All over the developed world we hear a similar story. Rising unemployment in the face of improving (in various degrees) economic conditions. Take the United States. It’s gross domestic product has recovered from the recession far better than in Britain, Germany, Japan and Russia, yet the unemployment rate in the US remains significantly higher than in those countries, particularly Germany and Japan (where admittedly labour laws make it much more difficult and costly to lay workers off). America is producing more and relying on fewer people to do so.
Last week Steve Ingham, CEO of Michael Page, the UK’s second largest recruiter, attributed a 40% increase in permanent job orders to “jobs churn” ie people moving jobs as opposed to new jobs being created. The unemployment numbers in the UK are, in the grand scheme of things, flat.
A 6% fall in GDP ought to have caused a similar fall in employment numbers, but it didn’t, mainly due to employees being prepared to take pay cuts and cuts in hours rather than face unemployment. Unemployment in the 3 months to November 2010 in the UK was 7.9%. In the same period 2009 it was 7.8%.
There are some encouraging headlines to be found in private sector jobs growth. In the nine months to September 2010, the private sector in the UK added 184,000 employees. In the same period public sector employment fell by 77,000. We had net jobs growth, surely a good sign? Those organisations that are hiring are only replacing headcount that was cut, and in many cases cut too fine, during the recession.
Youth unemployment in the UK is perhaps the most worrying sign. A record 951,000 young people aged between 16 and 24 are out of work. Where will the jobs come from that will stimulate the employment market and prevent a generation of disaffected young people?
For as long as I can remember the drive in business has been for more and more and more efficiency. Improving productivity has been the name of the game. Do more with less. We have invested (rightly) so much in technology that we no simply no longer require the same number of people to produce substantially more. That trend is only going in one direction.
It is innovation that will drive new jobs growth. The jobs we need are going to come from new and emerging industries, companies that today don’t exist will appear tomorrow and grow to employ thousands. 10 years ago we never had Facebook. Twitter didn’t exist. Google was an infant. Between them they employ today thousands of people. The Ipod, the Ipad, the Blackberry. They have all come about in the last 10 years. What will be the product developments of tomorrow?
We need governments across the globe to create the conditions to encourage entrepreneurs. We need to make it easy and inexpensive to employ someone. We need the law to continue to protect the rights of individuals in employment. Those rights must be balanced with the flexibility employers need as the business grows.
Emerging technology, new energy, healthcare? What are your predictions? Where will the jobs growth we need come from? I would love to know your thoughts.