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World View : The Case of the Diasppearing Worker: What's Gone Wrong? : National economies are growing, yet unemployment is on the rise. Some blame technology; others cite high wages and social programs.

July 06, 1993|JOEL HAVEMANN and NORMAN KEMPSTER | TIMES STAFF WRITERS

COPENHAGEN — Compared with some of Europe's basket-case economies, Denmark is doing fairly well right now. But that's little consolation to Ole Ladefoged.

Ladefoged, who looks younger than his 37 years, was laid off from his job taking care of children in a day-care center two years ago and hasn't been able to find work since. With Denmark's unemployment rate at 12.3% and rising, competition for jobs is growing fiercer and fiercer.

"When I apply for a job like the one I used to have, 200 or 300 other people also turn out," he said. "I've been turned down any number of times."

He may have to wait a lot longer.

In Denmark as in much of the rest of the world, unemployment is rising even where national economies are growing. This pernicious phenomenon, dubbed "jobless growth" by the U.N. Development Program, will loom large as the leaders of the seven largest industrial nations gather in Tokyo beginning Wednesday for their annual economic summit meeting.

In the United States, which was the industrial world's most efficient generator of new jobs in the 1970s and 1980s, the unemployment rate rose to an average of 7.4% last year even though the economy recovered, albeit weakly, from the previous year's recession.

East Asian economies have proved to be the world's most efficient at providing their citizens with work. Japan's unemployment rate is rising, but to levels that are minuscule by American standards: 2.3% now, expected to reach 2.6% next year. The region's newly industrialized countries are doing even better.

The Third World, especially Africa and Latin America, by contrast, remains mired in a state of permanent unemployment crisis. The population is growing by an average of 2.3% a year, much faster than jobs, in the world's developing countries. The number of job-seekers is growing even faster as more women enter the work force.

"Without substantial policy changes, the employment outlook for these people is bleak," the U.N. Development Program reported recently.

Increasing Third World unemployment is certain to drive more and more people from the countryside to the cities and from developing countries to industrialized ones. Either way, the migrants are moving from one disaster to another because jobs are also scarce at their destination.

At no potential destination is that more vivid than in Western Europe. In the two decades since the first Arab oil embargo, the unemployment rate has more than tripled, from 3.1% in 1973 to more than 10% today. The brokerage house Morgan Stanley International foresees a jobless rate of 14% to 16% in the next couple of years.

Altogether, the U.N. report says, the world will need about 1 billion new jobs by the end of the decade. At present rates of employment growth, that goal seems out of reach.

What is going wrong? Before the world can put its people to work, it will have to identify the forces responsible for throwing them out of work. And that is a controversial area.

Some experts blame technology; others say technology ultimately generates more jobs. Especially in Europe, high wages and generous benefits are blamed for pricing workers out of the market, and unemployment benefits are blamed for destroying the incentive to work. Solutions are hard to find.

Continental Europe and the United States, according to a recent report on unemployment by the Organization for Economic Cooperation and Development (OECD), have adopted diametrically opposed approaches. Neither, it says, has worked very well.

The United States has let market forces determine who has jobs and at what pay levels. The predictable outcome, the OECD found: a huge gap between pay for skilled workers, who are increasingly in demand, and unskilled workers, who can find work only for low wages.

"Such a development--as has happened in the United States--slows the process of job loss for unskilled workers," the OECD said. "But this is achieved at the risk of creating a larger class of the 'working poor.' "

Europe, by contrast, has tried to protect workers by setting relatively high minimum wages. But that strategy, the OECD said, "serves only to manifest the problem in a different form: Instead of being (the) working poor, unskilled workers are unemployed."

As for developing countries, they have the worst of both worlds: a disastrous combination of high unemployment and low wages for those who have jobs.

"In sub-Saharan Africa, not a single country had single-digit unemployment figures," the U.N. Development Program said. "In Latin America, urban unemployment has been above 8%. And in Asia, countries like India and Pakistan, despite respectable (economic) growth rates (more than 6% a year), had unemployment rates above 15%."

In general, the U.N. Development Program blames the worldwide jobs slump on a phenomenon that most others consider desirable--higher productivity. In simple terms, according to the U.N. agency, machines are doing what people used to do, allowing employers to produce more goods with fewer workers.

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