Butterfly Effect: The Coming Labor Wars - OZY | A Modern Media Company
If history is any guide, the social and political costs of ignoring labor rights during this once-in-a-lifetime crisis may come back to haunt free market democracies.
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How governments handle labor rights in the coming months could shape the future direction of modern democracies.

Charu Sudan Kasturi

Charu Sudan Kasturi

OZY Senior Editor Charu Sudan Kasturi's column, "Butterfly Effect," connects the dots on seemingly unrelated global headlines, highlighting what could happen next and who is likely to be impacted.

By Charu Sudan Kasturi

The apparel industry is often criticized for operating sweatshops that produce many of the latest designs for best-selling labels. But at factories in Myanmar that manufacture clothes for popular Spanish brands Zara and Mango, workers are leveling a different allegation: that owners are using the pandemic-fueled global recession to bust unions.

One factory fired more than 500 union workers in April just hours after the employees asked managers to provide face masks and ensure social distancing at the workplace. Other employees have continued to oppose the attempt at breaking the union by protesting outside the factory. These protests in one of the world’s poorest nations, where labor rights are weak to start with, indicate a brewing storm of global unrest as governments and industries weaken workers’ protections to try to jump-start their economic fortunes.

As the world’s focus slowly shifts from the pandemic to its economic impact, these flashpoints — already emerging in the United States, the United Kingdom, Germany, France and India — could shape the future political direction of modern democracies, much as they did after the Great Depression. And unless leaders at the helm of these democracies are careful, that direction won’t necessarily be to their liking.

Uttar Pradesh, India’s largest state with a population of 200 million, last week issued a blanket ordinance exempting businesses from all labor laws for three years in a bid to lure investors. Other Indian states have waived laws requiring companies to pay employees for overtime work.

In the U.K., unions are protesting Prime Minister Boris Johnson’s announcement on Sunday asking those who can’t work from home to return to factories and stores — without requiring employers to ensure worker safety. The move has fueled concerns of a widening divide between those with better-paying jobs who can continue working from home and lower-paid factory workers who risk exposing themselves to the virus.

Unions in Germany, France and the U.K. are pushing back against companies that are firing employees they could have furloughed — in all three countries, furloughed workers are eligible for a sizable chunk of their salary from the government. In France, a national hotline has received hundreds of complaints about companies that are claiming government reimbursements to pay stay-at-home employees while pressuring them to return to work. More than 200 workers at a slaughterhouse in Germany — many of them migrants from Eastern Europe — have tested positive for COVID-19 even as the country lifts lockdown restrictions.

The U.S. has witnessed a surge in union action during the pandemic. Ten thousand construction workers in Massachusetts went on strike over unsafe working conditions. Whole Foods employees have staged a nationwide protest. There have been walkouts at meatpacking plants and demands for personal protective equipment and hazard pay by Instacart workers. Expect more in the months to come as states rush to open up their economies, paying little heed to workers’ concerns.

It’s an approach that might work for some companies — at least temporarily. But if history is any guide, the social and political costs of ignoring labor rights during this once-in-a-lifetime crisis may come back to haunt free market democracies. We only need to look back to the 1930s, and the last economic recession of this scale.

In 1934, longshoremen across the West Coast’s ports went on strike for more than 80 days, culminating in the San Francisco General Strike that stopped all work in the city for four days. Two workers were killed by police. Similar fatal clashes erupted between workers and the police in Minneapolis; Toledo, Ohio; and other cities across the U.S. that year.

The lack of empathy for unemployed, underpaid and overworked employees bolstered the argument for global socialism. At the same time, that broad economic disenchantment gave oxygen to rising fascist demagogues, especially in Europe, paving the way for World War II.  

The U.S. pulled out of the Great Depression under President Franklin D. Roosevelt, whose administration chose a third approach: bringing in a raft of pro-union laws, including the National Labor Relations Act of 1935 that legalized collective bargaining. Unions in the U.S. saw their membership surge from 3 million in 1933 to 10 million by 1940.

Nine decades later, the world is once again at a crossroads. Populist far-right movements are salivating at the prospect of tapping into the distress of those left behind by democracies to fend for themselves in this recession. Individual companies may have no option but to cut pay or lay workers off to survive. But governments can choose between supporting workers or using the economic crisis as a justification to weaken labor laws.

For democracies, legitimacy in the eyes of ordinary citizens is the bottom line. Allow that to be eroded, and the path is slippery. The world can’t afford to repeat the mistakes of the 1930s.

Charu Sudan Kasturi

Charu Sudan Kasturi

OZY Senior Editor Charu Sudan Kasturi's column, "Butterfly Effect," connects the dots on seemingly unrelated global headlines, highlighting what could happen next and who is likely to be impacted.

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