Posted in Finance Articles, Total Reads: 922
, Published on 20 October 2012
August 2011 was marred with an unusual event signature of riots and chaos involving an estimated 4000 youths in the UK. More than 5,175 offences were recorded by the police (Berman, 2011) and damage to business was more than $250 million pounds (Lissaman, 2011). Dejection with social and economic inequality was deemed to be the underlying reason behind the burning anger of the mob. This was further fuelled by growing rates of unemployment post the subprime crisis, which increased the inequality gap. What UK faced in those four days of August shows the ugly side of capitalism. We are quick to discuss the financial impacts of bankruptcy, but why don’t we put more stress on the social impacts of such events? This article offers a study of the dark side of economics.
The Euro zone is struggling to survive today with unemployment statistics in these economies becoming ever so alarming. The Eurostat estimates that 25.112 million men and women in European Union (EU-27) were unemployed in June 2012. Out of the given figure, about 17.801 million were in the Euro zone (EA-17). European Union’s unemployment rate was over 11.2% in June 2012, with total youth unemployment rate being 21.3% (Unemployement statistics, 2012). The unemployment rate in Spain was 24.63% in second quarter of 2012, which means that 1/4th of the working population is jobless in the country! The unemployment rate for those under 25 years of age rose to 53%. The unemployment rate in Greece was equally alarming.- total unemployment rate was 22.6%, with youth unemployment being 52.7%. (Global youth unemployment 2012, 2012). A shocking 75 million youth worldwide are looking for work. (ILO Global Employment Trends for Youth, 2012)
Much literature has been written on Euro Zone crisis. “The problem is more in the design of the euro zone” says Jamie Daniel, IMF mission chief for Spain. If that was so, then pray what were they waiting for uptil now? How does he justify this to the millions of jobless people who have no means to sustain themselves? Why do we have experts and economists if this is what it has to come down to, or have we begun to run economies by trial and errors? Whose fault is it anyways? Who is paying for whose greed? These are the real perplexing questions that bare warrant. Millions have been rendered jobless, without the means to earn a living wage, to support their family, and to keep a roof over their head.
These questions cannot be ignored. Every action has an equal and opposite reaction, and the unemployed youth will definitely seek their due. The difference lies in the underlying temperament. As in case of the UK, riots aptly depict the violent response of the unemployed youth that felt neglected by their own politicians and economists. They turned to looting and rioting to draw attention to their cause. In another instance, the dormant frustration of the youth fuelled by years of oppression erupted like a volcano, leading to the revolutionary movement called the Arab Spring, in 2011. This famous revolutionary wave brought down the much feared local monarchies, declaring the power of the youth.
Youth unemployment was one of the prime triggers of the Arab Spring. The youth unemployment in this region, as per last record, was as high as 23.4% in 2010 (International Labour Organization, 2011). In the Middle East, unemployment rose to 26.5 percent (Arnold, 2012). The turn of events in Egypt, Tunisia, Jordan, Bahrain, Libya and elsewhere was an outcome of repressed frustration with unemployment, especially in the youth. The anger and frustration that was already there within people found a voice with the youth uprising. The enemy may not have been common, but the emotion was definitely felt similarly across the countries. The rate and intensity of the discontent brought major monarchic changes in the region (Egypt, Libya, Tunisia, Yemen), another nation, Syria is still struggling for democracy. The fury of a mob deprived of basic livelihood can be unrelenting, as evident in each of these cases.
Civil disorder is an obvious outcome of unemployment. When the outburst manifests in this fashion then it is scary but, what would happen if the feelings of frustration, dejection remained under the surface? Even more damaging are the wounds that are left on the psyche of the unemployed. The hopelessness and the lack of courage in the youth can leave a damaging blow to their lifelong productivity. Today’s youth are tomorrow’s leader. What leaders will they make if they lack hope and courage? Imagine a country manifested with people filled with no hope and courage. There couldn’t be a bigger price for an economy to pay or no sadder reality.
The movements seen in 2011-12, the Arab Spring and the UK riots, had different agendas, but their cause of grievance was the same: historically high rates of youth unemployment (25 percent in Egypt, 50 percent in Greece, 16.5 percent in the U.S and 9 per cent in the UK.); high rates of inflation, frustration with cronyism, inequality; and the loss of faith in the economic system. The people of Egypt, then Bahrain, then Yemen, and then Libya and Syria came forward with courage and showed that they had had enough.
The social impact of the recession is not discussed with the same breath of emergency as the financial impact of it. We are so busy with the numbers that we are missing out on the true grave reality. We are busy looking at the hand that is pointing to the moon, than the moon itself. One can imagine the plight of twenty- somethings graduating from colleges in Spain, Greece and Italy not finding jobs. With loans to repay, such realities can lead to desperation and degradation. Imagine how desperate a family man would be without the means to provide for his family. Let us not forget that desperation is the root cause of many evils!
One of the scariest prospects of unemployment of the world’s young adults is that jobless youth may turn to crime and terrorism for solace. Unemployment is gradually transitioning from an unfortunate social ill to a major threat to future economic and political stability.
Between the raging, seething, unforgiving anger and frustration of the unemployed youth to the silent, hopeless, brooding surrender of it, there is not much choice. The angry youth can create violence that may put the 20th century to shame. The hopeless youth can create an era of low motivated, dejected, depressed and suicide prone work force, which would never quite reach its productive optimum.
Let us not underestimate the strength and power of the youth of a nation. All the greatest revolutions in the history of the world have been made possible because of the power of the youth. Politicians should fear, because the youth believe with passion, they live with passion and they are ready to die for that passion. Governments across the world should unite for a common purpose - to save the youth. Financial instability is important to address, but isn’t it the moral duty of every government, from Spain to Syria, from Greece to USA, from UK to Spain, to safeguard its youth?
Poor people will rise up and take what is theirs..
Finally the tables will start to turn.....we are talking about a revolution
This article has been authored by Priyanka Priyadarshni from SP Jain College of Management Dubai/Singapore.