Growing labor unrest due to lower wages

The UK faces "years of discontent" as workers' strikes escalate successively after nationwide strikes. The situation is aggravated by the fact that wage growth lags far behind XNUMX% inflation. Britain can be the world's poster child "Stagflation"but the US and the continent are not far behind. Compared to last year, the number of major US downtimes increased by 30 percent. However, today's dissatisfaction is only slightly equal to that of the 70s (see chart) and is likely to last for a shorter period of time. Central banks have the upper hand, long-term inflation expectations are well anchored and labor markets will cool. But the workforce has changed, and this creates investment opportunities.

About the author

Ben Laidler - global markets strategist in eToro. Capital investment manager with 25 years of experience in the financial industry, incl. at JP Morgan, UBS and Rothschild, including over 10 years as the # 1 investment strategist in the Institutional Investor Survey. Ben was the CEO of the independent research firm Tower Hudson in London and previously Global Equity Strategist, Global Head of Sector Research and Head of Americas Research at HSBC in New York. He is a graduate of LSE and Cambridge University, and a member of the Institute of Investment Management & Research (AIIMR).

Strikes

Think of the 70s, when the number of strikes was 20 times greater than today in the US and UK. This decline now reflects a decline in the number of trade union members: down to 10%. in the US and 23 percent. in the UK (currently concentrated at a 4: 1 ratio in the public sector). Moreover, the spectrum of flexible forms of work is expanding. For example, 27 percent. employees in the UK are currently working on a fixed-term basis, 13 percent. are self-employed, and 6 percent. has a second job. Moreover, the higher and longer-lasting inflation in the 70s was more chronic and sustained than it is today.

Implications

The labor market has changed and this has been accelerated by the recent pandemic. We are witnesses structural changes towards remote workthat drive the demand for cloud, videoconferencing and employee integration solutions. With the development of freelancing, new business models have also emerged - od ridesharingafter delivery. Meanwhile, weakened demographics and rising wages have become a structural stimulus for automation and robotics. All this helped to keep the profit margins of the companies close to historical records.