We speak to Elise Buckle of UNI Global Union, the global union federation for the service sector, including banks and other finance sector institutions. Elise works in Finance Policy. Elise argues that banks should serve society, and not the other way …
We speak to Elise Buckle of UNI Global Union, the global union federation for the service sector, including banks and other finance sector institutions. Elise works in Finance Policy. Elise argues that banks should serve society, and not the other way around.
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Despite banks making massive profits, and paying out large bonuses at the top, in pursuit of short-term profitability banks have slashed at least 300,000 jobs since the start of the financial crisis. For instance, HSBC made almost 22 billion dollars of profit in 2011, but decided to cut 30,000 jobs, while Deutsche Bank made 7 billion dollars of profit but lost 22,000 jobs.
Banks making profits but cutting thousands of jobs… How is this possible?
- Banks are setting unrealistic targets, aiming for 15 to 20% of Return on Equity, while it used to be around 8% in the 1950s and 60s.
- As a result, profits are growing at grossly excessive levels, triggering generous bonuses and pays for a few greedy top managers.
- But at the same time, it is adding pressure on businesses to reduce labour costs and cut jobs. Ordinary people and banks workers at all levels are paying the price of the financial crisis.
- Higher Rates of Return on Equity means more profit but also more pressure on labour costs.
That also means employees are forced to sell more financial products even if it is not in the interest of customers, and employers tend to off-shore many jobs to lower-paying countries.
How could we fix this?
We need a new banking culture where banks invest in the real economy instead of speculating, where staff are valued, and where collective bargaining and global agreements create a new banking culture that is good for workers and society.
- The regulators and policy-makers need to develop new legislations to create positive incentives for banks to invest in the real economy rather than pure speculation. Commercial banks should invest at least 2/3 of their capital into the real economy. The banks play a crucial role by providing a “public service” to the society, which is the intermediation between economic actors. Without the banks, there is no economy.
- We need to create a new banking culture, in which bank employees are actively involved to change the system from inside the banks, as vectors of change rather than victims. In their daily jobs, they are the ones at the frontline that can develop more a ethical practice.
- By conducting collective bargaining, UNI and its trade union affiliates can work together in different countries to develop global agreements with companies, saving jobs, sharing profits and increasing staff motivation. There are some good examples such as the recent agreements with BNP Paribas, Nordea and Santander which show that social dialogue between banks and trade unions can be very fruitful for both employees and employers.
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