Monday, April 25, 2011

Jobs in the West and USA - Why Less Job Opportunities?

Why Less Jobs & More Unemployment in the West? How to Get Jobs in the USA and West? 

(When I say less jobs that only means relatively less jobs. Please dont mistake the sentence suggests "number of unemployed people are more and working people are less... - Title is not that relevant.)
There is a short term perspective and a long term aspect with respect to this question.
(As this is an old write up and as the short term scenario has changed considerably now, I am shifting that paragraph to the bottom of this article - Comment added on 22nd July 2011)

The long term problem: --- In order to understand this problem, we need to understand how the corporates function.

We are now living in a system, which is marked by the development model of global capitalism. (in simple word, we are living in a world of business). We all know there were small co-operatives, home based business, cottage industries , small and medium scale business etc, but if you look at who dominate the market, it is corporates. Say for example, though it is the small and medium business which is the biggest employer in USA, the lion share of the production is done by Corporates and they dominate the market.

Also, we know that all the developed nations, including USA and European countries are now witnessing a very low GDP growth, where as China and India has 8 or 10 % GDP.

Essentially, global market do not have boundaries now. This means, whether it is USA made car or Japanese made car, it doesnt matter for the market. You dont look if a kids toy is manufactured in China or in USA, what a consumer looks at is the price and quality of the product.

Immediately after the Second World war, USA had a policy, when it tried to attract a large number of cheap skilled labour from India, China and other third world countries. But by 1990s, it became more and more difficult for the USA corporates to compete with products from developing nations. (Let me clarify here: There are essentially two type of products. 1) Any product which needs latest advanced technology and a huge capital. 2) A product or service which doesnt require high level of technology innovation or big capital..... What the corporates of developed nations including that of USA is trying is, they are basically trying to control the technology. USA corporates are tightening the patent laws and trying to prevent other companies from acquiring these technologies. Thus Transnational corporates have effectively prevented smaller companies competing with their products. But in the second case, the USA corporates are trying to outsource their works to third world countries. Say for example, Nike is a USA brand but Nike shoes are not made in USA, but done in the sweat shops of Philippines, Taiwan etc. It is impossible for the USA corporates to produce shoes and computer mouse at a cost which is competent in the international market. But this doesnt mean that they give up control. But they outsource the work and get things done at a cheaper rate.)

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Now a little more back ground info. USA has a minimum wage of USA Dollar 6 or 7 per hour. (average). And This means a monthly salary of Indian Rupees 60,000 . But the same quality of work can be done in India paying a mere 1200 or 1500 rupees in India. Perhaps, even less. If you add the outsourcing cost to it, you can get things done for approx. 2000 rupees salary per month per person in India. (technological jobs are now becoming costlier in India. Nevertheless, there are other destinations, where USA corporates outsource). This means that when a USA company employ one person, Indian company can employ 40 worker for the same salary. This also means an Indian unit will produce 40 times more products (for example shoes or tee-shirts). Thus the price will be at least 25 times less. But because the corporates, both in USA and and their partners in India, make more profit, the whole benefit is not passed on to the consumer.

So, this is how the market works.

Now, let us take the example of USA based small and medium scale business, which is the biggest employer in USA till now. These small business can not afford to outsource to India or China. It is difficult to find a reliable outsourcing partner and ensure the logistics for small scale outsourcing. There is a high risk of partnering with small outsourcing companies in third world countries.

Now, let us say, a USA based Transnational company, a USA based small and medium business , a China based Corporate and and Indian small and medium company is coming up with the same product and trying to sell them in the international market. A USA corporate get the advantage of cheaper labour and wider acceptability of the brand as it spends huge amount of money in brand building across the world. A Chinese or Indian corporate may be able to compete with USA corporate product as long as that is not a high technology product which require huge capital. And surely USA based small and medium companies product which will be costlier than all other products will fail in the market. The lesson we learn is that all small and medium business all over the world are facing inevitability of failure and closure.

Now, the biggest employer is closing their shops one by one. How do you expect to get more and more jobs? You are lucky only because, at present NOT ALL THE products are outsourced. But when more trade restrictions are removed, almost all the products can be outsourced in the long run. And this means thousands and millions of our future generation job seekers would never find a stable, decent job.

To add to this complexity, the corporates are adopting methods which eliminate manual labour. They use advance technologies, and machines to minimize the human labour, This phenomenon is called JOBLESS GROWTH. It may be shocking, but the fact is that NOT ONLY USA, BUT CHINA AND INDIA also are facing the phenomenon of jobless growth. From 2003 onwards there is a clear downward trend of job creation in India. This is also reported in China.

If you look at who is getting profited in India's and China's high GDP growth, you can easily find it is the Global North corporates and Foreign institutional investors who make quick money from high growth in India and China and the ordinary people in India and China are starving.
3 5 0 0 0 0 0 0 0 Indian starved during the last year on one or another day according to the study conducted by CNN TV sponsored study. (The same CNN TV group based in USA, which has a joint TV in India called CNN-IBN).

The question one should ask is NOT "why is it SO hard to find a job?" Instead ask : "WHY SOME PEOPLE ARE STILL FINDING SOME JOB?"

Now, there are other angles to this problem:

We all know what is petro-dollar recycling.
All the world nations, want to trade oil. You have to either export or import Oil . And the accepted currency for export and import of Oil is USA dollar. And we know that most of the OPEC countries, which export Oil are technologically backward or they are all geographically small nations. These OPEC countries, especially Arab nations have huge trade surplus, which practially they cant invest in their countries. What can you do with several thousands of billions of dollars? Now, look at the other side of the problem. Every nation, which want to run some industry wants energy and they want to import Petroleum products. And if they want to buy petrol, they want USA dollar because, USA Dollar is the only currency you can trade oil. Thus every nation, in the world are forced to do trade with USA. Say Japan or India are forced to sell something (which is obviously cheaper than USA products) to USA in order to get USA Dollar, and they use this USA dollar to buy Oil. We have found that there are billions of dollars of dollar in the hands of Arab aristocrats, whcih they cant do anything. Essentially these dollars were ultimately coming back to USA and other Global North economies and get circulated in their economy. This is called Petro Dollar recycling. These huge amount of Capital went to Capital intensive business first and even went to housing market in USA. So for several year the prices in USA housing market went up and up and up and up... Because there were very little other avenues, these Arab aristocrats can invest. But as the success stories of other economies also started appearing part of this Petro-Dollar is now going to India, China, Singapur, Japan etc. In other words, USA is slowly losing monopoly. However the point to note here that USA corporates are not affected at all. Most of the USA corporates are now shifting their bases. Thus you hear ths story that IBM or Intel has abolished 1,00,00 jobs in USA and added 5,00,00 jobs elsewhere. The more and more new emerging economies attracting petro-dollar capital is one reason why the profit of the development of USA based business, especially, hte Corporates are not trickling down. And this is one more problem why there are less and less jobs.

One more problem is that, there are certain kinds of jobs which can not be outsourced. As I explained earlier, these works has to be executed within the geographical boundary of USA itself. Mostly these jobs need skills in areas like advance science. So if anyone is having science professional qualification, they may have better chance for a job. How can USA outsource strategical defence works? Of cource, some assembling jobs can be outsourced, but not all jobs.

There is one more problem--
In order to increase the profitability of the Corporates, they want to divide the work force. The work force of today's world are divided into two. The skilled professionals, who are of high demand and highly paid. Infact they are paid unreasonably high, thus corporates can control them and Corporte prevent the sharing of technology and high level skills. But in order to compensate to this, Corporates poorly pay the unskilled and semi-skilled. When the highly skilled professionals are encouraged to be partner with the management, the semi skilled and unskilled are ill-treated and even subjected to inhuman exploitation. This is one more reason, why semi-skilled and non-professionals are unable to find jobs. The corporates ensure that a huge army of unskilled and semi-skilled unemployed army is created in all over the world, especially in the third world countries so that they can hire and fire these workers at their whims and fancy.

There are other problems also--

Ever since the Second word war, first time in its history, the USA corporates are facing biggest challenges all over the world. Challenges various kinds, including military, economic, political etc. I dont want to examine all the aspects of these challenges here. But I would mention two of such challenges.

World Bank was serving the interests of USA corporates successfully (USA is the biggest shareholder). When World Bank give a big loan to a third world countries, world bank put restrictions on these borrowing nations. The world bank would insist them to buy Capital equipments from USA companies (or other Global North coroporates) which is to be used for that particular project to which world bank lending loan. But as people all over the world is now more and more fighting against such corporate centric projects, USA corporates are facing more and more political challenges. Almost the entire Latin American continent is now Pink. (They are mostly ruled by Non-communist Center-Left parties). Under the leadership of Hugo Chavez of Venezuela, a Global South bank is started. Hugo Chavez, with his huge surplus in oil export is now helping more and more Latin American neighbours, thus they are less and less depended on USA corporates and world bank. Thus USA corporates are finding it tough to capture more markets in the world. To add to this Russia which is presently a Capitalist system is now offering technology, especially military technology to third world countries. Thus, more and more third world countries can now buy defence equipments and other strategical products from Russia rather than USA. One more problem is that all the European countries are now united and jointly promoting Euro. Thus Economically USA is challenged even by Europe. In short USA is facing the toughest challenge in its history. This is also creating the economic expansion of USA and thus economy is not very robust and when economy is not performing to the maximum potential, naturally, less jobs are created.

These are all reasons, why you dont get a job now. Probably, you can have two points in mind--

1) Consider an area, where USA can not outsource. Develop skills in those areas, so that your skill are of high demand.
2) Try to understand about the culture and other aspects of other countries, especially to where the jobs are outsourced. Find an area, where you can contribute. Develop social skills and familiarize with other cultures. If you can travel to other countries probably you will be of high demand, because you are one of those very few people, who has the best from both countries. But remember, adjusting with other countries' culture may not be easier for every one. And also living permanently in another continent is not recommended, So you may have to find jobs which will require you to travel often to other continents and come back home and do the work for the rest of the year. Try to find such jobs. There are a large number of NGOs which needs social workers to work in Tsunami rehabilitation etc. And there are several such jobs. Explore.

The long term solution: Any Corporate which function in the stock market regime, where market is the center, can NOT actually focus on the employment creation. The question is ultimately to whom all these developments are ? Are they meant for human beings? But if you have invested huge capital it can not sit idle, it should go and everything work on profitability and more profitability. There should be a business model, which will allow co-operatives and small business to flourish. This can happen only when technology is liberated from Corporates and it is under public domain. I strongly believe this will happen not very sooner, but later. I myself is working on this direction. Only when technology (which is not the product of any one corporate, but is the brain child of many thousands of people) is shared, all business, including home based business, small and medium business, cottage business, co-operatives all will be working in a level playing field and all will have equal opportunity in the market. When that scenario become a reality, the focus of whole development will be human being and not market or profit. That is the time, when every body will get their jobs according to their satisfaction.

(The following para was originally in the beginning- comment added on 22n July 2011)
Short term:---USA market has started showing signs of recessions, though, the interest rate cut by Fed Reserve has given a temporary improvement of the situation. We all know the sub-prime mortgage crisis and how it has effected the liquidity of the Financing companies and in turn how it has affected the market slow down. Now interest rate cut may have given some liquidity, but is it going to trickle down? This will only give some relief to the financing companies. No mortgage companies have added more staff or are going to expand their workforce. No company is going to expand their work force quickly. And those thousands of people who lose jobs, do not find other jobs. And when people do not have money, how can they purchase? And if no-one purchase, how can you sell? And if companies cant sell, there will be further slow down. Secondly the artificially created liquidity by the Fed Reserve will, sooner or later add to the problem of inflation. And then what will Fed Reserve do? Increase the interest rate? Then, economy will fall in to deep trouble. So temporary slow down of the market and early signs of slowdown is creating problem in the USA and other markets. And this is one reason why more and more jobs are not created. Let us say this is only temporary and after 3 -4 years, market will recover from recession.
But there are other problems.
(These other problems are long term problems. Please read from first paragraph. Comment added on22nd July 2011)

(Originally Published in in 2007 as a reply to a query. Uploaded to this Blog on 25th April 2011)
(Points and Concepts are taken from articles published in Newspapers and Online Media- Note Added in June 2011)

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