Rising Unemployment – Global Slowdown

The soaring stock markets all over the world cannot hide the economic slowdown that is being faced by people all over the globe. The central bank funded liquidity tsunami has managed to escalate asset prices, but failed to move the wheel of the economy. Growth remains low in most parts of the world with millions of people finding themselves unemployed. Companies have continued to fire thousands of workers as they adjust to a new normal of lower revenues and higher competition. Technology improvements has led to further pressure on employment as most routine tasks can be automated by machines. This means that lower skilled workers are finding themselves either out of a job, or faced with even lower wages. Capital now enjoys enormous advantages over Labor given the twin headwinds of globalization and technology improvement. Normal professions like clerks and receptionists are becoming obsolete, while globalization is now leading to outsourcing of even high level skills. Improvements in productivity are not being matched with increase in wages as corporations capture more and more of the profit margins.

Governments have become pretty helpless in managing the social benefits as powerful corporations can simply switch to countries with weaker labor laws. Unionization is dying in most places of the world as private sector workers are left with little leverage against powerful companies. Siemens announced the plans to fire 150000 workers while Toshiba is going to fire most of its TV segment workers. Banks and financial institutions are also relentlessly cutting jobs, as their revenues have decreased sharply since the Lehman crisis. Six years after the crisis, most people still feel that they are living through the crisis. Only the very rich have benefited from central bank interventions as they own most of the assets which have been artificially inflated. This can be seen in the robust sales of very high end luxury goods which have been unaffected by the economic slowdown.