Dealing with unemployment

Jobs that provide income for people and simultaneously contribute to the economy is at the centre of attention in governments throughout the world. Apart from the fact that people need jobs to secure their income to pay for their basic needs, employment is also considered necessary for a healthy, growing economy.

But how healthy is our current economy and does more employment contribute to (sustainable) growth?
Well, opinions are divided about this, especially because growth and unemployment have been two major issues in countries over the past few years. Since the global economic crisis began in 2008, economists, theorists, professors at universities and many others have pondered about the causes of the financial crisis. The common agreed upon theory is that the financial crisis started in America by banks lending out subprime mortgages to borrowers who couldn’t afford one. This and other combined facts related to banks issuing loans and not getting them (fully) back whilst having low reserves was one of the (major) triggers of the economic crisis. However, according to some professors at universities, the economic crisis is caused by a more deeply profound problem.

One of the major causes of the financial crisis is that our (global) economy/economies have grown too big for the ecosystems that contain it. This is because the (global) economy is a subsystem of the biosphere. All of the inputs from the economy come from the environment and all of the wastes produced by it return to the environment. As the economy expands, it consumes more materials and energy and emits more wastes. However, as we live on a finite planet, with limited resources, this process can’t go on forever.

funny-ecards-151-unproductive-work

So what does all of this have to do with employment?
The economic situation of a country and the number of jobs are closely linked together. As commonly known, a growing economy is usually contributed by an increasing number of jobs. However, as mentioned before, our (global) economy has grown too big for the ecosystems that contain it. Therefore, endless growth is impossible as resources are (faster) depleted than they are replenished.

What we need is to redefine productivity and the way we measure progress. First of all, progress in our modern-day consumption society is GDP which is the total amount of spending by government, businesses, citizens and organisations in an economy.

Although GDP measures economic activity or money changing hands, it does not take the following important issues into account;

  • The health and well-being of a society
  • The (extra) pollution caused by economic growth
  • Happiness and social cohesion

So, if GDP does not take these important issues into account, is there a better way of measuring growth? Well, researchers from the New Economics Foundation have come up with the following measurement tool:

It’s called: the Happy planet index
It measures the ecological efficiency with which we are achieving good lives

HPI

The numerator in the equation (happy life years) is a composite of life expectancy and a life satisfaction obtained from surveys.

What is the difference between GDP and HPI?
GDP sums up the money exchanged in market transactions. HPI gauges how well we transform the limited resources available to us into long and happy lives.

So if we measure progress in a completely different way, would it really make our lives better?
Well, there are many other factors that play a key role in this. One of the most important factors of course is secure and meaningful employment. What do I mean with secure and meaningful employment? Well, jobs should add/create value for the very same reason(s) they are created. A teacher adds value by teaching students through providing knowledge and stimulating critical thinking. A policeman adds value by keeping the neighbourhood safe and secure. A doctor adds value by saving the life of a patient. These jobs have always been and will always remain important in our society. However, there are many jobs which are not (really) meaningful, thus hardly adding value to society. Think for example of a call centre employee, a print press operator, a fashion designer or an assistant manager of a fast food chain. No discredit to the people who occupy these jobs, it’s just to illustrate my point.

Problems of unemployment due to flaws in our current economic system

  • The misuse of gains in labour productivity

Technological progress has allowed businesses to become more efficient at producing goods and services, such as it now takes less labour to produce the same amount of stuff than in the past. However, instead of using new technologies to reduce working hours, we have largely used them to produce more goods and services, while keeping working hours relatively constant. This choice has made economic growth a requirement for creating and maintaining jobs. However, the strategy of increasing production and consumption to secure employment has become untenable, especially for those economies that already use too many resources and emit too much waste.

  • Employers frequently lack flexibility

In trying to cut costs by standardising their operations, firms institute “one size fits all” rules for work schedules and hours. For example, some companies offer only full-time positions with no opportunities for alternative work schedules.

  • A mismatch between jobs supplied by the economy and jobs society really needs

Available jobs reflect societal values, but we are undervaluing the maintenance of healthy communities and ecosystems while overvaluing the consumption of stuff. For example, jobs that desperately need doing such as repairing damaged ecosystems don’t get done because it’s unprofitable whilst brokering speculative financial deals is being done because there’s a profit to be made.

Solving the unemployment problem
So how do we tackle the unemployment problem? Well, (although it’s easier said than done) jobs should be created which people value and in which value is created. Labour should be directed towards constructive and meaningful tasks. According to ecological economists, Martin Pullinger and Blake Alcott, two key policies, one of them which is work time-reduction is proven to be effective in securing plentiful and meaningful jobs.

Work-time reduction
Instead of using productivity gains to boost production, we could gradually shorten the working day/ week/year. This largely applies to jobs involving manual or physical labour, not in human- service industries such as education or healthcare. According to a number of surveys taken throughout the years, people rather earn a little less money and have more free time instead. Another way of reducing work-time, is to increase opportunities for part-time work, job sharing (two people combine part-time work to make up a full-time job), options to take career breaks and parental leave. These policies are often called “work-life balance” and several European countries have been implementing several of these policies for years.

Conclusion
Our current economy is centred on growth by increasing GDP through increased production and more labour activity. However, the (global) economy has grown too large as it depletes natural resources faster than it can be replenished and it exceeds ecological limits. Therefore, a different way of measuring growth (or progress) and defining productivity differently are two key factors in creating more meaningful jobs. Instead of using GDP as a measurement tool, we should use the Happy Planet Index which measures the well-being of a society against the ecological footprint it leaves behind. Furthermore, we should change our priorities when it comes to (creating) jobs. Jobs should reflect the value(s) of a society and therefore more emphasis should be on maintaining and repairing damaged ecosystems. Also, the amount of hours people work on average should decline as it has several benefits including more free time and more jobs. More jobs are created this way because the decreased number of working hours is spread more evenly throughout the population. As increasing productivity decreases the need for labour, everyone does a bit less paid work and fewer people are forced out of their jobs. In addition, less working hours means that people can spend more time to seek purpose and fulfilment outside of work.

Sources:

Enough is Enough: Building a Sustainable Economy in a World of Finite Resources, January 2013.
Written by: Rob Dietz and Dan O’ Neill.

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Over jasonclarke93

Dear reader, welcome to my blog. My name is Jason Clarke I'm 21 years old and I live near Eindhoven (Netherlands). I am an International Business and Management student at Fontys Hogescholen in Eindhoven. I have always been interested in the world and how it is rapidly changing. That's the reason why I am blogging about the issues that affect us globally. I hope that you enjoy reading my blogs and please feel free to contact me!
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