|Letters to influential people could generate change|
15 August 2011|
Your recommendations to deal with youth unemployment (FT editorial 15 August 2011 p.6), can be summarised in two words: "Boost skills!"
This refects the old belief that ingenuity and knowledge could compensate for the competitive advantages of low labour costs and minimal regulations.
In the globalised market place any innovation will before long wander off to the lowest cost country for manufacturing. Thank you for your training and creativity! We will reap the profits!
The discipline of economics may have heard of the communicating vessels. When the valve in the connecting tube is opened, the high level in the narrow vessel will drop steeply - to a common level that is only slightly higher than the original level in the wide basin.
This is what globalisation and free trade does. It's a road to the lowest common denominator of labour costs and social conditions. The big winners are the traders.
Boosting skills will not offset the basic principles of physics and the free market.
One thing the opinion leaders refuse to consider is peak oil. Resource scarcities will start biting on the imminent post peak oil downslope, because there's no equivalent replacement for that fossil fuel. Say hello to mass unemployment, hunger riots, famines and starvation on a worldwide scale.
Reduced energetic return on energetic investment means that the last barrels of oil will stay in the ground because human labour will again be more energetically efficient. Present EROEI lies around an estimated 15 to 1. An EROEI lower than 5 to 1 means the end of growth and of modernity.
Finally, it needs to be pointed out again and again that economic growth on a finite planet is planned suicide. Because all growth increases resources depletion rates - till nothing will be left to sustain humanity. End of history.
Helmut Lubbers, ecological economist at ecoglobe.org
14 bd Carl-Vogt, 1205 Geneva, Switzerland,
Helmutecoglobe.org, Tel. +41 22 3212320
<<< some abbreviations to facilitate understanding of modernity >>>
BPE = Business, Politics and the discipline of Economics
ECONOMIC GROWTH = The difference in GDP between one year and the previous one. GDP=Money=Material. "Dematerialised growth" is nonsense sublime.
HOT = Hope Optimism Technology
LSM = Lame Stream Media
OVERSHOOT = Too many people consuming too much resources, possibly more than 400 times in excess of the planet's carrying capacity.
PIP = People In Power
PPOD = Post Peak Oil Downslope
<<< welcomeecoglobe.org - www.ecoglobe.org >>>
Ref.: IEA 2010 World Energy Outlook - The production peak was reached in 2003
August 14, 2011 6:53 pm >>>
The dangers of youth’s labour lost
If proof were needed of the incendiary consequences of persistently high youth unemployment, it has been in ample supply recently – most dramatically in the Arab uprisings. There were, of course, many factors behind that region-wide explosion of popular discontent. But among the most potent was the seething frustration with a system in which upwards of 40 per cent of youths could not find work.
High youth unemployment is not just a North African problem. The looting that ravaged English cities last week happened in a country where one in five young people is jobless. The picture in the US is no better. In continental Europe it is worse. More than 45 per cent of young Spaniards and 38 per cent of young Greeks are out of work. With developed economies facing years of austerity and sluggish growth, the picture is unlikely to improve in the near future.
It is not surprising that young people have a harder time than their elders in finding a job. They are, on the whole, less skilled and less experienced. They are also often more able to wait around for the right job than older workers with families to feed and mortgages to pay.
This does not mean that governments can afford to ignore the problem, however. High youth unemployment is associated with ills such as higher crime rates and lower health levels. A year of unemployment early in a career can permanently reduce a worker’s earning power. A cohort of such individuals working their way through their careers can dampen their country’s economic potential. Bringing down youth unemployment is just as crucial a post-crisis challenge for global leaders as repairing the public finances.
So what can be done? For starters, politicians should avoid the populist trap of blaming immigrants for the woes of indigenous youngsters. Not only is it a fallacy to assume that the number of jobs in an economy is fixed; there is no evidence linking immigration and high youth unemployment. Recent FT research found that, in Britain, youth unemployment was highest where the non-UK population had a lower share.
Better would be to give employers incentives to take on and train apprentices, as a recent report recommended in the UK. Even if firms do not keep youngsters once they cease to receive support, they will have gained valuable labour market experience. The catch is that with public purses around the world overstretched, subsidies may not be widely feasible.
Structural reform, by contrast, should be – although its nature should vary by country. In North Africa, it means cutting through the thicket of monopolies and regulations that artificially restrict productive activity. On the north shore of the Mediterranean, it means ending two-tier labour markets where excessive protections enjoyed by permanent employees create a class of overwhelmingly young economic outsiders with little hope of finding work. In countries such as the UK, it means ensuring that the youth minimum wage is not set too high: youngsters’ chances in the job market are especially sensitive to pay.
Everywhere, however, it means boosting the skills of young workers. Such reforms are time-consuming and unglamorous – Tony Blair once quipped that he could hide a declaration of war in a skills speech without it being spotted – but crucial. Governments should pay special attention to the lowest third of achievers, since these are most likely to struggle to find jobs.
As populations age, their political priorities shift away from the young. But today’s youth will work longer than past generations, enjoy less generous pensions, and pay more for education and to support ageing parents. The least yesterday’s youngsters can do for those of today is to allow them the economic opportunities they will need to foot these bills.