Implement innovative policies to cut joblessness

POLICIES to reduce the scourge of unemployment in the rich nations have proved to be a dismal failure. Things are not much better in the emerging markets either. Innovative economic policies should be urgently implemented, especially since the youth represent some 20 to 40 per cent of those who can’t obtain work.

Fourth-quarter 2011 figures of the 34 member nations of the Organisation for Economic Co-operation and Development (OECD) show that the lines of unemployed have only dipped by one million from their recent peak to 45 million.

It is highly unlikely that the International Labour Organization’s staggering global estimates of 209 million jobless in 2010 has fallen much, given the onset of an economic slowdown in China, India and other emerging nations.

Moreover, OECD and global unemployment figures do not tell the full story. They exclude people who are freelance part-time workers and consultants with income below former employment levels.

In countries such as the UK, many companies are following a pernicious practice of offering unpaid ‘work experience’ to graduates.

Instead of a week or two, these people work for months with the promise that a job might be in prospect.

In emerging nations, numerous families are either eking out an existence in cities, towns and villages, or as tenant farmers.

 

The unemployment scourge has created a vicious circle of inter-related economic, social and health problems. Within the OECD, economies are reliant on demand from people who have jobs.

But the combination of high dole queues, underemployment and the fear of losing jobs is a drag on growth. Families on lower incomes require support from social services which can’t cope because governments are slashing expenditure. Prisons have become overcrowded as crime has increased.

Health inequities are widening between the well-off and the growing numbers of people who have slipped down the economic ladder.

Mental stress, despair and depression directly dent productivity, but the long-term impact is heart and other diseases which in turn raise health, social and economic costs.

Monetary ease, negligible interest rates, dollar devaluation and quasi Keynesian government spending to create demand have so far hardly had an impact on US unemployment which is still 13.3 million or 8.6 per cent of the workforce.

Instead, the inflationary policies have boosted the cost of living and caused more misery. Much-promised infrastructure spending, which would have a direct impact on job creation, has taken place in dribs and drabs.

In the Eurozone and the UK, the policy is austerity to reduce government deficits. People are thus losing jobs in the public sector, but such is the fear of recession that instead of investing and expanding, businesses are retrenching.

Take Spain. Since 2008, queues for jobs there have soared from 2.6 million to 5.32 million, raising the unemployment rate to 22.8 per cent.

The Spanish youth unemployment rate is 47 per cent! People who initially protested peacefully have begun to riot.

It is hardly surprising that the governments of Spain, Italy and Greece fell in 2011. President Nicolas Sarkozy could well lose the April 2012 French elections.

US President Barack Obama may have a chance to win a second term because of unimpressive Republican contenders. But elections for US Congress and the Senate may well bring many surprises.

Urgent measures to boost employment should involve best practice infrastructure that nations really need. There should be genuine encouragement for businesses – especially medium and smaller concerns – to invest and expand and train and employ new workers.

These incentives would be conditional attractive tax breaks and depreciation allowances. Local governments could also organise compulsory paid community and other services for people who can’t get jobs.

The aim would be to lift people from despair. To help fund these moves there could be a worldwide agreement to impose ‘Tobin Tax’, that is tax on global bank speculation in currency, money market, bond, equity and commodity markets.

 

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