Protectionism, unemployment and riots as the global slump deepens
Feb 06, 2009
Print this article
We are facing "a global jobs crisis", said Juan Somavia, head of the International Labour Organisation (ILO). As the worst global downturn since the war tightens its grip, employers across the globe have been swinging the axe in earnest. Last Monday alone saw over 70,000 jobs cut by seven companies across Europe and the US. Spain lost almost 200,000 jobs in January, a record monthly jump. Jobless claims are now at around 3.3 million, a 47% rise from November.
Ireland's unemployment rate has almost doubled to 9.2% in a year. China estimates that 20 million migrant workers, or one sixth of the total, have lost their jobs over the past few months. According to the ILO, worldwide unemployment could rise by 50 million to 230 million this year – a 27% rise from 2007 levels. The potential social and political fallout, said the ILO, is "daunting".
Social tension is rising
The collapse of exports in China has triggered a "wave of social instability", noted Michael Sheridan in The Sunday Times. In the southern province of Guangdong, for instance, three unemployed men bombed a hotel to extort money from the management. Europe, too, is facing a winter of discontent. Unemployed youth in Greece have rioted, while one million French workers took to the streets last week. The Russian government is "extremely worried" that recent unrest there caused by the slumping economy will mount, an anonymous diplomat told Canada's Globe and Mail. Meanwhile, British workers have gone on strike to protest against foreign labourers being drafted in to a construction job at Lindsey oil refinery, a move that prompted wildcat strikes elsewhere.
The danger of protectionism
As the recession deepens, "the threat of local grievances fuelling nationalistic reactions is very real", as Constantine Courcoulas on Breakingviews.com noted. The pressure is on governments to "appease" voters worried about unemployment. A Spanish minister has launched a "made in Spain" campaign, urging people to spend less on imports and thus save local jobs, said Ambrose Evans-Pritchard in The Daily Telegraph. It's the sort of "protectionist reflex becoming visible daily in much of the world". Another example is Spain paying foreign olive grove workers to go home in order to create local jobs, said Sean O'Grady in The Independent. Further such moves will reduce remittances to emerging economies and further intensify competition for jobs there, fomenting more unrest and extremism in poorer countries with poorly developed welfare systems. With worldwide unemployment soaring and protectionism on the rise, we may be seeing the birth of a "radical, violent backlash against globalisation".
Related articles
-
By James McKeigue, May 18, 2013
-
By Simon Wilson, May 17, 2013
-
By Bengt Saelensminde, May 17, 2013
-
By John Stepek, May 14, 2013
FREE - MoneyWeek's daily investment email
Our free daily email, Money Morning, is an informative and enjoyable analysis of what's going on in the markets. Written by our Editor, John Stepek, and guest contributors.
Sign up FREE to Money Morning here.