Let’s Remove Unemployment
This article presents a very simple idea which will eliminate unemployment. It
will bring power to the people. It will significantly increase workers’
salaries. It will bring justice and growth to the economy. People know nothing
about this idea because the rich hide it from the public.
***
The owners of corporations favour
unemployment because the unemployed workers are pressured to accept poorly paid
jobs to feed their families. A higher unemployment rate produces cheaper labour.
The owners of corporations are capable of generating unemployment by influencing
the economic policy from importing labour to rising interest rates. It seems
that an unemployment rate of about 5% is very convenient for employers and
economists have accepted it as a “normal” state. This “normal” state allows the
exploitation of workers through low labour costs, while the total workers’
purchasing power is still large enough to produce profits for private companies.
Today’s
economy recognizes cyclical, frictional, and structural unemployment. Cyclical
unemployment is the result of oscillations in the process of expansion and
recession of production, which oscillates demand for work. Some economists
realize that the burden of crisis and benefits from profits should be more
equally distributed between employers and employees, but they do not know how to
implement it.
Frictional
unemployment is the result of people willing to move between jobs, careers and
locations. Structural unemployment is the consequence of a change in technology,
which results in the absence of demand for available workers. These kinds of
unemployment are invented by scientists to give students something to learn and
are not worth mentioning. Economists today are so indoctrinated with the false
teaching that they believe unemployment is the unavoidable price, which must be
paid for technological development. They even believe that
0% of unemployment is not a positive thing. I want to stress here that 0%
unemployment will solve most of the existing economic problems.
The
current philosophy of economics protects capital as the main requirement for the
protection of individual economic rights and of society. This is wrong. We need
to base the philosophy of economics primarily on equal human rights because
people are the main purpose of the economy and are the subjects that the economy
cannot exist without. Besides,
equal human rights are the condition for creating a good society. This is
the foundation of my philosophy.
Society
regulates freedom if such freedom endangers people. The stronger has no right to
endanger the weaker, and if so, the stronger will be legally punished. Can you
imagine what life would be like without law governing the rights and obligations
of citizens? But there is no such law in the free market economy. A stronger
producer might suppress a weaker from the market and thus endanger their
survival. If we have adopted laws that prevent a stronger to threaten a weaker
in daily life, we need to protect the weaker in the economy as well. But we
don’t, and this is the reason our society deteriorates.
***
The
unemployment of workers cannot form a healthy basis for a good society. A just
society requires the availability of work to everyone. If job creation is not
needed, full employment will be achieved by reducing the work hours
proportionally to the unemployment rate. This is a political measure which needs
to be accepted by people and must be enforced in both the public and private
enterprises. The regulation of working hours will produce full employment and
create a much better economy.
The
shortening of working hours will reduce employees' salaries proportionally to
the reduction of working hours. For example, an unemployment rate of 10% will
shorten the working hours of all workers by 10% and the workers' wages would
decrease by 10%. This 10% of the money the companies take from employed workers
will be distributed to the newly hired workers. Initially, the full employment
will not burden employers with additional labour costs, and all workers would
get employed and receive incomes. The previously employed workers would probably
perceive the lower wages as a disadvantage, but in the long run, their salaries
will significantly grow because in the reduced work market the employers will be
forced to increase workers' salaries to be able to keep them.
The
shortening of working hours will bring great benefits to society. The lower
salaries of workers caused by the elimination of unemployment are not even close
as bad as what unemployment brings to workers who receive no salary. Such a
measure would guarantee that unemployment and economic insecurity of workers can
no longer exist.
People are
accustomed to fluctuations in living standards depending on the performance of
the economy. The real purchasing power of wages changes more than the
unemployment rate due to changes in the market supply and demand, economic
crisis, inflation and deflation. Workers silently accept such fluctuations in
purchasing power. They accept that they live worse through the crisis. So, why
would they not accept this measure in the name of solidarity among workers,
which will help them establish a healthy long-term basis to achieve higher
standards of living?
Shortening
work hours proportionally to the rate of unemployment will not only eliminate
unemployment, but it will also solve the problem of exploitation. Here is a
simple explanation: If there are a total of two workers who apply for a total of
one work post, the competition among the workers will reduce the cost of labour
so that the worker who gets the job will be exploited. If there is a total of
one worker and a total of two jobs, the competition among employers will
increase the wage of the worker. Regarding this, the reduction of work hours
proportionally to the rate of unemployment will put workers in a better position
in the production process. Lower availability of workers will raise the value of
the labour of workers and thus, employers would pay workers more than they do
today.
Access to
the free market is a privilege that society gives to companies, and the
companies must pay for this privilege in a way that satisfies society.
Increasing the wages of workers will be at the expense of employers. Employers
would not like it at the beginning of course, but later they will profit from
higher earnings of workers.
Employers
must understand that they cannot earn more if there is not a greater consumer
purchasing power. They must understand that the purchasing power of society
cannot be increased without increasing the wages of workers. They should
understand that there is not a better distribution of incomes, neither for
employers nor for workers than of the one achieved through a fair labour market.
Shortening work hours proportionally to the rate of unemployment would ensure a
more fair distribution of incomes inside society. The fair distribution of
incomes will provide greater purchasing power to the workers, which will ensure
a higher flow of goods, which would again bring greater profits to the owners of
capital. Besides, this would remove economic crises because they are primarily
based on the lack of trade in goods and services. Shorter work hours will form
better capitalism and bring prosperity to society.
***
Overtime
work will continue to be allowed. In the Western world, overtime work pays time
and a half. Employers who intend to solve the labour shortage with overtime work
will not reduce unemployment. Then the policy that follows the will of the
people will further shorten the working hours of all employees, and employers
will have to pay more overtime hours. Let the employers themselves realize
whether it is more worth it to hire new workers or to pay more overtime hours
per worker.
The task
of a good policy is to simplify regulation as much as possible while achieving
the greatest positive impact on society. Today's policy regulates minimum
income, which has a very limited impact on the overall distribution of incomes.
In the developed world, a large number of workers earn minimum wage while
inflation reduces the real value constantly. Workers of the American corporation
Walmart generally receive minimal income due to the unemployment in America. The
salaries in Walmart cannot cover basic needs, and so the workers receive social
assistance from the U.S. Government. They live at the expense of U.S. taxpayers
while Walmart continues to be one of the most profitable companies in America.
A good
policy will regulate the length of working hours and not necessarily the minimum
income. When unemployment removes by reducing work hours, employers who need
more workers will have to take them from other employers by offering higher
salaries because other workers will not be available. They will have to compete
by increasing workers’ wages to attract workers from other companies. It will
cause a chain reaction in which the workers’ wages will rise. If employers do
not increase wages, they would not have workers. This is a fair labour market.
The regulation of a minimum income will not be required any longer. There will
be no need for unions as intermediaries in protecting workers' rights.
***
The
reduction in work hours is not a new idea. At the beginning of the nineteenth
century, Robert Owen
realized the absurdity of daily work that lasted between 12 and 16 hours. In
1817 he proposed the reduction of work hours to 8 hours a day so people would
have 8 hours a day for recreation and 8 hours for rest. The employers were
strongly opposed to it and did not let the reduction occur. The workers were
very dissatisfied. The first significant worker resistance happened in Chicago,
on May 1st, 1867, and the day was declared International Labour Day. The
struggle between employers and workers has been painful and often bloody. It
took around 100 years of struggle for the idea of the eight-hour workday to be
accepted worldwide.
But this
reduction in work hours is not enough today. French socialists in power adopted
a new law in 2000, which shortened the work hours of all employees from 39 to 35
hours per week. They did this to reduce unemployment and enable more free time
to workers. But the shorter work hours did not lead to an increase in employment
because employers burdened employed workers more. That says to me that there is
not even a need for a seven-hour workday because the automation in the
manufacturing process has reduced the need for human resources.
The French
Socialists should have been aware that the employers, who are accustomed to
exploiting workers, would not easily give up. The socialists needed to implement
a higher reduction of work hours until employers are forced to hire unemployed
workers. I would recommend decreasing the work week length to 30 hours.
The French Socialists were not sufficiently committed, and ten years later, the
Conservatives abolished the limitation of 35 work hours per week. So the idea of
social justice lost once again.
Privileged
people always find a way to oppress the marginalized, and that has always been
the primary source of problems in society. But in the 14th century, a huge
natural tragedy helped the disenfranchised. The Black Death killed one-third of
the European population, which produced a vast labour shortage. "The shortage of
servants, craftsmen, and workmen, and of agricultural workers and labourers,
left a great many lords and people without service and attendance." The crops in
the fields languished because there were not enough people to harvest them.
Suddenly,
workers and their labour were in much higher demand, enabling those who survived
the Black Death to be in a much better position to negotiate work conditions.
Historian and economist
Thorold Rogers documented that the peasants were virtually given everything
they asked. Wages have increased significantly (2-3 times) in one year, and the
higher purchasing power of people has improved the economy. More about this can
be found here:
The Economic Impact of the Black Death.
Now what?
Shall we wait for a new tragedy of humanity, or will we, in the name of justice
and solidarity among people, be smart enough to shorten working hours as long as
unemployment exists? Only that would force companies to hire unemployed workers.
Only that would build justice and balance in the process of production and
distribution. Such regulation of the market will use "the invisible hand" to
balance the demand for labour and income heights in the most acceptable way for
workers and employers.
***
I received
criticism saying that expensive work drives capital to the places where the
labour is cheaper. My response was the state market can always protect itself by duties
and taxes on the borders. However, does
capital not go to developing countries anyway?
Yes, but this situation will come to an end
because if workers in developed countries do not earn enough, they cannot buy
enough of the goods that the large capitals produce. The less the capital
invests in society, the less profit it receives. The capital which invests more,
profits more, and more easily survives on the market. The same will happen when
society accepts a new labour market regulation.
