It’s not a fad. We are seeing a permanent decoupling of economic activity from resource extraction, driven by several key factors, including continuous inflation that is eroding the purchasing power of regular people, acute resource scarcity threatening supply chains, and tightened regulations forcing corporations to internalise environmental externalities.

The statistics are clear. The global secondhand fashion and luxury market is projected to reach approximately $360 billion in the next four years and is growing three times as fast as the primary market. The market can be broken down into several key segments. The global secondhand apparel market reached $200 billion in 2023 and is expected to hit about $350 billion in 2028. It represents an incredible compound annual growth rate of 12%. The luxury resale segment is expected to grow from $32.47 billion in 2024 to $50.06 billion by 2030. The primary driver behind this growth is the “assetization” of luxury goods. The refurbished electronics market is also growing rapidly and is projected to hit $65 billion through 2029, with an annual growth rate of 14.2%. Finally, the secondhand furniture market is expected to reach $91.6 billion by 2027.

Well, the public narrative is mostly about fashion, but there’s a lot more going on. For example, when it comes to consumer electronics, there is something called the Right to Repair movement. It is now being codified into law across the European Union and several United States jurisdictions.

The legislative momentum creates entirely new secondary markets for refurbished devices, validated by sophisticated grading standards and data sanitisation technologies. But it’s important to note that rapid change creates complex contradictions. Resale as a service has commoditised circularity. The change has empowered fast fashion giants to launch resale platforms that many argue are a way to hide systemic overproduction through what people call greenwashing. At the same time, AI and digital product passports are emerging as critical infrastructure to bridge the trust gap in secondary markets.

The resale market has effectively separated from traditional retail cycles, functioning less like a distressed asset class and more like a preferred primary consumption channel. Growth is not uniform across geographies. In the United States, 87% of consumers cite affordability as their primary motivator, 11 percentage points higher than their European counterparts. Conversely, the European market is heavily influenced by regulatory pressures and a cultural inclination toward wardrobe curation, supported by denser networks of independent vintage stores.

The global cost-of-living crisis has acted as a potent accelerant, shifting circularity from a sustainability feature to a household survival strategy. Persistent inflation has forced consumers to trade down to secondhand goods to maintain brand access without primary market premiums. It’s particularly evident in electronics, where flagship smartphone prices exceeding $1,400 push consumers toward certified refurbished models selling for 30% to 40% less. However, the psychology extends beyond frugality. A “treasure hunt” dynamic drives engagement, with nearly 50% of resale buyers citing the search experience as a key enjoyment factor. For Generation Z, resale has become the primary discovery channel, with 80% using resale platforms to explore brands they haven’t purchased firsthand, effectively making the secondary market a gateway for primary luxury customer acquisition.

A primary brand hesitation is cannibalisation fear, but data from BCG and RaaS providers suggest the opposite. Cannibalisation has already occurred on third-party sites; by reclaiming this volume, brands capture revenue, customer relationships, and data. Furthermore, brand-owned resale increases customer lifetime value. Programmes like Lululemon’s “Like New” drive loyalty by rewarding trade-ins with store credit that is almost inevitably spent on new inventory, creating a flywheel where secondary markets subsidise primary purchases. Resale shoppers are often aspirational consumers who eventually graduate to buying new, effectively lowering customer acquisition costs for new segments.

Unlike forward logistics, which ships identical palletised items, reverse logistics processes unique items with varying conditions, defects, and values, requiring specialised infrastructure. Companies like Optoro use AI to determine the next best action for returned items to maximise recovery value, reportedly diverting 95% of returns from landfills. However, the cost of processing a single used garment can exceed its resale value. RaaS providers leverage volume and proprietary data to drive costs down, but profitability remains challenging without subsidy from primary brand marketing.

In the luxury sector, the goods are increasingly viewed as tradable assets, sometimes outperforming traditional investments. The market grows at 7.48% annually, fuelled by aggressive primary market price increases that make the secondary market the only accessible entry point for many consumers. The existential threat is counterfeiting, giving rise to AI-based authentication services.

Entrupy uses microscopic computer vision, analysing materials with 99.1% accuracy and offering financial guarantees. The RealReal employs hybrid AI tools, filtering high-risk items for human expert review. The watch segment is projected to reach 35%-40% of the global market by 2030, with mechanical durability making watches ideal for multiple ownership cycles.

The electronics resale market is driven by functional utility and grading standards. Back Market forecasts €3 billion in gross merchandise value in 2025, driven by inflation and the desire to avoid the massive carbon footprint of manufacturing new devices.

A critical barrier to corporate electronics recycling is data privacy. Blancco provides enterprise-grade sanitisation, ensuring devices from banks or hospitals can be safely resold, automating diagnostics and erasure for up to eighty devices simultaneously. The EU’s 2024 Right to Repair Directive forces manufacturers to provide spare parts and manuals for seven to ten years, fundamentally altering refurbishment economics and breaking planned obsolescence cycles, empowering independent repair shops that are critical to local circular economies.

Without digitisation, the circular economy cannot grow. A product’s journey (made, reused, repurposed) needs one steady digital link. By the late 2020s, EU rules will quietly require Digital Product Passports for clothes and tech items. These digital records store fixed facts, such as where a product started, what it’s made of, whether it can be fixed, and whether it can become new material. Starting from a shared base, the Aura Blockchain Consortium takes shape through collaboration among LVMH, Prada, and Cartier. Built around uniform blockchain systems, each item receives a distinct digital form. Should a product change hands during resale, those new owners gain access to linked records, unchangeable proof of origin and past possession. Instead of full public visibility, Aura applies controlled networks where openness meets boundaries, supporting trustworthy changes in ownership, especially where market value runs high.

The government used to encourage recycling through policy, until very recently, but now it is mandating circularity. The EU is leading the change globally, exporting regulatory standards worldwide through the “Brussels effect.” It helps multinationals adopt EU standards to simplify the supply chain.

The Right to Repair Directive by the EU came into force in June 2024. It is an incredible piece of legislation because it requires manufacturers to repair goods even outside legal guarantee periods, mandates the creation of a European online repair platform, and standardises repair information forms.

Not to mention the Eco-Design for Sustainable Products Regulation, which imposes tough standards by demanding durability, reusability, upgradability, and repairability from the start of product design. Also, the Waste Shipment Regulation prohibits plastic waste from leaving OECD borders after 2026. This regulation has led to an increase in recycling within Europe instead of shipping trash abroad.

Unlike the EU’s federal approach, the United States relies on state-level legislation, creating complex compliance maps. California, Minnesota, New York, and Colorado have passed vigorous Right to Repair laws. California’s SB 244, effective July 2024, requires parts and manuals for electronics and appliances costing over $100 to be available for seven years, crucially not excluding business-to-business equipment. Manufacturers cannot easily make California-only versions, so these laws have national ripple effects. Without federal equivalents to EU regulations, US companies often default to EU standards to maintain global supply chain consistency, essentially importing EU regulations.

They say the resale boom is a great win for sustainability, but if we critically examine it, there are some inconsistencies in that claim. For example, fast fashion brands have adopted resale aggressively. Some argue that these are sophisticated greenwashing tactics that distract people from the core overproduction business models. The Changing Markets Foundation is one such critic. Shein, for example, produces thousands of new styles daily using ultra-fast fashion models that rely on synthetic materials and labour exploitation. The platform might contribute only a microscopic fraction compared to what dominates sustainability marketing.

Investigations have revealed that clothes taken back through take-back schemes and other systems often end up incinerated, downcycled, or exported rather than resold. By using tracking devices, investigators have found that items in perfect condition were destroyed or lost, exposing a significant lack of transparency.

Academic research confirms rebound effects, where efficiency gains are offset by increased consumption. When consumers can sell used clothes, they may feel financially and morally justified in buying more new clothes. Studies estimate substitution rates at 1:1.23, implying resale markets might actually increase overall throughput rather than reduce primary production. Consumers buy with the intent to resell, treating clothes as temporary holdings. Similarly, the environmental savings of refurbished smartphones can be offset if consumers use monetary savings to buy more devices or upgrade more frequently, nullifying carbon reduction benefits.

By 2030, resale is expected to comprise 10% of the total global fashion and luxury markets. In high-value categories like handbags, secondhand items already make up 40% of consumers’ wardrobes, indicating saturation, where “used” becomes normal. The distinction between new and used retail channels will blur, with major retailers offering both side by side. The circular economy is inherently labour-intensive, requiring a human touch for repair, authentication, sorting, and logistics. The ILO and World Bank estimate the sector already employs 121 to 142 million people globally, poised to be a major engine of green jobs offering employment that is difficult to offshore.

The ultimate evolution is the dissolution of ownership toward “usership” models, where goods are leased or subscribed to through Product-as-a-Service. In such a model, manufacturers retain ownership and responsibility throughout product lifecycles, aligning incentives perfectly. If manufacturers pay for disposal, they design products to last forever and be easily repaired. Right now, it’s rare, yet forecasts show it spreading into expensive household items by 2030, especially as trash disposal gets more costly. At that point, Digital Product Passports probably won’t be hard to find for high-end products, letting shoppers scan a secondhand coat and immediately access details like the farm origin of fibres, handworker location, past owners, repair tips, plus reuse value.

Nowhere is change clearer than in how goods move across borders. Pushed by need, rules, and tools that connect economies differently, old ways of making and moving things fade. Even though doubts about real sustainability linger, with fake claims, energy tradeoffs, and delivery hurdles adding pressure, forward motion cannot stall. A time when buying and tossing came easily now shifts toward reusing, repairing, and reusing again. Nowhere is change clearer than in what companies must do about used goods. Instead of resisting, smart players are learning to shape these secondary trades. Success in the years ahead hinges less on selling new items than on turning every product into profit.

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In recent years, major incidents, such as Boeing employees rejecting a proposed wage increase and Volkswagen’s upcoming negotiations with Germany’s powerful IG Metall union have highlighted the complexity of the issue. Employees are increasingly rejecting offers that appear generous on the surface but fall short of addressing their core concerns, particularly around inflation-adjusted pay and job security.

International Finance will explore why wage deals are becoming a contentious point between manufacturing giants and their worker unions, focusing on inflation, cost of living, economic pressures, labour market shifts, and evolving worker expectations.

The evolving nature of wage disputes

Historically, wage negotiations in industries like engineering and manufacturing have been fairly straightforward. Unions and companies engaged in collective bargaining agree on pay scales, benefits, and working conditions. This model worked relatively well during periods of economic stability when inflation rates were low, and worker expectations were largely centred around stable jobs with fair wages.

In this context, unions played a vital role in ensuring that workers received a fair share of the profits generated by large companies. Strikes and wage disputes did occur, but they were often resolved through negotiation, compromise, and long-term agreements that benefited both parties.

Today, the economic environment is far more volatile, and one of the major catalysts for wage disputes is inflation. As inflation rates surge across the globe, particularly in developed countries, workers are feeling the squeeze. The rising cost of living, including housing, healthcare, and education, has led to widespread dissatisfaction with stagnant wages.

While companies may offer pay increases, as seen with Boeing’s offer of a 25% wage hike and a USD 3,000 signing bonus, workers are increasingly rejecting these deals. Boeing employees, for instance, voted down the offer because it failed to address their concerns about inflation-adjusted pay. Workers argued that even with the proposed raise, their purchasing power would continue to erode due to rising costs, making the offer inadequate for maintaining their standard of living.

This is not a problem unique to Boeing. Across industries, particularly in manufacturing and engineering, wage increases are being overshadowed by the sharp rise in living costs. Workers are pushing for deals that not only promise higher nominal wages but also account for real inflation rates, ensuring that they can maintain or improve their standard of living over time.

Now talking about the Boeing crisis, over 30,000 members of the International Association of Machinists and Aerospace Workers (IAM), who produce Boeing’s top-selling 737 MAX and other jets in Seattle and Portland, overwhelmingly voted down a new contract, before heading for the strike.

As per the Union leader Jon Holden, who initially endorsed the now-rejected wage deal, the priorities for his members were a bigger wage increase and the restoration of a defined-benefit pension scheme that the IAM lost during a previous round of negotiations with Boeing a decade ago.

The initial deal included a 25% pay rise spread over four years and a commitment by Boeing to build its next commercial jet in the Seattle region, if the plane programme was launched within four years of the contract.

Union members, however, vented their frustration at years of stagnant wages and rising living costs, as they stated that the removal of a performance bonus in the Boeing offer would erode half of the headline salary increase.

The situation at German automaker Volkswagen, on the other hand, offers another perspective on the growing tension between employees and companies over wages and job security. In September 2024, Volkswagen and IG Metall, Germany’s most powerful labour union, are set to begin negotiations for a new labour agreement affecting six of the carmaker’s German plants. This comes after Volkswagen cancelled a job security scheme that had been in place for years, sparking concern and unrest among workers.

In Germany, where manufacturing plays a critical role in the national economy, wage deals are about more than just pay. Job security, worker protection, and long-term benefits are equally important. When Volkswagen scrapped the job security scheme, it sent a signal to workers that their futures might not be as stable as they had once thought. As a result, wages are now just one part of a broader negotiation that includes demands for reassurances about the longevity of jobs in a rapidly changing automotive industry.

IG Metall, which has a reputation for tough negotiations, will likely push for both wage increases and the reinstatement of job security measures. This situation exemplifies how modern wage negotiations are no longer just about pay but are deeply intertwined with workers’ concerns about automation, outsourcing, and the future of their industries.

Why wage deals are becoming contentious?

One of the primary reasons is the mismatch between nominal wage increases and real wages when adjusted for inflation. As inflation continues to climb, the cost of essentials like housing, food, and transportation rises, effectively reducing the value of any wage increase that doesn’t keep pace.

Companies, on the other hand, face the challenge of balancing wage increases with their need to remain competitive in a global marketplace. Manufacturing giants are particularly vulnerable to rising labour costs, which can eat into profit margins and reduce their ability to invest in innovation or new technologies. The result is a standoff where workers demand inflation-adjusted pay increases, while companies are wary of agreeing to terms that could hurt their bottom line.

Global competition has put immense pressure on companies to keep costs low, including labour costs. Manufacturing and engineering firms are constantly looking for ways to streamline operations, invest in automation, and cut unnecessary expenses. This pressure often leads companies to resist significant wage increases, even during times of rising inflation.

Take Boeing, for example. The aerospace giant operates in an industry with razor-thin margins and fierce competition from rivals like Airbus. In this environment, agreeing to large wage increases can threaten a company’s ability to compete on price, especially when facing cost increases in other areas such as raw materials and energy. Boeing’s management likely viewed the 25% wage hike as a generous offer, but from the employees’ perspective, it wasn’t enough to compensate for the rising cost of living in areas like Seattle.

Similarly, Volkswagen faces intense competition not only from traditional automakers but also from electric vehicle (EV) manufacturers like Tesla. To remain competitive in the fast-evolving auto industry, Volkswagen needs to control costs while investing heavily in EV technology. This creates a tension between the need to increase wages to keep workers satisfied and the need to maintain profitability.

Job security and future-proofing

In addition to inflation-adjusted pay, job security is a growing concern for workers in sectors like manufacturing and engineering. Automation, artificial intelligence, and the offshoring of jobs to lower-cost countries are threats to traditional manufacturing jobs. Workers want guarantees that their jobs will not be automated away or outsourced to countries where labour is cheaper.

At Volkswagen, the cancellation of the job security scheme has made this issue even more acute. Workers are looking for long-term assurances that they won’t be replaced by machines or cheaper labour abroad. For unions like IG Metall, job security has become as important as wage increases in negotiations.

The situation at Volkswagen underscores a broader trend: workers are no longer satisfied with just wage increases. They want comprehensive deals that address their concerns about the future of their jobs in a rapidly changing global economy. Companies, meanwhile, are reluctant to offer such guarantees as they seek to remain agile and responsive to technological and market shifts.

The generational shift in the workforce is also contributing to the increasing friction over wage deals. Younger generations have different expectations from their employers compared to previous generations. While fair pay remains a priority, younger workers are more likely to demand work-life balance, meaningful work, flexibility, and strong benefits packages.

In many cases, younger workers are also less loyal to their employers, which gives them more leverage in wage negotiations. They are more willing to leave a job if they feel that pay and benefits are not meeting their expectations. This attitude forces companies to rethink their compensation strategies, as losing skilled workers can result in lost productivity and increased hiring and training costs.

The broader economic impact

Unresolved wage disputes often lead to strikes or slowdowns, which can significantly impact productivity. In industries like manufacturing, where just-in-time production models are common, small disruptions can lead to cascading delays throughout the supply chain. For instance, a strike at a Boeing plant could delay the production of aircraft, leading to missed deadlines and potential financial penalties.

Manufacturing sectors are highly interconnected, and a wage dispute in one company can have knock-on effects throughout the supply chain. Delayed production at one plant can lead to shortages of parts for other manufacturers, causing delays and financial losses across the board.

When companies eventually agree to wage increases, they often pass on the increased labour costs to consumers in the form of higher prices. This can contribute to inflation, which further exacerbates the wage problem. If wages increase but inflation continues to rise, workers may find themselves in a cycle where their real wages remain stagnant, leading to even more disputes.

Widespread wage disputes can create uncertainty in the broader economy, particularly if they lead to prolonged strikes or disruptions. Investors may become wary of putting money into companies or industries plagued by labour unrest, leading to reduced capital investment and slower economic growth.

As inflation continues to rise, job security becomes more precarious, and global competition intensifies, wage disputes are likely to become an even more significant challenge for the global economy. Companies will need to find ways to balance the need for competitive wages with the demands of their workers for inflation-adjusted pay, job security, and fair working conditions.

In the future, we may see more innovative approaches to wage negotiations, including the incorporation of flexible benefits, long-term job security agreements, and creative ways of sharing profits between companies and workers. Ultimately, both companies and workers will need to adapt to the new realities of the 21st-century economy if they are to avoid the kinds of disruptive disputes we are currently witnessing in the manufacturing and engineering sectors.

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