The Great Debate UK
from Nicholas Wapshott:
There have been a lot of sighs of relief in Europe lately, where countries like Britain and Spain, long in recession, have finally started to grow. Not by much, nor for long. But such is the political imperative to suggest that all the misery of fiscally tight economic policies was worth the pain that there are tentative claims the worst is now over and, ipso facto, austerity worked.
Hold on a minute. Growth is good. Growth is what allows countries to pay down their national debt by increasing economic activity, putting the unemployed to work and making people prosperous enough to pay taxes. But gross domestic product growth alone is not enough to provide adequate sustained prosperity if it does not also lead to significant job growth.
Take Spain, which has just emerged from two years of recession by posting a third quarter growth rate of 0.1 percent. Technically the Spanish slump is over. But a glance at their job figures shows the country has a long way to go before it can genuinely say it has escaped the diminishing effects of austerity -- in the form of tight fiscal policies, public spending cuts and labor and entitlement reforms -- imposed indirectly by Germany through the European Union.
In Spain, unemployment remains stubbornly high at 26 percent; half of those age 25 and under are still without jobs. More than half those age 25 and under in Greece and Croatia are also unemployed. In Europe, only in Germany and Austria is youth unemployment under 10 percent. Greece and Spain lead the sorry list of European countries with more than 25 percent unemployed, and 13 more are enduring joblessness at more than 10 percent.
from Nicholas Wapshott:
In the nearly five years since the worst financial crash since the Great Depression, the remedy for the world’s economic doldrums has swung from full-on Keynesianism to unforgiving austerity and back.
Following the Autumn Statement last week, pressure remains on Chancellor George Osborne to tackle the continuing fall in living standards and the growing divide between the UK’s highest and lowest earners.
While battles rage about the nature of the Government’s welfare reforms, it was refreshing to see a growing number of commentators acknowledge that it is not just those out of work that are struggling to get by. Indeed those in work will feel the greatest impact from the Government’s upcoming benefits cap, as tax credits, maternity pay and other in-work benefits are affected.
–Ben Stepney is a solicitor in the Employment Team at Thomson Snell & Passmore.–
The most significant of Business Secretary Vince Cable’s 14th Septmeber proposals as part of the government’s Employment Law Review is the dropping of “no fault dismissals”, as proposed by Adrian Beecroft in his government commissioned report. This would have enabled small businesses to bypass the unfair dismissal rules by making a relatively modest compensation payment to the employee, which could have seriously undermined the relationship of trust and confidence necessary for an effective employment relationship, as employees would know that they could lose their job at a moment’s notice without the employer being required to have a valid reason for doing so.
The Law of Diminishing Returns states that a continuing push towards a given goal tends to decline in effectiveness after a certain amount of effort has been expended. If this weren't the case, Usain Bolt would be able to run the mile in less than 2-1/2 minutes.
From an economic standpoint, this law now seems to be fully in force in Greece. The latest jobs figures from the twice-bailed out euro zone country paint a bleak numerical picture of the impact of unrelenting austerity in ordinary Greeks, regardless of whether it was self-inflicted or not. To wit:
–John Vassallo is Vice President of EU Affairs for Microsoft. The opinions expressed are his own.–
European Commissioner for Employment Laszló Andor recently estimated that youth unemployment costs Europe €2 billion per week. Absorbing just 20% of youth who aren’t in education, employment or training, into the European labour market, would thus save Member States more than €21 billion a year collectively. Apart from damaging Europe’s future competitiveness, at this rate we also risk depriving a generation of young people of a route into independence and self-development. More than 5.5 million under 25s in the European Union are unemployed. This translates to a youth unemployment rate of 22% – more than double the overall rate for the working population.
By Kathleen Brooks. The opinions expressed are her own.
Back in early 2009 I was sitting in the library trying to find a new spin on the U.S. financial crisis for a college paper. I trawled through book after book and they all said the same thing. But finally, late into the night, I stumbled upon something fresh in the latest unemployment report.
Jobs had been slashed in the U.S. and unemployment was rising, but interestingly, women were faring better than men. So there was my story. After June’s jobs report I decided to review this phenomenon and find out whether this was really just a male crisis.
By Agnes T. Crane and Christopher Swann
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
The latest U.S. jobs report should give fiscal hawks pause. With economists expecting employment to rise by a modest 100,000 in June, the piddling increase of 18,000 proved a bitter blow for a country amid the throes of an austerity debate.
-Omar Khan is director of policy research at UK race equality think tank The Runnymede Trust. The opinions expressed are his own.-
Scholars, policy experts, advocates and members of Congress will be gathering in Washington in early April to assess the racial wealth gap in the United States, where families of colour on average own 16 cents of wealth to the white family’s dollar.
from Chrystia Freeland:
Regular readers of Chrystia's column will remember that she recently called out the IMF for failing to foresee the destabilizing effects of rising youth unemployment in Egypt. Specifically, in its April 2010 Article IV assessment of Egypt, the IMF concluded the country's economy was in fact more resistant to external shocks thanks to "sustained and wide-ranging reforms." Well, it turns out that the IMF has evolved in its thinking. In an exclusive interview today with Chrystia and Reuters IMF correspondent Lesley Wroughton, IMF First Managing Director John Lipsky announced that going forward the Fund will more heavily weight unemployment risks in its annual country assessments. "We think that these are very important issues and need to be looked at, and again, not just in cases where it might result in political turmoil but just as a matter of course in examining economic developments and policies," Lipsky said.
Watch the whole exchange here:
Posted by Peter Rudegeair.