The global unemployment issue
Last week there was an article about unemployment workers in the U.S in the local newspaper where a reporter interviewed some of them and it had some interesting facts:
“Frank lost his job at a software company since 2009 but today he is still out of work. He has attended many jobs fairs, sought help from job-search counselors and applied in many software companies. He explained: “I really do not know what to do anymore, I had over 20 years of experiences but they told me that I do not have the skills that they need. Technology changes so fast and I cannot keep up”. When asked about additional trainings to update his skills?” He answered: “I am 45 years old, my health is not good, I often have headache when I feel stress. I already have a degree so I do not want to go back to school.”
“Carol is a nicely dressed young woman, she told the reporter that she was laid-off during the financial crisis of 2008. She lived off her saving money for two years before it ran out. She spent many months looking for jobs in the financial area but now wants to go back to school to learn computer skills. She said: “I should go back to school to learn new skill when got laid-off but I waited and hope that the financial job market will improve. It did not change and now all my saving money are gone. I lost a good opportunity to learn something that can help me get good job. Without any money I could not afford to go back to school now”.
“Jeff was a manager for a large manufacturing company. He lives in a large house with his wife, an elementary school teacher. Both of their children are students in nearby college. He lost his job in 2009 because the company outsourced most of the works to China. He has been looking for work since but found none. He said: “In this time of recession and high unemployment, it is impossible to find job especially for a high position management. As I look back, I did not see the outsourcing trend. I did not pay attention to globalization. I did not care about what happen in the world as I had a good job, good salary and good life. It is too late now. I wish that I would pay more attention to what happened and be prepared”. Since he made a lot of money, he also spent most of it as they have three luxury cars and had long vacation in Europe every year. Now he is having problem financially as they did not have any saving money left. He is really worry because his wife's salary is not enough for both of them and the children. He said: “We may last until the end of the year, after that we do not know”.
“The job market looks even bleaker for Bill. Despite having a “Master degree” and applying for “more jobs than I can remember”, Bill had only one job as a salesman in a computer store for a short time before he was fired. His problem was that his degree came from a “phony university”. He complained: “I paid a lot of money for it but the computer company considered me cheating. They put on my personal record: “Cheating with false degree” and it is the barrier to getting any job now”. When asked why would he enroll in a phony university? He smiled: “It was easy, all I need is to pay them and they gave me the degree. I thought nobody know”.
The newspaper reported that today less than 78% of people in the U.S have job. Between 1960s to 1990s: 93% of people have jobs. This change drive unemployment rate over 10% with many people have been out of work for more than a years. Traditionally, the lack of job has been high among the less educated workers but today even educated workers are also having difficulty in finding jobs due to the change in global economy. This is not unique in the U.S but also a global situation. When adding data from Europe and Asia, it found that 68% of people with less than high-school education could not find job today and probably getting worst in the future. Of those who finished high school but did not go to college, the unemployed is approximately 32%. Unemployment of college educated is about 9% but is likely to improve as the economic recovery continues. The data suggests that with globalization, a college education is essential to survive in this competitive world.
The newspaper also cited that the main reason for the high unemployment throughout the world is most less-educated workers are working in construction or factories. However, many manufacturing works are now being automated with robots or outsourced to lower costs countries. Today and in the near future there will be much less demand for labor workers. The depreciation of the housing market due to the financial crisis in 2008 also halted many constructions in the U.S. With no more construction, many labor workers also have no works. Widespread unemployment has huge economic, fiscal and social costs as it reduces the country's economic potential. As fewer people have jobs, poverty becomes more entrenched and people without work could to turn to crime or involve in anti social activities. Broadly speaking, this is a common situation across the developed world, as unemployment rates are getting higher than several years ago. However, most economists are worrying that this could have devastating effect on developing countries. When developed countries stop consume and halt import manufactured products, developing countries that rely on manufacturing to export these products would be impacted. Some economists predicted that the effect will begin to take effect soon. With more closing of factories in China and higher unemployment in the “Manufacturing center of the world” China may experience significant economic problems than anywhere else.
For years, economists has warned about the integration factor in the global economy. The effect of one country could have significant effect on others because of this interdependency factor. The main reason of the high unemployment today is due to the structural changes in the foundation of the global economy that is transition from industrial to knowledge. It reduce the demand for less-skilled and less educated workers. Today productivity growth due to automation has enabled factories to produce more with fewer people. Technological advances require higher skills to survive so for the low-skilled, low demand it means lower wages, less opportunities. Since the U.S economy is very competitive, it adapts more technology for cost-cutting than any other countries so it changes more quickly than other countries but this is only the beginning as other European countries will also go through a similar situation when they transition from industrial to knowledge based economic. The recent recession in the U.S and Europe will have much greater impact on employment in Asia for the next few years.
Today, the knowledge industry is exploding but it also experiences a critical shortage of skilled workers. For example, Apple Computer with its success in iPhone, iPad etc. is growing into the largest company in the world, bigger than Exxon, the oil company. Apple is the first company that worth in trillion dollars, not billion dollars anymore. Economists also believe that in the next few years, many high tech companies will grow larger, bigger and hire more skilled workers as they compete for the market. The question is where do they find the technology skilled workers?
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
