By Frank Enright
Unemployment is growing in all the advanced industrial countries despite several of these economies coming out of recession. In March, ministers from the Group of Seven (G-7), the most powerful industrial countries, met in Detroit to discuss policy initiatives to deal with persistent structural unemployment. After two days of talks the high-powered meeting failed to find any solutions.
The unspoken truth is that high levels of unemployment are with us to stay. Even the government white paper's best scenario outcome will accept an unemployment rate of 5% plus by the year 2000. Twenty years ago, 2% of the work force without jobs was unacceptable — today such a low figure is almost unimaginable.
In the nervous nineties, the bulk of unemployment is structural — that is, built into the economy, not transient. Therefore, when an economic recession eventually passes, the unemployment rate remains high. France's economic minister told the Detroit G-7 gathering that structural unemployment in his country was 8%-9%, out of a total of 12.2%.
Short of France winning a far bigger share of the world market, or world economic growth exploding, the high rate of permanent unemployment will be hard to reduce significantly under the capitalist economic system. This applies with equal force to Australia.
This structural unemployment has increased dramatically since the mid-'70s, the end of the post second world war boom period. Largely it has resulted from a rapid increase in technological innovation. Today, many more things can be produced with far fewer workers.
This situation has hit the manufacturing sector hardest. Certain regions, such as the northern half of England, Scotland and parts of the US midwest — known as the "rust belt" — have suffered most.
But it hasn't stopped there. At the Detroit meeting, Germany's representative, Norman Blum, commented that 3 million unskilled jobs would disappear in Germany over the next eight years. And while Japan's unemployment is an enviable 2.5%, it's increasing.
In March an article appeared in the New York Times which explained why this restructuring is not a one-off phenomenon, but an ongoing process.
The US economy is growing and company profitability is booming; but also on the rise are lay-off announcements. "Although many American companies have become as efficient and modern as those in Japan and Germany, the job shedding has spread.
"Each year this decade, the total has been higher and has included not only blue-collar workers in manufacturing, but also white-collar workers at companies beyond manufacturing", the article noted.
The Times reported that a temporary dip in sackings last year was misread as a trend. This was mirrored in Australia in the opening months of 1994. The Daily Telegraph Mirror was so swept away by an announcement that business confidence was at a 30-year high that it blazoned across its front cover on March 21: "No More Sackings".
Back on terra firma, the Times article explains why the sackings will continue, and for years to come. The pause in job shedding reflects the way the drive to greater efficiency works today — hitting one industry before moving on to the next. "... phone companies can't lay off people indefinitely. But when the phone companies stop, then the banks start in and then the retailers do it. The staff cuts migrate from industry to industry", says Paul Ostermann of the Sloan School of Management at Massachusetts Institute of Technology.
In relatively flat markets, whether at a world or local level, the only way to increase profits is to win a greater share of that market from your competitor and/or to reduce costs. Either way, there is a compelling and unrelenting drive to greater "efficiency". That means more job cutbacks and/or cuts to wages and conditions. And the Times article points out, "Even after a company or industry trims back, the process can begin anew".
The service sector has compensated, though inadequately, for some of the job shedding in the manufacturing sector. Increasingly, however, the service sector is being casualised, with more and more part-time jobs. And even here technology is beginning to replace workers.
This endless round of restructuring and modernisation produces more than consumers can afford to purchase, especially because more of them join or remain on the dole queue. The New York Times writes that consumer spending will have to double or treble to soak up the current productive capacity of the US. With some important differences, the same applies to Australia.
The economic strategy pursued by the federal Labor government and the trade union bureaucracy has been eminently successful in redistributing wealth from wages to profits, but this lowering of general living standards can't solve unemployment.