According to the Economist, there will be over 3.1 billion people in work. Although, there is a sense of crisis regarding jobs, as there are over 205million people globally who are unemployed. The latest figure on underemployment currently stands at 19% of the global workforce, it comprises of 7% of unemployed, those with part time jobs but would prefer to do more hours or work at 12%. According to the international Labour Organisation, about 1.53billion people roughly half of the global workforce were in “vulnerable employment”, that were either self employed or in low paid jobs working for their families in 2009.
Prior to the global financial crisis of 2008 the world enjoyed a period of “Great Moderation”. The previous business cycle that created a high level of unemployment had been dealt with, with the mixture of intelligent and independent bankers, prudent rich-world governments and the flexible labour markets. The govt of the G20 had to co-ordinate a fiscal and monetary stimulus to prevent the Great Moderation from turning into a great depression. Although, the rate of unemployment have not returned to its pre-crisis lows and not a lot of govt have the capacity for further stimulus.
Long-term unemployment has risen in complete terms and as a proportion of total joblessness in many countries. There has been an increase of long-term unemployed that currently stands at 30% in America, up from 10% in 2007 which proved a shock amongst experts as they believed America’s flexible Labour Markets would protect it from “European” levels of long-term joblessness.
The biggest victims or losers in this crisis have been the young people. Youth unemployment rate in the OECD in 2007 was 14.2% in comparison with 4.9% of older workers. The first quarter for this year, the rates amounted for 19.7% and 7.3% respectively. Several countries performed worst than others an example was Spain, were the rate of youth unemployment rose from 17.6% to 44% over the same period. A major role played a part for this crisis as the flexible contracts made it easier to fire or gets rid of people who were new in the Labour market but not for people already in work. When companies make cuts it falls on the flexible younger workers. A big factor for why the young have suffered excessively is because the older workers have been less keen to leave the workforce than in previous downturns, when attractive early-retirement packages were on offer. Those packages have now become rare; also the laws to prevent discrimination on age have spread rapidly, with more people now working longer.
Government policies have made a huge difference in some countries for example, the German government made subsidy for those on short term work to help fight joblessness and youth unemployment. In America, Obama decided to extend unemployment benefits from 26 to 99 weeks may have played a small role in increasing the prospect of long-term joblessness, and it also reduced the rise of poverty.
In some countries unemployment benefits have been made harder to get in a lot of countries, which has led to the increase in people claiming disability benefits. Young people who are out of work for a long period of time can have detrimental effects on them, scarred by the experience and may never get back on track. According to Robert Reich, an economist “once a person is on disability benefit that is in effect the end”. (http://www.economist.com/node/21528434). Reich also added that Labour-market which have currently troubled rich-countries were already apparent prior to the financial crisis. “It has given employers the excuse to do what they wanted to do but had resisted before the crisis” (the winners). He believed employers are replacing people with technology. As “employers do not want a reputation of firing when job markets were tight”.
Firms are relying more on part-time, contract and temporary workers who are basically more flexible. The number of part-time workers rose to 19.7% of all employers in America in 2010. According to a recent survey conducted by American firms, 58% of firms are expected to use more part-time, temporary or contract employees, while 22%expect to outsource more jobs. The demand for temporary staff is on the high and is usually provided by employment agencies such as Manpower and Adecco, while offshoring and outsourcing have continued to grow, in spite of the fact that some jobs are being repatriated. Reich also added that the trends don’t necessarily affect the numbers of jobs, but the quality of it, the security of jobs and the income.
Inequality keeps increasing in most countries. There’s a shortage of supply of talents even in this economic difficulty and the world’s leading companies are competing fiercely for it. The winners are the employers and large firms who decide who works for them, while the losers are the youth and employees who are being replaced by technology.