People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 4

February 01, 2009


Unemployment: A Bomb Ticking

R Arun Kumar

WORLD wide, across the continents and countries, the unemployment bomb is ticking. More than 85,000 jobs were cut on a single day on January 26, termed as Black Monday, as we were celebrating our Republic Day. Millions of people are losing their jobs and livelihoods as companies are announcing an avalanche of job cuts. The social impact of the economic crisis, termed to be the severest in recent decades, is slowly unfolding.

In the recession ravaged United States of America unemployment is at a sixteen year high of nearly 7.2 per cent according to their department of Labour. Many people are predicting it to be more than 13 per cent on the ground. In the last one year, more than 2.6 million - the most since 1945 - had lost their jobs, pushing the total unemployed in the country to nearly 11.1 millions. 1.9 million lost their jobs only in the last four months of 2008. And these figures do not include the 642,000 'discouraged workers' who are ready to work but are not counted amongst the unemployed because they were not looking for jobs in the past four weeks as they genuinely believe that 'no jobs are available'.

The US department of labour was forced to revise its unemployment figures for the months of October and November from 320,000 to 423,000 and 533,000 to 584,000 respectively. Many people are estimating another increase in the figures that were released for December too and this might push the overall unemployment rates further up. Already, many private estimates are putting the December figures at 693,000 instead of the government figures of 524,000.

Job losses in the US are not confined to just one sector but are spread across various sectors. Service sector that employs nearly 80 per cent of the people had lost more than 273,000 jobs in December alone. Manufacturing lost 149,000 in the month while 791,000 jobs were lost in the whole year - most of the job loses being in automobile sector. The same is the case with construction that is more directly affected with the bursting of the housing bubble. It had lost 899,000 jobs last year, losing 101,000 in December. Even retail sector shed 522,000 jobs in the entire year. The average work week fell to 33.3 hours, the lowest since 1964 from when the data was begun to be recorded.


This phenomenon is not just confined to the US that is the epicentre of this crisis. The International Labour Organisation forecasts that the overall growth in the numbers of unemployed through out the world would increase by 20 million in 2009 taking the figure to 210 million. Recently the OECD has come out with its latest issue of OECD Economic Outlook (Issue 48, November 2008) that projects a grim picture for many OECD countries. It projects that the unemployment rate would increase to 6.3 per cent on the average in all the OECD countries and this scenario is supposed to continue for the coming eighteen months. Their conservative projection is that unemployment would peak to 7.3 per cent by the first quarter of 2010 and the total number of unemployed persons would be 42.1 million in the entire OECD area. They are hoping for a resumption of employment generation only in 2010 with 2009 witnessing a rapid rise in unemployment across the region.

This naturally implies that many countries in Europe too are suffering from the severe rise in unemployment. In Germany, considered to be the strongest European economy, unemployment is on the rise with the present rate being 7.4 per cent. This is further expected to grow by the end of the third quarter in 2009 to 10 per cent. In one of the deepest post-war slumps in Germany, the number of unemployed rose to 3.1 million. The forecast, according to the officials is that this would further rise to at least 4 million before 'any hope of employment generation can be entertained'.

The same is the situation in France, the second largest economy in the Euro zone, with unemployment rate rising by 8.5 per cent year on and nearly 2 million people out of work. In Spain, unemployment rate is already as high as 10 per cent. The same is the situation in Britain, where Woolworth, a hundred year old departmental store is closing, throwing out 16,000 workers on the street. Dutch banking and insurance group ING announced 7000 job cuts while electronics giant Philips announced 6000 cuts on January 26, 2009. In Japan, major companies like Toyota and Sony have announced severe job cuts. Japan's top 12 automakers expect to cut a total of 25,000 jobs between now and the end of March.

In many of these countries, industrial output has seen a drastic fall and this is being used as a ruse to further lay-off workers. In November, the industrial output fell by 2.9 per cent in UK, by 16.2 per cent in Japan, 14.1 per cent in South Korea, 6.3 per cent in Germany, 11.9 per cent in Sweden and 15 per cent in Spain. All these data show that there is a sharp fall in the industrial production in almost all the major developed countries. According to an estimate, the world manufacturing fell by at least 20 per cent in the last three months of 2008. Thus, from computer chips to sophisticated heavy machinery, production is witnessing the fastest fall in the previous few decades.

This is true for even the major developing countries like China, India, Brazil and South Africa where the industrial production has seen a fall in the past two months. Many factories are facing closures or temporarily stopping work. With exports taking a beating, many export oriented enterprises like textiles, toys etc., that employ millions of people are closing out, throwing workers on to the streets.

Temporary workers, women, immigrants and migrants are the first to face the severe brunt of this large scale job loss. While economists and managers of finance are debating whether this period is to be termed as 'deep recession' or 'depression', for those who have lost their jobs and are struggling to meet their ends, this debate is merely semantic. They are more concerned about the means to overcome the crisis of their lives, because behind every number there is a person and a family.



Widespread resentment and anger is brewing among the people who are unhappy with the state of affairs. This is reflected clearly in the European barometer, a survey carried out in the European countries. This survey was carried out in the immediate aftermath of the fall of Lehmann brothers and in a period when the effects of the enormity of the global economic crisis just started to trickle down.

The results show that assessments of the economy are now distinctly negative. 71 per cent of respondents consider the current economic and employment situation as bad. Europeans appear particularly pessimistic about the global economic situation. 53 per cent expect the employment and 51 per cent the economic situation to worsen over the next 12 months. Going by the way events are unfolding in these countries, this displeasure appears to have increased over time. This can be gauged from the growing protests across the countries. Iceland, the first country where the economy had collapsed due to the financial crisis, has now become the first country where the government too had collapsed. Protest demonstrations of the scale never before witnessed in the country's history shook it and forced the conservative government to step down.

The events in Iceland are sending shivers among many unpopular rulers in Europe. Ruling parties are anxious of the mounting social and economic tensions which are strongest in Southern Europe where recession has already set in and appears to be longer and deeper. They already fear that they would be once again confronted by the protests on the street making the coming spring, a 'hot spring' of protests. They are forced to put to cold storage many structural adjustment policies that they feel are 'long overdue'. Greece, Spain, Italy, Scotland, Hungary, France, Germany, Latvia, Lithuania, Bulgaria and Czech Republic have already witnessed huge protests.

Noteworthy among these demonstrations are those that had taken place in Greece. Working class in Greece had organised two massive general strikes bringing the entire country to a halt. Poor and middle level farmers are continuing their blockade of the major roads and highways for the past nine days. The recent incidents that followed the killing of a fifteen year old boy also are a result of the growing discontent among the people. Hundreds of thousands of people participated in these protests. On the other hand we also found few anarchist elements indulging in rioting.

These incidents demonstrate the fact that along with the forces that try to properly channelise the growing discontent among the people, there would always be elements that try to weaken this mobilisation by indulging in riots and propagating sectarian and chauvinistic slogans. The attacks on foreigners in South Africa and in many other countries also are trends pointing towards these tendencies. In the recently concluded elections in Austria, we had already witnessed another of this trend. The fascist parties had increased their vote share to one-third, reaping rich dividends through their campaign against immigrants.

History shows us that the big bourgeoisie does not even think twice before supporting fascist forces to ward off the communist ascendancy. This is what had happened in the 1930s during Great Depression. Deploring the crisis and speaking on behalf of the ruling classes, Angela Merkel, the chancellor of Germany and Nicolas Sarkozy, the French president have recently expressed their concern that the attempts to discredit free market capitalism “may play into the hands of the Left”. So, the inept ruling classes to ensure that they remain in power, are once again gearing up to prevent the growth of Left.

In an ominous sign in our country, big industrial houses have already started voicing their approval for people with fascist tendencies like Modi to lead our country. They fear that the growing discontent among the people because of the slowing production, falling exports, closing factories and growing unemployment might further strengthen the Left. They know very well that a stronger Left would use all the power at its disposal to obliterate the sufferings of the people than stand by them.

It is in the interests of the people of our country that the nefarious designs of the bourgeoisie are defeated. Their efforts can be successfully thwarted only by combining our struggle against the policies responsible for our present predicament with the struggle against the divisive, chauvinistic and communal forces. Strengthening the unity of the downtrodden and mobilising them in ever larger numbers in the struggle is the only way out.