Thinking about the unthinkable

A few weeks ago I wrote about the notion of a “jobless recovery”, ie a recovery for the financial markets, but not for the real economy, nor for employment (see blog posting of 10 June). I concluded that a “jobless recovery just doesn’t make sense”.

Well, as we head into the Northern summer break, that is just what seems to be happening. Stock markets are up – in many cases to the best level in over 6 months. Banking institutions like Goldman Sachs have announced – believe it or not – record profits, and have paid back their bail-out money to the government. Bonus payments to high fliers are back up too – despite castigation from political leaders including President Obama of the US, and Chancellor Merkel of Germany. This week French Finance Minister Christine Lagarde said banks that have started paying guaranteed bonuses again are an “absolute disgrace” and should be reined in by governments at the next G20 Summit in September (www.FT.com, 22 July 2009).

Meanwhile, announcements of job cuts and lay-offs come out daily in country after country, affecting local communities across the planet.

Writing in the New York Times a week ago, Paul Krugman stated: ’the American economy remains in dire straits, with one worker in six unemployed or underemployed’, even as Goldman Sachs announces a record quarterly profit and a return to outsize bonuses (Paul Krugman: “The Joy of Sachs”, NY Times, 16 July 2009, www.NYTimes.com). Krugman writes that rescuing the financial system without reforming it will only make another crisis more likely.

Six months ago, Trade Union leaders at the Council of Global Union, the ITUC and TUAC felt that the crisis was the occasion to push for a resetting of balances – a better balance between employee bargaining power and financiers, a better balance between resources for the public and private sectors, a start on the tough issues of global imbalances in trade and financial flows.

What we are seeing instead is a return to the very behaviour that led to the crisis in the first place. The industrial and financial landscape has been shaken up, but is settling back into a new configuration with the same underlying structure.

“Jobless recovery” seemed unthinkable. But it may be upon us – at least until the next crisis.