Unemployment: A global issue for workers and youth that this system can’t resolve

from each according to ability winz

Jared Phillips

The world economic crisis has driven rising unemployment and the effects are being felt in New Zealand and globally. At the same time as New Zealand’s unemployment rate grows the National government has completely declined to respond to major job losses, including within heavy industry. The government’s only response on the question of unemployment has been increasing barriers to accessing benefits and vilifying unemployed people.

As the rate of unemployment grows the government’s ‘strategy’ will increasingly be shown to be nonsense and it will become more apparent to many people that only socialist solutions can resolve the unemployment problem.

The number of officially unemployed in New Zealand rose by 13,000 within the third quarter of 2012, taking the rate of unemployment to 7.3%. That is the highest rate of unemployment experienced in New Zealand since three decades ago. This increased unemployment is a result of an economic slowdown which is slowing the number of new jobs being created as well as producing redundancies.

According to the ILO the global rate of unemployment stabilised for a two year period in 2011 and 2012 but is set to increase again. In 2012 the total number of unemployed rose by 4.2 million and that number is expected to increase in 2012.

Youth unemployment rates for those aged under 25 have reached historic highs in the advanced capitalist countries of Europe in 2012. Overall, the youth unemployment rate for EU countries at September 2012 was 22.8% and was up by more than 1% on the previous year.















Rates of youth unemployment in selected European Union countries in 2012, Source: Eurostat, Bloomberg, Business Insider.

In the United States youth unemployment had stabilised in 2012 at 16%. A recent International Labour Organisation report concluded that global youth unemployment will climb to 12.9% in 2017, up 0.2% from 2012.

As with other unemployment statistics the youth statistics are based on only those actively seeking work in the labour force. However youth unemployment statistics are further tilted by the presence of youth not seeking labour participation but who are also outside of education or training, and school leavers not actively seeking training, education or employment. New Zealand’s youth unemployment rate is up. The NEET (No Employment, Education, or Training) rate was 13.4% for the September 2013 quarter. Of youth in the labour force 17.1% were unemployed. This is showing that young people are being particularly effected by the economic situation.

unemployment nz whose fault
Socialists have always pointed out that the ruling class relies on the existence of a reserve army of labour – a pool of unemployed and under-employed workers – to put downward pressure on wages by being available to step in to jobs. This is why it is in the interest of all workers to have full employment, not to mention that any working person can be exposed to job losses. That has been seen from the redundancies at KiwiRail, Solid Energy, Tasman Pulp and Paper and Tiwai point aluminium smelter.   

Capitalist governments, particularly in the most effected countries, claim they want to reduce unemployment. Their reason for this is that they want to prevent rebellions and to stabilise class relations between workers and the ruling class. However the austerity measures that are traded for debt bail-outs have the opposite effect by slowing down demand and introducing public sector cuts and spending caps.

The New Zealand government has claimed it will deal with unemployment by regenerating the economy through such ‘reforms’ as tax cuts for the rich and selling assets to pay off government debt. It also claims that the introduction of vicious probationary ‘no rights’ work trials will allow more opportunities for job seekers (but obviously not opportunities for secure jobs!). This approach is aligned with neo-liberal economic theory which holds that if there is less state intervention then markets – including the market for jobs – will correct themselves.

In terms of youth unemployment the government claims that reintroducing youth rates will create more opportunities for young job seekers. However this is contrary to the advice of the government’s own treasury, that reintroducing youth rates will not reduce youth unemployment. As with other capitalist plans to ‘help job-seekers’ this is just another way of reshuffling the deck of unemployment.

Directly or indirectly, unemployment is an issue for all ordinary and working people. Under capitalism paid work is allocated according to the needs of private profit-makers. Even public work is allocated on the basis of what the dominant capitalist class deems to be affordable. The only lasting way out of unemployment and under-employment as well as job insecurity for employed workers is through a socialist programme for a planned economy. Work would be allocated on the basis of the needs of society rather than according to the profit margins of the employers. To that end socialists are in favour of a massive expansion of employment in public works including in housing, health, childcare and education. A special focus on expansion of genuine youth programmes – rather than talkshops –  is also desperately needed.


  1. And the money for this expansion will come from where?

    Do you honestly believe a group of technocrats sitting in an office could plan an economy? and how would they decide employment? by drawing straws, race or numbers of children? would you like to have your career or job allocated to you?

    A revolution is needed but not necessarily in the manner you describe. I would look to the individual as a member of society not a society containing individuals

    The current monetary system based on fiat unbacked money is one of the main drivers of the social and environmental chaos that you see around the world today. Governments don’t want unemployment and have been using the creation of debt to fund and create growth. The governments of most countries have been using centrally planned economies to keep them selves in power and central bankers are not called that because they watch from the sidelines they have been attempting to manipulate the economy.

    All this manipulation has been debt funded as such we have been in a credit boom/debt bubble it is the collapse of this debt that has exposed the false economy. What you see is the end of the current centrally planned economies not the end of capitalism. Market forces are overwhelming the central planners and markets are made of people back the people.

    • I’m sorry RossC but the Global Financial Crises has not resulted in the decentralization of finance and banking it has resulted in the exact opposite, increased centralization, monopolization and stronger ties with the state. You may wish to call this ‘Fake Capitalism’, but a study of economic history will prove to you that this is a very common trend of the logic of Capitalism.

  2. Excellent article, especially on the part about the Reserve Army of Labour. Having recently read and studied Capital volumes 1 and 2 (I’m now starting on volume 3) it’s almost frightening about how much our own world is starting to reflect the dystopian results of following the logic of free-market utopian ideals. Within our own modern welfare state (withering) the reserve army now plays a dual role; suppressing wages and being used as an escape goat for economic and social woes.

    I myself am very keen to do an analysis of the correlation between advances in computer technology from the 1970’s till today and the rise in low waged service sector jobs in New Zealand by using the ideas in Volume 1 surrounding Relative Surplus-value and the rise of the servant class. This was an issue that Marx only touched on briefly during the chapter on Relative Surplus-value since he was mostly focused on production, but in our own post-industrial, service sector dominated country, I believe that it is an idea that needs to be expanded upon.

  3. the global financial crisis has not resulted in decentralisation because it hasn’t finished, it is though, the result of 40 years of centralisation. The to big to fail banks in America exist because the free markets were subverted long ago.

    These banks were created because they have direct access to the printing press of America, they get first dibs at the money at low interest, they are favoured by the government.

    The corporate monopolies that exist are a direct result of government policies the current elite have centralised business and when they fail they get their government to print more money. The governments mostly, japan and america have been happy to print and increase debt because it leads to short term growth which is good for elections.

    This debt/credit bubble and expanded money combined with fractional banking and capital’s need for continual 3% economic growth has lead directly to what we see now.

    It was the very belief that bureaucrat’s in offices distant from the economy could create economic growth and well being that has given us what we have.

    Money printing in america and japan is directly linked to chinese economic expansion, war,Greece’s collapse and high house and land prices in NZ. all paper money is debt owed to somebody most likely pension funds and states and when those crediters come for their money that will be the start of the end.

    What you see now is the start of the start, all bubbles pop.

    Also technology and it’s use to replace people is driven in part by current monetary policy and central bankers. They operate on the idea of moderate inflation and perpetual growth . This leads to the zero sum game we play supported by cheap debt.

    • Interesting analysis or should I say interpretation of the GFC. There is a problem with it and that’s your use of the phrase; ‘…the free markets were subverted long ago.’

      When exactly in history did this free market exist? During the time of the East India Company or during the time of the construction of the First Transcontinental Railroad in the United States?

  4. yep that pretty much sums it up so free markets aren’t necessarily the enemy of the people. For a real free market to exist all the costs of products and services and all the knowledge about those products and services would be known and past on.

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