| Workshop 6: "Labour, Unemployment, Self-employment and Credit", Abstract by Oliver Haas for Bernd Balkenhol |
OVERINDEBTEDNESS
(Working Paper by Oliver J. Haas, supervisor: Dr. Bernd Balkenhol)
Over the last two decades overindebtedness has become one of the major social problems in the developed countries. It is often a feature of the working poor, reinforcing a perception of socio-economic dependency, jeopardizing the employment situation and decreasing the perspectives for jobless people to create income.
Furthermore especially within the large sector of the financial services industry credit is increasingly used to create dependency of independent agents or within labour or near-labour relations. The protection of labour law does not apply. Acquitting one’s job may be hindered by existing debt or the threat of less favourable conditions. Repayment of the debt may be used to exercise pressure for increased work.
The EU Directive seems to assume that such labour related credit is less dangerous and can be exempted from consumer protection. Consumer credit may also provide opportunities to create income if it sets time free from work at home, finances education and helps to achieve more mobility and bridge temporary cuts in wages and income.
On the other hand overindebtedness means social exclusion and increases vulnerability. For the social partners overindebtedness implies high and lasting costs of welfare. Taking on debt is a normal and constructive practice in the contemporary credit societies, as it opens opportunities for education and enterprise activities. Credits contracted in the first periods of life can usually be paid back in later periods, when the individual enjoys a regular and stable income. However this does not apply to everyone: job loss, business failure or illness can lead to overindebtedness. Such precarious situations often lead to abusive practises on the costs of the poor. Moreover this precarious situation is sometimes on purpose, for example in human trafficking and forced sex work. In the end, overindebtedness undermines decent work and in particular wage protection. The effects of overindebtedness include increases in the burden to all social partners.
The new quality of indebtedness leads to a demand for new suitable practices to prevent and to mitigate the causes and effects of overindebtedness. This new answers need to be based on solidarity.
(Please read the full abstract by Oliver Haas below) |
| ID: |
37163 |
| Author(s): |
iff |
| Publication date: |
28/04/06 |
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Created: 07/04/06. Last changed: 07/04/06.
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