The Economist March 14th - March 20th 2009

175 Pages | English | PDF 3,85 MB | Audio 173 MB | MP3
The jobs crisis
It's coming, whatever governments do; but they can make it better or worse:
Over the next couple of years, politicians will have to perform a difficult policy U-turn; for, in the long term, they need flexible labour markets. That will mean abolishing job-subsidy programmes, taking away protected workers’ privileges and making it easier for businesses to restructure by laying people off. Countries such as Japan, with two-tier workforces in which an army of temporary workers with few protections toil alongside mollycoddled folk with many, will need to narrow that disparity by making the latter easier to fire.
The euphemism for that is “flexibility”. The bare truth is that the more easily jobs can be destroyed, the more easily new ones can be created. The programmes that help today, by keeping people in existing jobs, will tomorrow become a drag on the great adjustment that lies ahead. As time goes by, spending on keeping people in old jobs will need to be cut, and replaced with spending on training them for new ones. Governments will have to switch from policies to support demand to policies to make their labour markets more flexible. That is going to require fancy political footwork; but politicians will have to perform those steps, because if they fail to, they will stifle growth.
However well governments design their policies, unemployment is going to rise sharply, for some time. At best it will blight millions of lives for years. The politicians’ task is to make sure the misery is not measured in decades.
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