A world out of work

UK unemployment is on the verge of breaking through 2 million, but joblessness is a global epidemic and the number of workers at risk is without precedent. Sean O'Grady reports
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The Independent Online

Whatever the truth about whatGordon Brown meant by his now infamous soundbite "British jobs for British workers", the global truth is that there are simply not enough jobs to go around for anyone's workers in this downturn.

Here in Britain, yesterday'sforecast from the Chartered Institute of Purchasing and Supply points to job losses in the hard-pressedmanufacturing sector alone of 30,000 a month for the foreseeable future. That will help to push the jobless total over the 3 million mark for the first time since the 1980s. In America, last week saw "Bloody Monday" – 72,000 jobs cut by seven different companies in 24 hours. That brings American jobs lost to the recession to 2.6 million since December 2007.

But, as Mr Brown often reminds us, this is a global problem looking for global solutions. The population of the world is still growing regardless, but the downturn means that, more than ever, employment is not keeping pace, and the rapid descent into protectionist activity seems set to make matters even worse. The 1930s showed what unpalatable political movements can spring from even the most civilised nations in the face of unemployment levels in excess of 20 per cent and the apparent uselessness of democracy. It is an unhappy precedent.

Next year, the IMF says, worldeconomic growth will be at its slowest since the Second World War, andglobal trade will decline for the first time since 1982. The International Labour Organisation predicts that another 50 million or so will join the jobless queues around the world, out of a world workforce of around 3billion. The wildcat strikes at refineries and power stations across the UK, and anti-government protests from Latvia and France to China and Mexico, may be just the beginning of much more radical, violent backlash against globalisation.

Despite pledges to resist "the retreat to protectionism", thepressure on governments to "protect" domestic industries and jobs has become irresistible; legislators on Capitol Hill plead that they can do no other than inject "Buy American" clauses into the fiscal packages and other bailouts now being assembled, such is the public anger about what has happened to the economy. Having just elected the most protectionist Congress in 60 years, Americanvoters expect their legislators – and their President – to deliver on promises about "American jobs", and are deaf to the arguments for free trade. America's new roads and bridges will be built with US steel.

The scale of the economic, social and political problems the global rise in unemployment represents are frightening. Indeed, this recession could easily result in the biggest loss of paid employment seen in human history – given that major powers such as Russia, Germany and Japan had virtually opted out of the world economy during the last serious downturn, in the 1930s.

The growth in the world's population and the opening up of populous nations such as China and India mean that the scale of job creation needs to be that much bigger for these countries and the world as whole for their jobless numbers just to stay still.China needs growth of around 10 per cent a year to keep unemployment stable: around 27 million jobs, equivalent to the UK working population.

Or take Surat in Gujarat, India, where millions of jobs have been lost in the once-thriving diamond trade. The Indian government says that it has found most of the diamond enterprises have closed recently; of 1,000 units covered in a Labour Department survey, only 360 were still working, with many remaining staff on reduced hours and low wages. Millions more jobs have been lost in the textile industry in Tamil Nadu. Even adjusting for the size of India's vast population, this will be the biggest jump in joblessness since independence six decades ago. Soon, in the upcoming elections, populist politicians will blame it all on globalisation.

India is not alone. In countries such as Mexico, Morocco and Bangladesh waves of young people, including their graduates, are launching themselves into a shrinking jobs market. A century ago the populations of Mexico, Morocco and the Philippines were 14 million, 4 million and 7 million respectively. Now the Mexican and Moroccan populations have increased about sevenfold to 100 million and 29 million respectively, and the Philippine population is up tenfold, to 76 million.

Hence the pressure – even in good times – on their economies and the flow of people, legal and illicit, to North America, Western Europe and the Middle East in search of work and funds to send home. In the last century, in Europe, families in Ireland and Italy became familiar with their diaspora sending cash back to the old country. Nowadays such flows are even more substantial; about $300bn internationally, comprising, for example, 10 per cent of the Philippines' GDP.

That may not sustain. As we see from the "British jobs" movement, countries that once welcomedimmigrants to do the jobs the native workforce rejected are thinking again. Spain, for example, has seen unemployment double to 14 per cent in a year – not far off Morocco's official rate. With the construction boom over, almost one million more Spanish workers are jobless than this time last year. So now the Spanish want their old jobs in the olive groves back, and they are paying the Peruvians imported to toil there to go home.

If labour market xenophobia forces more such workers repatriated, there will be grievous effects on emerging economies; the remittances will dry up and competition for jobs in their countries of origin will intensify still further. Social unrest and political extremism are the inevitable consequence in nations with fragile democratic traditions – and few, if any, social security benefits. The ILO says that some 200 million workers could be pushed into extreme poverty.

And all this comes at a time when the flow of lending from advanced to emerging economies is also evaporating; according to the Institute of International Finance, a sort of banking think tank, these will slump from $1 trillion last year to $150bn this year, as Western banks trim their balance sheets and put home businesses first (as many governments, including the UK's, seem to wish them to do).

Such a starvation of funds from falling remittances and investment will leave the emerging and poorer economies in a still more exposed position as joblessness mounts.

Pressure on land, water, food andhousing, and levels of poverty, will soar; the temptation to argue with neighbouring nations over natural resources will grow. The world may soon witness its first "water war". The price of mass unemployment – human, economic, social, environmental – has always been high. This time it will be higher than ever.