the proposal to privatise parts of the Post Office shows; Brown may not be advocating the austerity measures pursued by others but he has not given up on neoliberalism. However, the sight of the explosions in Greece will have given politicians across Europe food for thought as they look at their options for 2009.

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