Monday, 25 March 2013

Unemployment figures highlight dearth of jobs

New Zealand’s unemployed population decreased to 6.9 percent for the fourth quarter of 2012. However the economy still lost 31,900 jobs last year despite gross domestic product growing by 2.5 percent. The sector with the greatest, and most alarming, loss is in manufacturing.

Many other economies are showing healthy signs of recovery and yet surprisingly, unemployment is still a problem for advanced countries. There is an elephant in the room regarding unemployment: greater automation in the workplace is destroying jobs.

Recently, the government’s State of the Nation address declared, “the only way net new jobs can be created is by private investors putting their money into New Zealand businesses.”

And in a February press release, Green Party co-leader Dr Russel Norman said, “something major has to change with National’s economic approach because it’s simply failing workers and the families who depend on them for their livelihoods.”

Mr Norman’s words echo around the world, but he is critical of the government in not quite the right direction. What if the market has fundamentally changed and the jobs are not coming back?

New Zealand’s unemployment figures are certainly higher than their 2007 low of 3.5 percent, hovering today around 7 percent. But it is difficult to convincingly theorise how unemployment will be consistently reduced in an environment intent on increasing profits and maximising efficiency at the expense of human labour.

The widening gap between rich and poor and a stagnating unemployment situation are only symptoms of an economic structure producing more goods each year with less human labour input. Because of this, the developed world now faces different degrees of the dearth of manual jobs and simple employment.

This is not the fault of any one ideology; it is a natural progression of the capitalist system. Automation is making many industries unprecedentedly more efficient, supplying cheaper goods, but leaving many people without jobs. And we only have ourselves to blame.

Creating jobs is every politician’s first step in securing votes. People appreciate the promise to deal with their most pressing daily concern. But despite election campaign rhetoric, it is almost impossible to create jobs out of thin air.

According to Prime Minister John Key, the New Zealand government is emphasising getting unemployed people participating in the workforce. In an ideal world, new job positions should be created as businesses expand and the economy strengthens.

However, there is no objective law of nature that economic growth always creates more jobs. Business owners may be getting wealthier and industries swelling larger, but they are intent on profits increasing and will explore every possible avenue for smoother efficiency.

In this sense, larger business does not necessarily equate to new jobs. Profit maximisation is capitalism 101 and while jobs have certainly exploded from stronger economic growth in the past, the latest figures suggest the two do not appear to march in lock-step anymore.

Twenty years ago Asia supplied the developed world with unprecedented wealth. The menial tasks New Zealanders and Americans otherwise needed to perform were gladly taken up by eager developing nations looking for investment and jobs.

Of course, cheaper goods and a diminished need for domestic unskilled factory work has been a profitable step for many western countries. Industrial development and globalisation has spread jobs and wealth. But even this trend has an unavoidable consequence.

As the global economy produces enormous abundance, there is a diminishing need for actual, maintained human labour efforts. Folks who just a few decades ago could work on relatively manual tasks are being replaced by automated, and cheaper, machines at a startling rate. Unfortunately for both National and the Greens, human labour is quite simply replaceable.

For example, simple logistics could soon be run by fully programmable computers, while their human controllers contemplate a redundant future. Similar stories are being repeated in industries across the planet.
Even high-level jobs are under threat as companies create smarter programmes to accomplish tasks at close to 100 percent accuracy.

From a business perspective, if goods can be manufactured using little human labour, factories will be built closer to target markets. Suddenly, outsourcing labour to the developing world becomes inefficient if machines are cheaper. Human labour is quickly becoming too expensive.

If any economic law applies, it is this: greater technology automation and motivation for greater investment return is a job-destroying feedback loop.

Mr Norman morally desires employment for more New Zealanders, but he is wrong to point the finger at the current government. The same constraints and the same economic reality exist for whichever party governs New Zealand. To assume any political party can appreciably alter the trajectory of the global economy is wishful thinking.

It is clear the 21st Century will be markedly different from the 20th. The great sea of jobs probably will not return to our shores. As the latest figures suggest, capital growth is decoupling from job growth. Unemployment resulting from automation is not a worry for tomorrow, it is here today.

It is also clear that technology offers both a blessing and a curse. Computers may not subsume all jobs, but a growing chunk of them no longer exist because of automation. As this trend quickens and the New Zealand economy becomes stronger as a result, perhaps the jobs may not come back at all.

This is why outdated political discourse on job creation needs to be updated. In 20 or 30 years fewer real people will be required to create more goods. There will be more stuff to go around with less working hours available.

The discussion must be about how New Zealand will deal with fewer people working in the future, not about trying to fit the square peg of job creation into the round hole of integrated automation.

Jobs are haemorrhaging but the numbers of unemployed people are growing. The political discussion needs to focus on what working-age New Zealanders will actually do if many jobs truly disappear. In parts of Europe, a work week can last for as little as 25 hours. What societal changes will occur when this is becomes a global reality?

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