A man willing to work, and unable to find work, is perhaps the saddest sight that fortune’s inequality exhibits under this sun. ~ Thomas Carlyle
When one looks at the ongoing recession and how it has been more than five years that the world is still unable to tame this ongoing economic saga; one can see that there are real casualties of this recession- what I am referring to is the unemployed persons all across the globe. It is not like the world has never seen the economic downturns any more. The difference this time is that those who lost their jobs are finding it long and hard to be employed again. And those who have found work, the compensation is lower- way lower.
The real recovery will not happen until the job outlook improves in many Western economies. The US economy has to create jobs to start the recovery. China needs to create jobs to avoid their own Arab spring. Indian government is outlining their own version of creating jobs in India where unemployment rate has risen especially in major cities because of the migration from rural areas to major cities to look for jobs. Saudi government is also working on several initiatives to tackle the youth unemployment in the kingdom which is around 33%. Moreover, the Saudi government has stopped issuing work visas for certain occupations in order to give those jobs to locals.
Either way, employment is the key to national economic survival and growth. People need to work to be able to pay taxes for government programmes; to spend to create consumption factor; to save so they can borrow to buy a house or do the investment.
History has shown over and over the impact of unemployment on social order. Apart from my ongoing research on the global political and economic affairs, I am also reading about the Depression of 1930s specially the rise of Nazi Party in Germany and how much role German economic conditions played in the context of unemployment and inflation in the Weimar Republic and how economic conditions in Germany gave rise to Hitler’s regime.
Before the crash of 1930s, 1.25 million people were unemployed in Germany. By the end of 1930 the figure had reached nearly 4 million, 15.3 per cent of the population. With the drop in demand for labor, wages also fell and those with full-time work had to survive on lower incomes. Hitler, who was considered a fool in 1928 when he predicted economic disaster, was now seen in a different light. People began to say that if he was clever enough to predict the depression maybe he also knew how to solve it. The rest, as they, is history.
Apart from suffering from the debt issue, the euro-zone also faces an unemployment crisis. As of today, the Euro Zone unemployment rate (data by EuroStat) remains at 11%, indicating that despite strong economic growth in the second quarter, the recovery has yet to result in the creation of a significant number of new jobs. In individual countries, the rate is much higher: Spain ( 22%), Portugal (12.2); Greece (16.2), Hungary (9.9); Slovenia (8.4) and Ireland (14.2). Many policy makers in Europe believe that the individual rates are much higher than reported by the EuroStat.
The high rate of unemployment undermines national economic sovereignty and can rupture the institutional confidence by the citizens on their institutions. That could lead to social breakdown and that is why the key to kick start the global economic engine humming again is to invest in the job recovery. No other variable has the potential to get the world growing again.