Deep dark hole of capitalism

WANTED: 600 million new jobs. This was the stark headline of a report last week by the International Labour Organisation (ILO) that warned about increasingly wretched employment prospects almost everywhere in the world and said that, 'the world must rise to the urgent challenge of creating 600 million productive jobs over the next decade'.

The report was all but ignored except by the very serious press and the BBC. Perhaps it is not surprising. How did the ILO calculate such a figure? Did they count them? How can anyone count up to 600 million, especially over 10 years into the future? Is it a case of thinking of the highest number that may scare you? The ILO rather spoiled its case by adding that even today 1.1 billion people worldwide are unemployed or living in poverty. As for its suggestion that 'the world' must create new jobs, and 'productive' ones at that, what is this 'world' and who runs it?

Unemployment is the deep dark hole of modern capitalism. You can see this clearly in the United States or Europe, sophisticated societies where losing your job turns your life upside down or not having a job after leaving school or college leaves you with an empty future.

It is especially true in the 21st century West where towns that were communities that would come together and where families would support each other in good times and bad are disappearing and being replaced by the fast-paced anomie of cities, where losing a job is little short of a tragedy.

In Spain, the number of jobless hit 5.3 million, or 24 per cent of the population, last year and almost half - 48.6 per cent to be exact - of those aged between 16 and 24 have no job.

The US is fighting a losing battle with China for the title of the world's largest manufacturer. But in gross domestic product, US manufacturing has fallen from 21 per cent in 1980 to about 11 per cent. More startlingly, manufacturing employment has collapsed and six million jobs have been lost in the last decade.

Between 1960 and 2010, US employment in producing goods, including manufacturing, fell from about 38 per cent to 14 per cent, while services similarly rose from 62 per cent to 86 per cent.

In 1960, the biggest American firms in terms of jobs were manufacturers: General Motors with 595,200 employees; Bell System, the telephone giant that became AT&T, with 580,400; then General Electric (260,600); Ford (260,000); and US Steel (225,100).

In 2010, service firms were the biggest US employers. Walmart led the way with 2.1 million employees; followed by Kelly Services, the temporary jobs services firm, with 538,000; then IBM (426,751); UPS, the express delivery concern with 400,600; McDonald's (400,000); and Yum!, the operator of Taco Bell, KFC and Pizza Hut stores. GE came 14th with 287,000 workers, sandwiched between Bank of America (288,000) and CVS, the pharmacy chain (280,000).

Manufacturing jobs in the US and the West generally have been hit by the devastating double whammy of automation and outsourcing. This threatens to become a much bigger problem, with potentially dangerous moral and social implications. If the only options are notoriously low-paid retail or clerking jobs, the income gap between the rich and poor will grow.

How long before workers revolt en masse against bosses and financial whiz-kids collecting multimillion-dollar salaries while they struggle to find jobs? Or will they accept that the highly paid are a race apart, the global elite competing worldwide where firms have to pay tens of millions of dollars for talent or lose out?

In the developing world, where roughly 80 per cent of humans live, problems of employment are more intense. In a searing series of articles The New York Times recently revealed unsafe and inhumane conditions in some Chinese factories making Apple's iPhones and iPads. China will have to grapple with blatant abuse of its own labour laws.

One striking aspect of the Apple story was the firm's last-minute redesign of the iPhone screen and the way that the Chinese workers met the challenge: 8,000 of them were roused from their beds at midnight, given a cup of tea and biscuits and started a 12-hour shift to fit the glass screens into the bevelled frames; within 96 hours the factory was producing 10,000 iPhones a day. It was something that no US factory would be able to match.

But should China be so quick to rescue the American firm from its own bad management of a last-minute redesign, especially for such a small share of the profits? And is China vulnerable to another lower-income country snatching the work away?

There is much more scope for outsourcing of jobs from the West, given that academic studies suggest that unskilled wages in rich and poor countries differ by a factor of 10 to one. This is hardly good news for US and European countries reeling from job losses since the financial crisis.

The ILO says that there are 29 million fewer workers now than in 2009, thanks largely to 'discouraged workers', who have given up looking. The young are particularly badly affected with their prospects being described as 'bleak'.

5.27m

The number of jobless people in Spain in the last quarter of 2011, or 22.85 per cent - the highest in the industrialised world