Growing labor unrest over lower wages

According to Ben Laidler, Global Markets Strategist at eToro, the UK is facing a "summer of discontent" as a succession of escalating labor strikes follows nationwide strikes. The situation is exacerbated by the fact that wage growth is lagging far behind nine percent inflation. 

The UK may be the world's poster child for 'stagflation,' but the United States and the continent are not far behind. The number of major U.S. work stoppages is up 30 percent from last year, but today's discontent only narrowly matches the 1970s and is likely to be shorter-lived. Central banks have the upper hand, long-term inflation expectations are anchored, and labor markets will cool, but the workforce has changed.

In his view, the labor market has changed since the 1970s, a phenomenon accelerated by the recent pandemic. 

"We are witnessing a structural shift toward remote working, driving demand for cloud, video conferencing, and workforce integration solutions. With the rise of freelancing, new business models from ridesharing to delivery have also emerged. Meanwhile, weakened demographics and rising wages have provided a structural boost to automation and robotics," the expert added.

(WBJ)