Wealth Creation No Longer Creates Jobs & Unemployment Sucks
Our Afghanistan Marketplace project has created and sustained approximately 118,000 jobs since 2006. As far as aid effectiveness goes, that’s the equivalent of less than $130 of taxpayers’ money for every job created. No other project or development program worldwide has been so effective at creating jobs.
Put this into the context of an important issue being raised at Davos this week: youth unemployment. The numbers are stark: in some countries of the Arab world, up to 90% of 16-to-24 year olds are unemployed. In Spain, it’s nearly 50%. In the United States, the youth unemployment rate is 23%. In the UK, it’s 22%.
Then there’s the lack of basic life skills. Many youngsters today don’t know the basics, from getting on with co-workers to having entrepreneurial skills starting with simple street savvy.
In South Korea, it’s the other way round. So many people are now university graduates that the country is running out of people to fill blue-collar jobs.
The UN’s International Labor Organization (ILO) reports that worldwide, some 200 million people are unemployed, with 75 million of those unemployed between the ages of 16 and 24. And yet the legislated response of developed nations has so far been to increase the age of retirement for us older generations who are already currently employed—resulting in even fewer vacancies for the 40 million or so young people who are entering the workforce as every year goes by.
Does this make sense?
World leaders in Davos are waking up. Young people who are unemployed for a long time will earn less throughout their whole lives. They will be less employable in the future. They don’t have the skills that businesses are crying out for. They are more likely to have long-term health problems.
Our world is plagued by youth unemployment, which is leading to a greater demand for government benefits at the same time that commercial production, plus consumption and hence economic growth that contribute to governments’ fiscal revenues are all falling. All this leads to escalating sovereign debts, which are likely to cause further social disruptions. The leaders in Davos say that “we’re sitting on a social and economic time bomb“.
There’s another term for it: the lost generation. Or as one business school professor puts it: “Unemployment sucks. Youth unemployment sucks even more.”
Sadly we also live in a world where wealth creation has become uncoupled from job creation. This once-close connection is ruptured. Take Mitt Romney who made his fortune by laying people off. Take me, among others: I made the equivalent of two months’ salary over the last four months simply by converting my euros into US dollars last September and then converting those dollars into UK pounds sterling this month. In such a way millions of zeros have been added to speculators’ balance sheets all over the world during the last calendar quarter without adding a single job.
All that said, alhamdulillah for the Afghanistan Marketplace project!