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| Frank Roels |
The fallacy of
“investing”
In many discourses, “investment for growth” is
proposed as an answer to the crisis. However, “investment” has various
meanings. Often it is equated to job growth; but this is erroneous in most
cases in today’s economy. Indeed, the biggest investments nowadays, totalling
dozens of billions each year, are fusions or take-overs of one corporation by
another, resulting in overlap or synergies that require fewer personnel.
Jobloss is the result. For a shortlist, see.
A second common type of large investment is restructuring,
in order to increase productivity and/or lower production capacity in response
to a slack of demand; the explicit goals are fewer jobs to reduce labour cost,
and to maintain or improve net profit.
Increasing competitiveness is another credo in
political and business circles. But it always results in jobloss in the lesser
competitive enterprise, and in a smaller number of jobs where productivity is
higher. In the internal European market, job creation is zero. And when
considering the exports out of Europe, are there truly some businessmen who
hope to beat the Chinese and Indian working conditions?
In fact, substantial job growth in the private
sector is always dependent on significantly higher demand on condition that the
latter exceeds the existing production capacity; because it is the clients who
must pay for the bill. If future demand is uncertain, hiring will be postponed;
instead personnel will work overtime, and/or clients are asked to have
patience. At present, many businesses have an unutilized capacity.
What type of investments do really create novel
jobs? Innovation? Again, it depends. Not so, if a computer program replaces
employees (example: pc banking). More of such developments are predicted to be
forthcoming. Job creation does result in case the investment simultaneously
raises its demand: the most evident example is building works, either for
private or public clients: roads, bridges, houses, schools, hospitals, homes
for the elderly, energy plants, as well as renovation and insulation of the
same. And of course, military expenditures, which are ordered and paid for by
governments.
It is important to note, that for almost all of
these jobs, public funding or public support is the motor (keep this in mind,
for the subsequent chapter on employment). So, investments in each specific
case should be questioned in terms of job creation.
The fallacy of
activation
Most European governments continue to propagate and
organize so-called activation of the unemployed. This includes a) short-time
training, in languages, skills, and stages in enterprises; b) mandatory
uninterrupted applying for jobs; c) sanctions if an individual does not fully
comply. In addition, in some countries, unemployed must carry out unpaid jobs.
Unemployment benefits are being lowered in several
ways. For example, next year, Belgian youngsters will lose their benefits if
they have not compiled 312 working days in 3 years; widows and widowers under
45 will lose their widow’s pension after 1-2 years, “to motivate them for
work”. While training is always useful, and is a must for youngsters leaving
school without certificate (which requires special programs, with dedicated
teachers), this activation policy does not create jobs. Advocates of this
policy ignore the permanent disproportion between the number of unemployed seeking
jobs, and the (small) number of vacancies. The latter are in part for workers
with years of experience in a very specific task, or for highly qualified
employees. Training on the floor of the company should remedy so-called
“bottleneck vacancies”; but in their advertisements employers rarely offer
training, and then complain about lack of candidates.
According to the EC, there are 2 million vacancies in
Europe. Even if true, the figure shows the discrepancy. The 27 million
unemployed in Europe can never find jobs in this way because the jobs simply
are not available. The inefficiency of activation to solve unemployment is
clear from the unemployment figures: the latter have not decreased while
activation was stepwise extended over the years and sanctions became more
systematic.
Recently the activation policy in The Netherlands was
evaluated by Rutger Bregman. The government spents over 6.5 billion euro a year
on a series of measures, but their effectiveness is not tested nor visible,
given the persistence of 700.000 unemployed.
