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Unemployment and Learning
Marcelo Rinesi
Frontier Economy
Posted: Nov 13, 2009
High unemployment is here to stay. Adapting to it will require changing how and when we learn.
Societies, managers, and politicians used to consider certain levels of unemployment in the economy as a whole as “natural,” but unemployment itself as a necessarily short phase in the life of a “proper” economic actor. To many commentators, long periods of unemployment are associated with lack of adequate motivation or training in the person seeking a job.
But all of these models, explicit or implicit, assume economies much better shielded from external and internal shocks than ours are. All developed and most developing countries are connected to the global economy in a way that transfers, and sometimes augments, local shocks into global ones. A recent, still ongoing example, is the way in which the relatively sudden accession to the world market of a massive Chinese and Indian workforce has drastically revamped the world labor market for many activities.
All national economies, and all sectors, are equally open to technological, financial, and even demographic shocks far greater than the gradual shifts in supply and demand in the simplest economic models. In practical terms, this means that massive, prolonged, and sometimes irreversible drops in labor demand are always a very real possibility for most areas of an economy. Far from being an aberration, this kind of industry-specific structural unemployment is a natural consequence of a world where economic structures can shift very fast, and we need to address it as such.
Part of the necessary adjustment must be focused on education. “Retraining” is often mentioned as a response to unemployment, but the choice of word betrays a deep underestimation of the sophistication of the contemporary economy. Economically valuable abilities are no longer mostly physical skills that people can be “trained” in, but rather conceptually complex cognitive (and sometimes psychological) abilities. They cannot be acquired in the simple, quick, and massive way in which older economies used to train and retrain the first industrial workers.
For people to re-enter the active workforce after a sudden labor demand shift, they have to have access, then, to much deeper and long-term educational opportunities that occupational retraining. But our educational systems are entirely unsuited to this. By and large, they offer either very expensive and very time-consuming “serious” educational commitments (e.g., graduate or postgraduate degrees), or cheaper but “light” courses that only improve marginally the student’s productivity and employability. The former are out of reach for most employed and most unemployed people (due to scarcity of either time or money), and the latter do very little to help them recover their earning capability.
What’s needed is a much more dynamic system that is flexible enough for a worker to be engaged with it during his or her entire life — before their first job, while working, when unemployed, and perhaps even after their last job —, affordable enough to make it accessible to unemployed people, and sophisticated enough to impart the increasingly complex networks of knowledge and skills that are a requirement to be competitive in the contemporary economy.
The political case to encourage such a system or competing market of systems is strong. Nothing else is likely to make it possible for workers to recover from the structural unemployment caused by sudden economic shifts. And without this, economies lack the flexibility to respond to changes, and will see the productivity of their labor force decrease with every new development in the world economy.
But the business case to develop these systems is even stronger. As much as we have come to understand that constant learning is an economic necessity, that necessity is still being very poorly satisfied, or even not at all. Whoever gets to do it — and given the huge investments already made on information technology know-how and equipment, much of the groundwork has already been laid — will become a key piece in the very fabric of the economy’s constant reinvention.
Marcelo Rinesi is the Assistant Director of the IEET. Mr. Rinesi is Data Analyst at Zauber.
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Quote : “High unemployment is here to stay. Adapting to it will require changing how and when we learn.”
I agree totally with your views on serious education for the masses. The world as a whole has an ethical responsibility to enhance the quality of life for all, by ensuring the increasing world populace has employment or other productive means to support, feed and cloth themselves. Yet our technologies, speed of IT and communications, and our reliance upon computers have made the world a much smaller place, and lightning speed datacoms and computation are squeezing the cents out of every spare buck to be had. Hence you are correct, a sustained level of unemployment seems unavoidable. It has become a way of life and we appear to accept this.
A large slice of the financial profit realised by our so called civilised western economies and banking systems is based on debt, the debt of the working class majorities, and which aim it is for the banks to keep these masses in debt. And look what happened? Our modern financial institutions nearly crashed the lot : literally overnight! The financial crises and the unemployment backlash from this recent recession are our real rewards for bailing out these irresponsible financial institutions. This and the prospects of further increased taxation.
Yet we cannot hope to employ all of the peoples all of the time, you are correct a more flexible approach is required, and the acceptance of periods of short-term unemployment may be a necessity. We have all been through this, and the so-called fast track re-training is often a necessity for most of us to get back on the employment ladder.
There are various ways we can achieve this change in mindset, and which I believe may prove to be of benefit to our social evolution and mass education in the longer term
1. Job sharing and part-time employment
Whilst not always the answer for everyone, this permits time for studies and re-education. Whether these are schemes supported by employers or government sponsorships or by other means. The main problem with this is that whilst employers make much noise in support of job sharing and part time employment, they still do not take it seriously or value it enough. It’s time for employers and institutions and governments to get serious about this, and realise the benefits not only for the individual, but also for their own business and their flexibility. This also helps to provide and to support a means to overcome long-term unemployment.
2. Personal development
I envisage, (I dream!), this as becoming the norm and a key part of the accepted rewards for being a member of society. Personal development can also be used as an incentive and a benefits package associated with all types of employment. Here the employee is not only paid a salary but should be guaranteed a path of education and re-training, which will provide benefit to the employee in the long term. And you are correct, this should be more than merely the pseudo development training offered by most employers, (again we have all been there). Once again this is an area that employers do not yet take seriously, and for the most part only view as extra expenditure on their behalf.
3. Ethical change and longevity
With the predicted advances concerning the overcoming of chronic disease, and with increased longevity we are faced with an ageing populace, which I believe needs to remain productive in some small way at the very least. Yet how can we achieve this, surely we cannot have 75 year old folks carting trash, or sweeping streets or made to pursue even more demeaning employment? No, what we need is a change in ethics to incorporate this elderly population and encourage them to be productive. And the answer must be via either re-education or using education. For those who have spent many years employed and productive would have much to offer in the training and re-education of others, (this is obviously only one area and means of productivity).
Eventually, if these types of ideals are realised, we may see that it is the norm, rather than the exception, that we only work for a part of our lives compared to the expected 9 to 5, 5 to 6 days a week till you retire or drop dead, that is currently the tradition. And why not I say? Is it not the dream that technology and computers would help to reduce our working burden, and not to add to it? A change in mindset and a more ethical viewpoint will also help to provide more education and leisure time - and time for us all to evolve to higher levels of personal development and understanding.
Excellent article
What about all the people who lack the neurological goods to benefit from “education”? I suspect at least a third of the adult population needs something more like zoo-keeping than additional schooling to stay out of trouble. Ferdinand Lundberg expressed this well in his book “The Rich and the Super-Rich,” published in 1968:
“The cleverness of the rich, as I see it, has consisted largely of the fact that the acquisitors among them have been able to operate practically unhindered by law among multitudes of thoroughly confused people, who are readily victimized in politics and economics. The victims have at all times been left externally free to choose in their own way. The rich, whether they knew it or not, could always have been fortified in the thought that the handicapped will usually make the wrong choices under the rule of external freedom.
“Approached from the standpoint either of IQ or formal education, far more than half the population has not had the knowledge, intelligence or ability to make choices in its own interests. It has merely drifted with the tide, trusting to its feelings, while others gathered in the hay. Nobody in most instances twisted the arms of this population to make it perform as it did in the polling booth and the market; on the other hand, rescue parties have been few and have not been understood as such by the victims, who regarded saviors such as Mrs. Sanger as enemies. A whole line of would-be saviors, including socialists such as Norman Thomas, have been rotten-egged for taking the trouble to make known their panaceas to this same population. Left and right, radicals, reformers, liberals and labor organizers have been bustled off to jails, not usually by capitalists or even by capitalist agents, but by the local rank and file of victims and their duly elected officers.
“Underlying the low IQs and faulty education have been deliberately contrived cultural deprivation as in the case of Negroes and spontaneous, self-induced cultural deprivation as in the case of rural and small-town Protestants and urban Catholics. These, it is evident, have been self-designated victims in a game with rules the rank-and-file did not understand.
“What is evidently the case is that a large section of the population is dependent-emotionally, intellectually, economically and politically—and is unable inherently or by conditioning to function in its own behalf under free institutions. A large section of the population, indeed, if it is to be properly served, should be regarded as public wards, ethically subject to rather close highly informed benign guidance in making life dispositions. No doubt much of this dependency arises from its conditioning, from its unreasonably inculcated faith that provision will be made for it, if not by man then by some remote deity. Perhaps a socialist sector of society should be established for it, perhaps true socialism itself is the ultimate answer.”
So what do we do with the people who can’t benefit from education, can’t get new jobs and in effect become life-long “public wards”?
Every time the issue of long-term unemployment comes up, pundits quickly invoke retraining and education as a cure. However, what I’m hearing from more sources is: “Retraining for what?” A recent article had this:
“Moreover, of those who manage to finish their retraining, a significant percentage do not find jobs. Of those who do, about half earn only a fraction of their former pay, a 2000 Government Accountability Office study found. “
The rest of the article is here:
http://michaelmoore.com/words/latest-news/nc-damage-not-easily-mended
What we really need is a combined effort on multiple fronts. Part of the answer may be in an updated version of FDR’s Works Progress Administration from the (last) Great Depression. The WPA employed a maximum of 3.3 million in 1938, according to the Wikipedia page. WPA and other New Deal projects, like the TVA and the REA (Rural Electrification Administration) built up an electrical power infrastructure to serve hundreds of thousands of homes that had previously been without electrical power.
Mr. Obama has already made a start toward building a new infrastructure for alternate energy. That could be extended to include the proposed “smart grid.” There are other technological infrastructure issues that could be addressed. One of these is the proposed extension of high-speed internet services to small town and rural areas. A recent study showed that the US is 15 years behind South Korea in internet speeds; actually, we’re behind 27 other countries. Read more here:
http://albany.bizjournals.com/albany/stories/2009/08/24/daily30.html?ana=from_rss
Projects to upgrade our tech infrastructure could help re-employ many of our high=tech workers who’ve lost jobs to off-shoring (outsourcing) and 41B workers (insourcing).
We can also support efforts toward economic democracy. Remember the article that appeared on the IEET site months ago, on the book: “The Spirit Level: Why More Equal Societies Almost Always Do Better?” The authors have a project called The Equality Trust. It’s aimed at inequality in the UK; but many of their solutions, like co-operative companies, can work in the US. Michael Moore featured examples of co-operatives in his film: “Capitalism: A love Story” I do recommend the film, if you haven’t seen it. The Equality Trust’s website is at: http://www.equalitytrust.org.uk/
Finally, we need some new economic models. Ones that would allow the lower 95% of the population to share in the rewards of the increases in productivity that have enriched the upper 5%.
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