In today’s world the headlines heap praise on entrepreneurs and less is written about the woes of workforce. I decided to write about the woes of workforce. The three major forces of an economy are Capital, Labor and Technology. In this post I will explain how these three are creating havoc to the workforce and what the workforce expects from the government and companies.
“In 2008, when the financial sector was collapsing every unconventional measure was taken to save the financial sector…. Every conceviable method some open, some not so open were taken to save the financial sector. Now the financial sector is saved but unemployment is still high. Why are we not thinking of unconventional methods when it comes to [saving] people, poor people, employment.”
-Mr.Y.V. Reddy, Former Governor of RBI
In today’s world capital gets too much focus and labor gets no focus at all from both the governments and private sector companies. Companies right now are more interested in stock buyback rather than creating jobs. Businesses started to treat people as consumers rather than workers. The destructive deregulation on capital market still continues adding more woes to the world economy. In most of the capitalist countries the government policy is not fair when it comes to taxation on capital gains. The following quote will explain the pain sarcastically.
“If you make money with money you pay less tax but if you make money with sweat and blood you pay more tax.”
While it is understandable that technology is good for humanity and it makes our lives better, it is wrecking a havoc on the workforce. The rate at which workers are getting displaced is increasing with the advent of every new technology. No protection is offered for workers when new business model or technology is introduced. The recent spat between an automobile executive and a US state governer shows the problem. It is highly irritable when the so called entrepreneurs criticize elected government officials publicly. Business leaders should remember that when the world went into financial crisis it was the government that saved the country and economy not the companies, in fact companies were the ones that created the crisis.
I remember during liberalization of Indian economy in 1991 typewriters were suddenly replaced by computers and people were expected to be productive. The management in various organizations totally forgot about learning curve and expected people to become overnight masters in computers. Some of them who were not able to cope up with this change ended up loosing their job.
“Under capitalism, man exploits man. Under communism, it’s just the opposite.”
-John Kenneth Galbraith, Economist
Exploitation, not empowerment, is now the trend. Few decades ago workers in developing country were afraid of competition from workers in developed countries due to their extensive knowledge and use of best-in-class technologies by workforce in developed countries. This is why most of the developing countries were hesitant to open up their economies to companies from developed countries. Now workers in developed countries are afraid of competition from the developing countries because of cheap labor, faster transfer of technology, free movement of goods, capital, services to other countries. Thanks to the cruel measures of the IMF and World Bank which devalued currency of most of the developing countries. This devaluation was good for the so called “Investors” of the developed countries because they can now buy assets in developing countries at a cheaper cost but the real price is paid by the workforce in developed countries who lose their job to their counterparts in developing countries.
“There are three kinds of lies: lies, damned lies, and statistics.”
-Benjamin Disraeli, Former British Prime Minister
This is the quote that comes to my mind when I read unemployment report of most countries. The question I wish to ask is how long has the person who prepares unemployment report been unemployed. Excluding discouraged workers and under employed workers actually hides the burden of the society.
I think I have whined enough about the problems now I will outline what the workforce expects from the society.
The average age of people in the developed countries is increasing which indicates that more people are heading towards retirement. People in workforce work for around 40 years. They have given 40 years of their valuable service to the economy. Don’t they deserve a respectable retirement? Governments should provide a respectable retirement option so that people get the deserved dignity when retired and not viewed as burden to the society.
Here are the people at the other end of the spectrum facing unemployment in high numbers. I remember reading in one of Nehru’s book that if a country knows how to deal with its youth and provide them opportunities then it will have a peaceful society. The youth unemployment and underemployment in developed countries is pathetic. Government should treat this a priority to provide more opportunities for youth.
Government as employer of last resort
“Companies are not immortal but government is.”
When government via their central bank act as lender of last resort why can’t it act as employer of last resort. Immediately after World War II and during economic crisis governments have nationalized companies to save the economy and employment. This happened in capitalist countries too. Some notable examples are, British Leyland was nationalized partly by UK government, US and EU governments bailing out investment banks, insurance companies and automobile makers. Government should provide employment opportunities not just for unemployed but also for under employed and discouraged workers.
The most fascinating documentaries that I have ever watched are “Inequality for all” by Robert Reich and “Park Avenue: Money, Power and the American Dream” by Alex Gibney. It is highly commendable that governments all over the world are providing more political equality and social equality but when it comes to economic equality the governments are in total paralysis. Inequality is wiping out middle class wealth and lowering the standards of living. There is a painful disconnet between skill and income due to global competition in workforce. Governments must step in and interfere with market to regulate wages and benefits. The reason why most families in the society are having scant savings is not that they are living beyond their means it is just they are not able to afford most of the things for a decent living due to economic inequality in the society.
Education and health care as right
Robert Reich is a true champion when it comes to caring for the society and fighting for raising the standard of living. His advice to provide education and healthcare as a right rather than a previlege for everyone in the society is very valid. I have spoken to students from various countries and found out that student loans are becoming dream killers for the young people. Governments must subsidize the education and also prevent private enterprises from exploiting those subsidies. One of the examples is that in India the RBI announced with good intention to provide upto Rs. 4,00,000 of education loans without any collateral. Some worthless educational institutions started to exploit this subsidy and have college fees of Rs. 4,00,000 inspite not having even basic infrastructure in the colleges. Education and Healthcare are the most valuable safety nets for people in the society. They lift people out of poverty and they prevent them falling back into poverty. Employer sponsored healthcare insurance should be discouraged. It is painful to see children in school talking about parents’ pain rather than their dreams and goals.
“Often institutions limit our individual freedom exactly in order to enable us to do more collectively.”
-Ha-Joon Chang, University of Cambridge, UK
The above is my favorite quote when it comes to collective responsibility. Layoffs are treated as individual failures and not as society’s problems. It is the collective action of people that resulted in raising minimum wage, better standard of living, regulated hours of work and subsidies for welfare during tough times. Society must keep individualism under check. There is too much hype and glory surrounding entrepreneurs today.
Credits and References
- Mr.Y.V. Reddy Interview – https://www.youtube.com/watch?v=ivnrzSsupY0
- Mr. Robert Reich – http://www.robertreich.org
- RBI Education Loan – https://rbi.org.in/scripts/NotificationUser.aspx?Id=369
- Ha-Joon Chang – http://hajoonchang.net/