Share this story
Close X
Switch to Desktop Site

Unemployment Rising Over Much of Globe

Slow economic growth worldwide indicates little creation of new jobs, layoffs for many

OUT-OF-WORK Americans have plenty of company in the global labor market. Almost one-third of the world's workers are jobless or earn wages too low to cover their costs of living.

While labor economists draw the obvious link between economic growth and job creation, the employment picture looks bleak as world economic growth is projected at a sluggish 1.5 percent this year, according to International Monetary Fund estimates.

About these ads

"The unemployment figure is a barometer of exclusion," says Wouter Van Ginneken, chief editor of the World Labor Report of the UN's International Labor Office (ILO). Jobless Americans lack the resources that their counterparts in other leading industrial countries have - such as adequate unemployment benefits and health care - to carry them through prolonged periods without work, he says. The under- and unemployed in the United States "are increasingly marginalized from society," while in Europe the soci al-welfare net is in place to catch the jobless, Mr. Van Ginneken says.

In May, the unemployment rate in the US reached its highest level since 1984. But at 7.5 percent, it still falls well below most European countries, which together average an annual rate of 8 to 9 percent.

The stronger safety nets in France and Britain, for example, both of which have unemployment rates of 10 percent, have enabled those societies to cope better with the lack of work.

While the US economy grew by 2.5 percent during the first quarter of the year, providing some with hope that job generation will soon follow, "the best is behind us," says Gail Fosler, chief economist of the New York-based Conference Board. She estimates that the country's 1992 economic growth rate will be only 1.8 percent.

Unlike the steady or expanding European and Asian markets, the American labor market is contracting "because it's manufacturing base is getting smaller and smaller," Van Ginneken says.

And, as their positions are permanently eliminated, many service-sector employees, including a growing number of skilled mid-level managers, will be forced to find other work. Unskilled American workers will face a much tougher job market, with the closing of US plants and the influx of cheaper unskilled labor.

US labor groups strongly oppose the North American Free Trade Agreement, which would open the US market to Mexican goods and labor and make the job market even more competitive for US wage earners. "By importing labor and keeping labor costs low, the US takes the low road of economic growth," Van Ginneken says. "Korea and Japan keep their borders tight, their nationals employed, and their wage scales are much higher."

About these ads

Wage rates, now generally booming throughout Asia, have doubled in Korea during the past 15 years, he says.

A recent study by the Washington-based Center on Budget and Policy Priorities shows a steep increase - a 50 percent rise from 1979 to 1990 - in the proportion of full-time, year-round American workers who are paid too little to raise a family of four above the poverty line. As government bureaucracies decrease in size, Van Ginneken says, job seekers with skills and initiative will find it easier to find work in private companies or to set up businesses themselves.

Carol Kleiman, author of "The 100 Best Job$," says she has already recognized the trend. She projects that by the turn of this century, one-third of American workers will own home-based businesses.

That group will undoubtedly include many casualties of the post-cold-war world. Peacetime has hit the American defense establishment hard. This year alone, some 150,000 US military personnel and defense-industry workers will be laid off.

Much of the world's future unemployment will result from democratic reforms and strides toward market economies in Eastern Europe and the former Soviet Union. Van Ginneken says he expects the region's unemployment rate to reach 20 percent over the next three to five years.

IN Russia alone, some 15 million people will lose their jobs in 1992, according to ILO projections. Harvard econo-mist Jeffrey Sachs, a senior adviser to the Russian government, cites large numbers of layoffs due to restructuring of the government and industrial plants.

Rising unemployment is political dead weight for national leaders, whether they are Russian reformers or Bush administration officials. If the past three years, during which 1 million new jobs have been added to the US economy, are any indication, President Bush will fall well short of his 1988 campaign promise to create 30 million jobs over eight years.

While Mr. Bush has invoked preservation of "American jobs" in a host of initiatives ranging from the invasion of Iraq to extending most-favored-nation status to China, the domestic job market has contracted. Between June 1990 (the official beginning of the recession) and January 1992, 2.2 million US jobs were lost.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.