What if the unemployment time bomb explodes?

Labour expert Stephen Pursey explores the disastrous consequences of failing to provide jobs for the world’s bulging population of young people. The interview is part of the Risk Response Network’s “What if?” series, which explores various hypothetical risk scenarios.

What is your main field of expertise and current research?
I study the world of work and how it connects to the global economy. As the Director of the Department of Policy Integration at the International Labour Organization, it is my job to try and connect the work of the ILO with the work of other international organizations in the field.

Given your research, what would you say is the most under-appreciated risk?
I believe we are facing a global social time bomb, or more accurately, a series of such time bombs, each one different according to the particular circumstances in various parts of the world. This situation we face is derived from a global shortage of jobs and widening social inequalities. There is an enormous differentiation between the top of the world income distribution and the bottom. Something like 61 million people have as much income as the bottom 3.5 billion of the world’s population. Around 1.2 billion adults are unable to earn enough to keep their families above the US$ 2-a-day poverty line per person. We have 200 million unemployed and 85 million of those are youth. Globally, we face the prospect of having to grow 40 to 45 million jobs every year for the next 10 years. That is around 400 million jobs before 2020.

The consequence of not achieving this growth – and given current global economic forecasts it will, to say the least, be a significant challenge – is that these ticking time bombs of social dissatisfaction and unrest will eventually explode around the world.

“What if” this was to actually happen?
In part, we can see problems unfolding already. All sorts of things are happening around the world, which express dissatisfaction and frustration. In some cases it has taken the form of relatively organized protests, with people on the streets putting reasonably coherent demands for change to their governments. In other cases, the frustration has come out in less focused ways: riots, or a rise in small-scale issues of social dislocation such as family violence, increasing drug abuse and other destructive manifestations of social tensions.

In the longer term, of course, it will be a question of tremendous waste, with a large part of the world’s population not contributing to global development either because they cannot find a job, or because they are undernourished or suffer from ill-health and are unable to contribute productively. We have, if you like, all sorts of ways in which these social time bombs are evident and will become evident over time.

In your analysis, how might this scenario unfold?
What we are seeing already is all sorts of symptoms of social dislocation emerging in different parts of the world. In the Middle East this year, we have seen the Arab Spring. While it is dangerous to generalize about the causes, clearly a lack of decent, productive employment for an enormous number of young people is part of the problem, as there is a very large youth population in this part of the world. There are also inequalities between the evident wealth that derives from the region’s oil resources and the very large number of people who are still trapped in back-breaking work on the land, or toiling in the informal economies of the big cities.

Who would feel the impact the most and how?
If these social inequalities remain unaddressed, it is the disadvantaged who will feel the impact most. However, what we see happening in an alarming way around the world is that the super well-off are recognizing a risk of growing disorder and developing gated communities of various types to try and protect themselves. Ultimately, this will not work. One way or another, those gates will be broken down. It is not a survival strategy that can last. I am hoping that the world’s leadership will see that action should focus on addressing the inequalities that lead to unrest and security risks not on building walls to protect the wealthy.

How well do you think we are prepared for such a contingency?
There is recognition of the danger of global unemployment and of the vast social divisions, but when leaders sit down in their meetings, the discussion turns again and again to how to get the banking system straight. Of course, it is about time this happened. A big part of the issue is the malfunctioning of the world’s financial system. However, I believe concentrating only on the financial systems distracts leaders from tackling the main issues of getting people to work and narrowing income distribution by developing social policies that really redistribute wealth to those who need it.

What is your top mitigation approach for this risk?
To avoid this “what if” we need a combination of approaches. Obviously, in one respect, the problems have to be tackled by individual countries taking action. This is not something that can be governed by the General Assembly of the United Nations. There are a number of interesting examples from emerging economies: China, India, South Africa and Brazil for example where they are developing policies on minimum wage and social protection systems which ensure that children go to school and which provide a liveable income for the elderly. Change is beginning to happen. However, we also need an enabling global environment in which the world economy starts to move ahead in a more balanced way. At the moment this coordination is not happening and we see the consequences. The beginnings of a fragile recovery are threatening to slip back into a prolonged recession.

On the flip side of risk, what opportunities do you see associated with the growing labour pool?
There are opportunities in the enormous energy that is available in the world’s social movements at the moment. Right now, this energy is mostly directed at protest, but it can also be channelled into action: coordinated public policies and local level action in which communities get together to solve problems, build facilities, look after children, improve education, improve healthcare and build jobs. I believe action at both the local and the global level is possible and that this is starting to happen.

Pictured: Rail workers protest against job cuts in Portugal (Reuters)

Stephen Pursey is Director, Policy Integration Department and Senior Adviser to the Director-General, International Labour Organization; Member of the World Economic Forum Global Agenda Council on Employment and Social Protection