Unemployment Surges As The Noose Tightens On The Global Recession

The International Labour Organization forecast this week that as many as 51 million jobs could be lost worldwide in 2009 due to the global economic crisis. But if I look at some of the numbers hitting my desk this week, even this estimate cound prove to be a conservative one.

Here in the EU, the most striking case is of course Spain, where unemployment hit 14.4% of the labour force in December. But perhaps the more significant developments are taking place at the moment in Germany, where the massive jobs machine evidently changed course in November, and where the seasonally unadjusted number of unemployed rose by 387,000 in December. Perhaps the chart which makes what is now happening in Germany clearest is the one below for employment creation, where we can see that the rate of new employment generation started to decline in the summer, and the line downwards is more or less constant, so while employment was still up year on year in November, it will soon turn negative, and will remain so for some considerable time to come.

In the United States the number of people staying on state jobless benefit rolls after drawing an initial week of aid jumped 159,000 to 4.78 million in the week ended January 17.

In Russia 800,000 people lost their jobs in December, and the total number of unemployed hit 5.8 million people, as compared with 5 million in November. But all of this pales in comparison with the number which has just come out of India, where it is now estimated that one million people lost their jobs in December alone.

So, while I have no exact idea of what the total job loss in December was globally, I am sure it was a large number, and I am also sure that if things continue at this pace, 51 million losses over the whole of 2009 will turn out to have been an optimistic estimate. The point is, of course, that these job losses are simply a noose which serves to further tighten the grip of the global recession, as less workers means less spending, and less spending means even less workers, and down and down we go in circular fashion, for the time being at least.

Update

Indeed the 51 million estimate for the whole of 2009 is already looking on the low side. Chen Xiwen, director of the Office of Central Rural Work Leading Group estimated this week that more than 20m rural migrant workers in China have already lost their jobs and returned to their home villages or towns as a result of the global economic crisis, and by the start of the Chinese new year festival on January 25, 15.3 per cent of China’s 130m migrant workers had lost their jobs and left coastal manufacturing centres to return home, according to data from the agriculture ministry survey.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

9 thoughts on “Unemployment Surges As The Noose Tightens On The Global Recession

  1. What will be the results of the unemployment for the guest workers, especially for the guest workers from Moldova, Europe’s poorest country? An astonishing 36.2 percent of Moldova’s GDP in 2007 came from money sent home by emigrants. From Moldova’s approximately 600 thousand guest workers, about half of them is working in Russia, the other half in western Europe.
    More than 60% of the Moldavians in Russia are working in the building, and this branch experiences the most serious impacts of the crisis. From the Moldavians that are working within the E.U.-country’s, a lot are working illegally because Moldova is not part of the E.U.
    Also, it is to expect that a large percentage of the Moldovan guest workers will be forced to return home, because there is no work available for them anymore abroad. But the economy of Europe’s poorest country, that was already very depending on the money that the guest workers were sending home, could not take the burden of paying that great amount of unemployment benefits. It’s looking if the Moldovan economy is heading toward disaster.
    @ Edward
    Maybe you can write a more professional article about the situation in Moldova.
    Ron.

  2. Hello Ron,

    “Maybe you can write a more professional article about the situation in Moldova.”

    I would definitely like to find the time to do that. I have given quite a bit of thought to Moldova’s situation over the last couple of years. I am interested in demographic processes and economics, and the whole sustainability position of a country with very very low fertility whose main export is people is most preoccupying.

    I won’t go into this more now, but I will certainly try and find the time in the next couple of weeks to do something on this important topic. Moldova certainly deserves more attention and more concern than she is receiving.

  3. If we are facing the frightening possibility that Ukraine may become unviable, how will the outlook for Moldova look like? Could you possible arrive at another advice than joining Romania?

    On a general note, has somebody like at other large commodity exporters in trouble? At the top priority, Iran?

  4. Hi,

    “If we are facing the frightening possibility that Ukraine may become unviable, how will the outlook for Moldova look like?”

    Basically, horrible.

    “Could you possible arrive at another advice than joining Romania?”

    Well, these are political decisions. I don’t know. And I haven’t done a recent study on Moldova yet. But as far as I can see the situation of all the countries who are outside the EU, including Belarus, Serbia, Croatia, Macedonia etc looks very difficult at present.

    “On a general note, has somebody like at other large commodity exporters in trouble? At the top priority, Iran?”

    Well beyond my expertise I’m afraid. So, don’t know.

  5. @ Edward
    Thanks for your reaction, I am looking forward to your article!

    @ Oliver
    In the hypothetical case that me were given the same powers that Stalin had, in shifting populations and borders across the map. And that was given to me the task to solve both the political paralyzed situation in the Ukraine and the catastrophically economic and political situation in Moldova, I would made the following decisions.
    First I would split the Ukraine according to this map;
    http://docs.google.com/Doc?id=dhgz6cjv_58d43w8pg7
    Then I will integrate the south and east of the Ukraine, together with Moldova’s pro-Russian separatist Trans-Dniester region, into the Russian state. The rest of the Ukraine will be formed as a independent Galician state, that has the potential of being a important political mediator between western and eastern Europe.
    The Rest of the failed Moldovan state will be integrated into Romania.
    As you can see it is very easy to solve complicated political issues on this blog.
    But now…Back to reality.
    Ron.

  6. The economic downturn will cause serious pressures. Populations will shift. I think you are underestimating the scale of the problem. Basically problems of foreign policy these days will be solved with money only if they are vital. Moldova isn’t vital. If it fails, it’ll fail.

  7. Pingback: The (Credit) Drought In Spain Falls Mainly On The Plane | afoe | A Fistful of Euros | European Opinion

  8. @ Edward
    I read today an article on the Russian news site “New Region”. Maybe it could be useful for your future article about Moldova. On the following link you can find an computer-translated version of it in the English language;
    http://nl.babelfish.yahoo.com/translate_url?doit=done&tt=url&intl=1&fr=bf-home&trurl=http%3A%2F%2Fwww.nr2.ru%2Fpmr%2F218839.html&lp=ru_en&btnTrUrl=Vertalen
    In this article they are revering to some E.U. supported international project, called “IMPACT” as the source for their data.
    Ron.

  9. Hi
    As discussed by Mr. Ron, similar is the case of Pakistan. Pakistan was receiving six Billion US$ as remmitances sents by the migrant worker’s working abroad. Unemployment genrated due to recent Globle recession is a great economic threat to Pakistan Economy. I want to explore this issue please guide me how can i reach to a conclusion.