Ten years after the 2007-2008 global financial crisis – the human toll in the financial services sector

by Gregor Gall*

Ten years ago this summer, the first rumblings of the thunderclap of what would become the global storm of the great financial crisis of 2007-2008 were heard. The first rumble to be heard was of the panic around sub-prime mortgages in the United States. Previously ever increasing house prices started to stall as people’s ability to pay their mortgages declined. The Fannie Mae and Freddie Mac lending agencies collapsed, necessitating government bailouts.  This was followed by BNP Paribas closed down two hedge funds as essentially worthless.
The contagion then spread to Britain, with the first run on a bank in one hundred and fifty years happening. This was Northern Rock. It was nationalised along with some other building societies and the financial titans of the Royal Bank of Scotland and LloydsTSB. Barclays only avoided needing a government bailout due to securing questionable loans from Qatar. The contagion spread into the wider economic system in Britain, with the credit crunch giving way to a financial crash and then a recession and that recession then gave way to an age of austerity in public spending and welfare which we are still living with today.
For a crisis that started in the financial services sector, relatively little is known about how it has affected the mass of ‘ordinary’ workers in this particular sector of the economy. Indeed, most of what is known in popular terms can be situated around ‘banker bashing on bonuses’ but this does nothing to shed light upon the post-crash experience of the massed ranks of the non-managers and non-executives in the financial services sector.
Employment Relations in Financial Services An Exploration of the EmployeeIn my new book, Employment Relations in Financial Services: An Exploration of the Employee Experience After the Financial Crash, I examine the processes and outcomes by which workers in the sector have been made to pay for a crisis and a calamity not of their own making. The book examines their working conditions and experience of work and employment in the sector and builds upon my previous book,  Labour Unionism in the Financial Services Sector: Struggling for Rights and Representation, which was published in 2008 just at the storm clouds were breaking.
The tale to be told in Employment Relations in Financial Services is a sorry one of redundancies, unpaid overtime, below inflation pay rises and ever more oppressive management techniques. Financial services sector workers are now working longer and harder for less in real terms. Indeed, those left in the sector can be seen as the most unfortunate ones because they are the ones having to pick up the pieces and do more with less. My book analyses these outcomes in terms of flight, fright, fight and falling-in-line.
There has been a massive amount of flight, fright and falling-in-line but sparse evidence of any fight. Hundreds of thousands have left the sector as result of voluntary severance packages. The fear of redundancy is one of the main factors which has resulted in workers experiencing fright. Another is performance management systems whereby individual workers’ pay rises are determined by managers’ assessments. In this system, underperformance leads to a not so polite invitation to leave the organisation. Some have referred to this as ‘being managed out the door’. The result has been a falling-in-line of workers chasing their tails to meet their ever growing number of targets.
Ironically, partnership working between unions and management in the sector – which has been more widespread in the sector than in any others – has survived the financial crash even though the companies have effectively ceased to negotiate with the unions, merely consulting with them now. It’s been a difficult situation for the unions – unable or unwilling to mobilise their members, membership has fallen in a self-reinforcing and downward spiral. That is why I was able to extend the four-fold analysis from my previous book into this new work in regard of the dissolution, disorganisation, dislocation and demoralisation of financial service sector workers’ collective organisation, namely, unions.
So, ten years on, is this just another hard luck story amongst many other hard luck stories in Britain today after the financial crisis of 2007-2008? Arguably, the extent and depth of the crisis in the financial services sector has been greater than that felt in other sectors of the economy. Consequently, the deleterious impact of the crisis upon workers’ terms and conditions as well as experience of work has been too. Compared to manufacturing, which was already experiencing decline and contraction, the fall from grace of the financial services sector has been quicker, steeper and more spectacular. The ‘health’ of the bankers’ bonus system may never return to quite was it was prior to the crash but after 2013 there was a revival in profitability and, thus, rewards for the top echelons. No such similar phenomenon was to be found lower down the pecking order.
Only full and proper state regulation of our financial and economic systems can prevent such a calamity from happening again. But it will also need state intervention in employment matters to protect workers’ interests and to support the creation of stronger unions to help in doing so. Currently, in Britain there is only one mainstream political party prepared to advocate such a course, and that is the Labour Party led by Jeremy Corbyn and John McDonnell.

For a book that unfortunately will be beyond the financial reach of many individuals, please consider getting your union branch, university library or public library to order a copy.
* Gregor Gall is professor of industrial relations at the University of Bradford

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