I’m working for a tech start-up in Ghana this term, which affords me the opportunity to talk to people of all walks of life. Again and again, I’m hearing from people about how they’re out of high school but trying to get some money before they go to university, but can’t because only the university students get jobs. Or if they have finished university, they’re selling t-shirts or underwear on the street because there’s no jobs elsewhere. This reminds me of a few friends and family members who have completed degrees but are unable to find work or work they’re qualified for, something Waterloo engineering students often scoff at arts students for.
However, unemployment remains a huge problem, and in my opinion, it is the largest barrier to poverty reduction that exists. My company VOTO Mobile did a national poll in 2012 in Ghana and found job creation was the largest issue on people’s minds. Robert Chambers et al’s anthology of qualitative research with marginalized people quotes employment insecurity or fragile livelihoods as almost everyone’s major or main concern. The International Labour Organization estimates global unemployment will be at 208 million in 2015, posing a significant threat for civil unrest. In addition to the unemployed, there are the informally employed – those people working as seasonal farm labourers, hawking products at stop lights and on sidewalks, or picking up afternoons of construction labour where they can. In developing countries, 41% of the workforce lives in this situation. 70% of these are working alone and most are also women.
Basic economics predicts that a labour surplus lowers the price of labour to a point where everyone can now be employed. However, at a certain point, when the price being offered makes you have to choose which of your kids isn’t eating tonight, you start looking elsewhere. It would be nice if this profit motive encouraged entrepreneurship that brought new value to society, but people in this situation are lacking every kind of capital and are less likely to innovate. In addition, they can’t buy these new products that are coming out because they have no income. At best they contribute to the economy by showing people what will happen if they lose their jobs. Basic economics predicts that in the long run, things will even out if the market is allowed to work. However, managing that transition is the hard part. As foundational economist John Maynard Keynes put it “The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us when the storm is long past, the ocean will be flat.” For a really good example of this in action, check out how agricultural mechanization forced hundreds of thousands of Americans to migrate to California in the 30’s, the subject of John Steinbeck’s novel the Grapes of Wrath – my pick for summer read if you’re reading this on co-op.
But what causes a labour surplus? Long ago, people spent almost all their time securing basic necessities; they needed to be working all day to survive. As societies gained technology, organized state and business administration efficiently, and started trading, they had to work less and less. At the same time, they produced and consumed more than before, raising their material standard of living. Today, through really good engineering, business, and government holding up the system, we have enough global production capacity to give everyone a decent standard of living (whether we can sustainably is unsure).
The problem becomes distribution. Everyone needs a job to earn a living, but not everyone needs a job to produce enough for society, like in the very old days. So we are left with some structural unemployment and a massive predicament that we need to solve. This may seem a far-away issue because I’m writing from Ghana, but just think that in Canada, many people are already unable to work in jobs they’re qualified for. Under the current paradigm, continuous growth, and mostly in the service sector, we need to make new products and jobs as fast as we make other products more efficient to produce, and we need to do it in a way that puts enough money in the hands of people that will spend it and buy the products. There is some reason to believe that, even when focusing on services and skirting the finite planet problem, this approach is unsustainable economically as well as socially due to the class divide it creates and eventual inelastic demand for products.
There are however many alternative economies. The first example of this is an ‘inefficient economy.’ These naturally employ a lot of people by doing jobs really poorly. In Ghana for example, to buy phone credit you have to go out, find a credit seller, buy vouchers, scratch them, and send a USSD code to your telco. It’s making a purely virtual product have a physical form and require a network of distributors and retailers. It’s also employing a lot of people in unnecessary jobs.
The second example of an alternative economy is one of ‘zero-growth.’ We could cap individual income in a way that we would all do the same net work, but share it more. The Work Less Party of Canada proposed a 4 day work week, to force people to spend more time enjoying leisure and at the same time, instantly expand the labour market to get the fifth day of work done. It’s a radical extension of the 8 hour workday (a huge milestone in labour organizing that many people fought and died for. Hope you celebrated May Day last month!)
Finally, there are ‘local’ economies: a special case of the above, but subverting the global system by establishing a subsistence economy at a local scale where everyone could see the consequences of production and consumption and adjust accordingly for something that worked. There could be enough wealth in the products that are generally just dumped for economic reasons to put a serious dent in global inequality. This isn’t really an end solution, but think of some global pay-for-the-all-you-can-eat-sushi-you-don’t-finish system that would prevent the colossal amount of food and other waste that happens.
If this issue of economic sustainability can be solved, I think it’s a unifying piece in environmental and social sustainability as well. From what I’ve seen, I think the problem of structural unemployment is an injust and unsustainable economic system and is something that should be part of the public discourse and taken seriously in policy. The Work Less Party, Bhutan’s National Happiness Index, Occupy and others have all started the conversation; as engineers enabling the efficiency that can create unemployment I think we should continue it and start looking at the economic impact of engineering designs in global systems.
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