Unemployment Around the World

Courtesy of Economist.com, here is a graphical look at unemployment rates around the globe:

Graphic courtesy of the Economist.com

(From Economist.com): "UNEMPLOYMENT is accelerating in many countries as companies shed jobs in an attempt to survive the global recession. On Tuesday April 14th, Russia's president Dmitry Medvedev said he was “deeply alarmed” that unemployment levels were rising more rapidly than forecast, to reach 8.5% in February. This week Greece announced that unemployment had risen from 8.9% in December to 9.4% in January. Spain's economy has crashed since its housing and construction boom ended. In four months unemployment rose nearly three percentage points to stand at 15.5% in February. Countries in severe financial trouble, such as Latvia, Iceland and Estonia have also seen rates rise rapidly."

One the things that concerns me most about rising unemployment in the U.S is that many of the people who've lost their jobs are going to find themselves underemployed in the future. Many high-paying manufacturing jobs are gone for good, white collar workers may find themselves dealing with a lower pay scale on an on-going basis, and many employers aren't going to "give back" the mandatory pay cuts imposed on many workers. As a result I anticipate lower consumer spending, consumer confidence, etc, even after the official unemployment rate returns to pre-crisis levels.

To be sure we saw some of this after the last recession and it was one of the factors that led to the increased use of consumer credit, as more and more consumers used credit as an income supplement. In a post credit bubble world credit will be harder to come by even after the financial sector recovers, which should only serve to exasperate the declines in consumer spending the pain felt by the retail sector.

Either way the true pain caused by rising employment will continue to be felt even after the economy recovers.

Sources:

Economist.com: "How the recession hurts" -- April 15, 2009

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.

Comments

[capitalisth...:]

Wow Mexico has only a 5% unemployment rate! Maybe it's time to immigrate illegally.

Apr 22 04:02 AM

[User 353732:]

1. It is not very useful to compare unemployment rates across countries. The basis of meaurement varies too much . Even in the US the metric keeps changing over the years. Unemployment, as measured, in 2009 in the US, by the government captures only a portion of true unemployment(e.g unemployed people too discouraged or too inert to look for work are deemed not to exist; people underemployed are considered fully employed. Several posts and comments on SA suggest that true unemployment in the US is in the high teens)
2. Governments have an incentive to understate unemployment figures where there are unemployment benefits; they also seek to supress true unemployment statistics for political reasons: the more ignorant the voters about the real state of(bad)
economic affairs, the better for the people in power.
3. Even when the metric is comprehensive, one has to be wary of the integrity of data collection, compliation and analysis in many countries, especially places such as Mexico and China.
The great majority of the world's workers are not covered by any form of unemployment insurance or benefits.When such people loose their jobs they do not file forms: they look for something to do that will enable them to survive. Besides seeking some support in kind from family or village or alms from strangers, the commonest response of an unemployed person is to start a micro business ( for a few weeks to a few months until some better opportunity can be found), typically at the very edges of retail distribution: a push cart, a tiny stall, a one to two person home ( or street) based little enterprise making and selling or reselling food and garments, for instance. Micro entrepreneurship is a surprisingly common response to unemployment in the Global South( especially in Asia); indeed there is no alternative way to survive.
Perhaps if we in the US made it easier to start, finance, operate and shut down a micro business, many hundreds of thousands of such businesses might be launched. It would create at least some supplementary income, rebuild in part the culture of self sufficiency and self reliance that was once the defining trait of America and convince millions of people that the solution to economic adversity is not waiting inertly for someone else to bail us out but to take the intiative and act for ourselves. Unfortunately, the biggest obstacles by far are the Government which encourages dependence rather than self reliance( the Welfare state seeks captive clients not indpendent successes) and a quasi-European "professional" culture in Big Government, Big Business, Big Institutions and Big Media that sneers at small businesses and self employed people and at entrpreneurhip in general.

Apr 22 07:35 AM

[wavelength:]

Strongly agree with what User above is saying, especially the last paragraph. I have had various micro businesses as a safety net since I was a teenager and once again am finding this is saving my bacon. The current one is a small website - something anyone with basic literacy can accomplish. Although I originally had to quit school at 15 I have since acquired a post-grad education. Yes the well educated American professionals I associate with do sneer at my little sideline - I get the extra cash and the last laugh, but am deeply concerned about the future when I see what was once a core value become an item of contempt. Many argue that countries like India have demographic advantages that will see them prosper as we decline. Sadly, countries like India now also have a cultural advantage as in the US beaurocrats, the "chattering classes", and the 50% who pay no Federal taxes and passively accept welfare all see more honor in holding one's hand out than in getting ones's hands dirty.

Apr 22 10:16 AM

[notsosmart:]

if you double the figures you may be closer to the truth.also,in this country people have too much stuff.other than food,gas & power,how long can you go without a purchase? awhile i guess.i know i left out insurance & other stuff but just making a point.

Apr 22 12:20 PM

[Markham Lee_:]

I don't understand how you can put forth the argument that job loss isn't a big deal? Many of the people who are losing their jobs aren't qualified to work in the tech field (manufacturing workers), and the service jobs they can get don't pay as well.

How is not a big deal if a lot of the new job creation is for lower paying jobs, and (for the moment) the economy is shedding jobs?

I don't get your argument.

User - I think Micro businesses sounds good, and I admit it can help some folks. BUT I don't think it's feasible as a broad band solution for everyone, just think of it: if you had several million competitors with the very same web site you're running, you wouldn't make very much money.

Considering the failure rates of entrepreneurs in general and the competition introduced if "everyone does it", I just don't think it's a broadband solution.

-M

Apr 22 01:25 PM

[rosey99:]

Tue enough. During the Great Depression, a popular micro-business was selling apples on the street. At the time, Hoover thought that was just great. While it allowed some to survive day-to-day, it did nothing to stem a rising social tide of frustration and despair. Indeed, the selling of apples became symbolic of government failure, and emblematic of the Hoover administration.

People will do what they need to do in order to survive, but that does not mean that it is the wisest, or most effective policy to encourage the economy to move in this direction. While I do not know the best way to do it, we need to create jobs that actually pay enough for people to live on. If government intervention is the way to do this, and I'm not sure that it is, then so be it. Any solution based wholly on faith - whether in economic fundamentalism, or government action - is not likely to be very useful at this point. I'm not sure what the best course is, but I am sure it is probably not the easiest course, nor the most expedient one.

I do agree that we are likely to see a "jobless" recovery, which to my way of thinking is a statistical recovery that does little to address the systemic problems. I think there is a real risk that globalization itself may be in jeopardy, if nothing is done to address the fears of those who are getting squeezed by it. It's an interesting idea, but telling them to go and sell apples probably will not be enough.

On Apr 22 01:25 PM Markham Lee wrote:

> I don't understand how you can put forth the argument that job loss
> isn't a big deal? Many of the people who are losing their jobs aren't
> qualified to work in the tech field (manufacturing workers), and
> the service jobs they can get don't pay as well.
>
> How is not a big deal if a lot of the new job creation is for lower
> paying jobs, and (for the moment) the economy is shedding jobs?<br/>
>
> I don't get your argument.
>
> User - I think Micro businesses sounds good, and I admit it can help
> some folks. BUT I don't think it's feasible as a broad band solution
> for everyone, just think of it: if you had several million competitors
> with the very same web site you're running, you wouldn't make very
> much money.
>
> Considering the failure rates of entrepreneurs in general and the
> competition introduced if "everyone does it", I just don't think
> it's a broadband solution.
>
> -M

Apr 23 07:10 PM