PSI blog on the Financial Crisis

Unemployment to rise until 2011, according to OECD forecasts

Unemployment across the OECD is predicted to continue to rise well into 2010 and to fall only modestly in 2011 from its peak of over 9% of the labour force. GDP growth for the OECD zone is projected to be -3.5% in 2009 and +1.9% in 2010. The OECD instructs governments to undertake tough fiscal consolidation measures before 2011, including cuts in public services, “long overdue” reforms of healthcare and pensions and regressive tax reforms.

The key message of the OECD Economic Outlook No. 86 is that the economic recovery now spreading across the OECD “is still too timid to halt the continuing rise in unemployment”. OECD-wide unemployment is predicted to continue to rise well into 2010 and to fall only modestly in 2011 from its peak of over 9% of the labour force. The jobless rate is expected to peak in the first half of 2010 in the US, but for the Euro zone only in 2011 will unemployment finally start to fall.

Read more here.

Job Crisis Takes toll on Union Membership

With the economy hemorrhaging jobs—more than 3.3 million jobs lost in 2009—the latest figures from the Bureau of Labor Statistics (BLS) show union membership in 2009 dropped slightly, from 12.4 percent of the workforce to 12.3 percent.

Nationwide, union membership dropped by 771,000, to 15.3 million in 2009, according to the BLS.
The recession eliminated jobs across the private sector, but was felt most deeply in manufacturing, transportation and construction—the nation’s economic backbone and heavily unionized sectors of the economy.

The loss in union membership, says AFL-CIO President Richard Trumka, is another indicator of the terrible toll the economic crisis is taking on the nation’s middle class—not just union members.

Full article on the AFL-CIO Now Blog here.

German public sector unions start warning strikes

Unions in Germany have decided to carry out a series of warning strikes in the public sector this week after a round of wage negotiations ended in failure.

Unions are seeking a five percent pay rise for some 2 million public sector workers, for whom the financial crisis has meant a severe loss of purchasing power.

"We've called on our members to take a stand," said Jan Jurczyk, a spokesman from PSI affiliate Verdi.
The public sector held a major role in tackling the crisis and considers that the requested increase is further justified by the amounts German taxpayers have been asked to pay for saving public and private banks. PSI has sent a letter of solidarity to Verdi (see below).

The wage negotiations will reconvene on 10 February.

Download PW_solidarity_msg_strike_Feb_2010

Migrant spending a great stimulus to economy during crisis

The massive inflow of almost 300,000 migrants and temporary workers last year was one of the biggest contributors to Australia's superior economic performance during the global recession.

Their spending delivered a stimulus at least as big as the government's first cash splash, and the flexibility of a temporary migrant labour force that now holds about 7.5 per cent of all jobs helped the economy to ride out the downturn with a relatively little rise in unemployment.

The government came under pressure from unions to wind back the migration program, with claims that migrants were taking “local” jobs.

Read the article on “The Australian” website here.

The impact of the crisis on the real economy

The Centre for European Policy Studies (CEPS) has published a new paper called "The Impact of the Crisis on the Real Economy".

The recent financial crisis was caused by a combination of asset price bubbles, mainly in the real estate sector, and a credit bubble that led to excessive leverage. A recurrent theme of this paper is that an appropriate assessment of the crisis should be made in light of the bubble that preceded it. Accordingly, the current situation should be compared to a ‘no-bubble’ benchmark rather than the pre-crisis period. Furthermore, the fall in GDP may be a flawed measure of the severity of the crisis if we aim to assess the true impact of the crisis on the wider public: the latter is more affected by job stability and consumption paths than GDP statistics.

Download the paper on the Centre for European Policy Studies website here.

The State of Our Union

This message regarding President Barack Obama’s State of the Union address comes from AFSCME President Gerald W. McEntee.

President Obama made it clear last night (27 January) that he will fight for jobs. He knows that we cannot lose sight of the millions of working families who are still suffering from the worst economic disaster since the Great Depression. Too many Americans are out of work and too many jobs are at risk.

The President and Congress must act now or millions of Americans could lose their jobs in the months ahead. To this point, the President reminded the Democrats of their obligation to lead and served notice to Republicans that ‘just say no’ is not an option.

AFSCME agrees with the President that America needs to lay a foundation for long-term economic growth, and we continue to believe that providing affordable, quality health care for millions of additional Americans is not only the right thing to do, but is also a key to economic recovery.

We also agree that federal action is needed to keep our economy from slipping back into the ditch. Too many services in communities across the country are being cut to the bone. AFSCME members understand this first hand. Members like you are on the front lines of this crisis, trying to do more and more with less and less. State and local governments need help and they need it now.

AFSCME will fight for robust investment in vital public services. Indeed, investment in public services must be a part of federal jobs legislation. In the coming weeks and months, we will call you, our 1.6 million members, to lend your voice to our efforts to make this happen.

Article published on the AFSCME blog here.

The Philippines: Refusing to Pay the Price of a Crisis Not of Their Own Making

The global economic crisis has brought the Philippine economy to the brink of recession. At the onset of the global crisis late last year, the government of Gloria Macapagal-Arroyo initially took the stance that the local economy will be insulated. But despite being in denial and whistling in the dark, the signs are clear of an economy teetering in recession.

The global economic crisis and the slowdown in the local economy had a grave impact on the lives and livelihood of workers in the Philippines. Job losses, mainly in the export sector of the economy, are worsening the unemployment and underemployment rate.
 
The adult unemployment is more than 20%, the highest since 2005, according to the Social Weather Station survey last June. Some 40,000 workers were laid off since October last year according to the conservative data of the Labor Department. At least 120,000 workers affected by layoffs, job-rotation and wage cuts according to the Labor Department.
 
The full article can be accessed here.

ACTU: Welcome news on jobs, but underlying problems mean stimulus must continue

A drop in Australia’s unemployment rate for the third month in a row is encouraging and may indicate that the peak has passed, but December’s over-reliance on part-time jobs growth may also be masking underlying problems, say unions.

Unemployment fell to 5.5% last month, but we must not lose sight of the fact that there are still 639,400 Australians out of work and 118,300 more jobseekers than a year ago.

ACTU President Sharan Burrow said most of the 35,200 new jobs in December were part-time, and much of this was due to retailers adding extra staff for a short period before Christmas.

Additionally, the underemployment rate remains unchanged at 7.8%, while aggregate hours worked actually fell by a million hours.

Full text on the ACTU website here.

Jobs, Anyone?

When will the lawmakers in Washington, D.C., figure out that putting America’s unemployed workers back to work means there actually needs to be jobs available? And that means creating them. The AFL-CIO’s five-point jobs plan includes job-creating measures, such as rebuilding the nation’s roads, schools and infrastructure, and lending Troubled Assets Relief Program (TARP) funds directly to small and medium-sized businesses via community banks. If small businesses can get credit, they will create jobs.

The U.S. House passed a good jobs bill last month, but, as usual, the Senate is sitting back in its privileged chambers and doing nothing. Time to act. Now.

More from the AFL-CIO Now blog here.

Job losses persist on both sides of Atlantic

Analysis from the Financial Times, based on latest labour market survey results from the US and Europe, notes that continued high unemployment hinders consumption which could slow down the rate of economic recovery.

Grim jobs market reports on both sides of the -Atlantic highlighted on 8 January the ongoing human cost of the credit crisis and kept alive concerns over the sustainability of the recovery.

In the US, news that the economy shed another 85,000 jobs in December dashed hopes that a quickening labour market turnround could add momentum to the rebound.

Eurozone data showed that unemployment hit 10 per cent in November - matching the jobless rate in the US. It was the first time that eurozone unemployment reached double digits since the introduction of the single currency a decade ago. Both the US and the eurozone economies grew in the second half of 2009. But the jobs market continues to lag behind the recovery in output, with businesses reluctant to hire.

Full article from the Financial Times here.