United States' UN Hatred vs Seafarers' Rights

The [UN] Secretariat building in New York has 38 stories. If it lost ten stories, it wouldn't make a bit of difference - John Bolton, US Ambassador to the UN 2005-2006

How much has US thinking changed about prospects for international cooperation, multilateralism and all that good stuff about being a responsible member of the world community? To be honest, not all that much. The infamous Bush appointee John Bolton once said that blowing up the top ten stories of the UN wouldn't make a difference in world affairs. Conservative media certainly hasn't stopped its crusade against the UN. Although Obama and his foreign policy officials are nowhere near as brazen in speech, in practice nothing much has changed. The US remains the only developed country not to sign on to the convention against discrimination against women, has not joined the International Criminal Court, has not joined the land mines ban...the list goes on and on. From keeping Guantanamo Bay open to conducting drone strikes and extraordinary rendition--there is a UN treaty on enforced disappearance the US has deliberately chosen to ignore--America's roguish streak against international law is evident. As I've said, the UN should be anywhere but New York. 

Obama is actually more appalling than Bush in the sense that he pretends to be cosmopolitan and internationalist when, in reality, US foreign policy remains largely unchanged. In hindsight, we should probably appreciate Bush's candour about us being either with the US or against it. Practically speaking, Obama defines American national interest the same way Bush does, but is not as forthright in saying so. Such deception may fool committee members who gave Obama a Nobel Peace Prize for "not being Bush," but I would like to think that we are not so easily deceived.

Recently, the International Labour Organization's (ILO) Maritime Labour Convention [MLC] came into force on 20 August 2013. With 49 countries already signed on, it demonstrates that many states value the contributions of seafarers to making globalization possible. By shifting goods vast distances, they provide an essential service to the world economy. But does the United States value their contributions? To no one's surprise, one of the major holdouts in legislatively ratifying the MLC is the US of A:

Before the U.S. Senate can vote on the issue, however, the administration of President Barack Obama must formally sign the convention and then request the Senate to authorise its ratification. Currently, an inter-agency advisory panel is looking at the specifics.

“The U.S. government believes the MLC is an important addition to protect workers at sea, and we welcome its entry into force for 30 countries this week,” a U.S. State Department spokesperson told IPS. “The United States was actively involved in the negotiations, and we supported its adoption in 2006. At present we are reviewing the convention to determine whether to submit the convention to the Senate for its advice and consent.”

That review is being coordinated by the U.S. Coast Guard. While the Coast Guard did not respond to IPS requests for comment, analysts have suggested that the agency does support ratification, as the MLC offers a potent tool to crack down on ships in U.S. waters that are failing to adhere to international standards. “It will be very important for the U.S. to ratify this convention, as doing so will go a long way towards eliminating substandard vessels from international commerce more generally,” the Centre for Seafarers’ Rights’s Stevenson says. “Further, given the size of the U.S. economy, it is almost impossible to make money operating a major ship without going through the United States.”

It is fair to say that shipborne cargo makes the world go round since it carries 90% of world trade. So, why this self-proclaimed champion for human rights choose to ignore the rights of those who labour to bring so many goods to America? Last I checked, the United States remains by far the world's largest importing nation.

Like "Internet Freedom," I guess this is just another instance of American hypocrisy about so very many things. On binding international treaties, the US is a non-entity. How did that saying go...all hat, no cattle? When it comes to stepping up to the plate by signing on to treaties to observe various rights, America quite frankly doesn't give a damn.

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Meet America's #2 Jetliner Company...Airbus S.A.S.

Mas oui! There's an old joke that the best car made in America is the (Ohio-made) Honda Accord. Similarly, we may soon hear that the best jetliner made in America is the (Alabama-made) Airbus A320. Following the lead of Mercedes-Benz, the multinational European concern has decided to set up shop in the land of the Crimson Tide to meet US demand for its bread-and-butter Boeing 737 competitor. The post below talks about how the Chinese have been continually frozen out of investing in the US over increasingly dubious "national security" grounds. Yes, there remains that brouhaha over it being forced out of a contract to make the US Air Force's next generation air tankers, but that was not really over "national security" but over "buy American" objections. The Europeans being Europeans, there are no such concerns with Airbus investment in the commercial sector despite its long-running WTO dispute with Boeing. Speaking of whom, unfavourable attention regarding the 787 Dreamliner's design faults may, by default, work in the European consortium's favour insofar as there are only two real players in this industry at present.

There is now an MSN contribution from Allan McArtor, chairman of Airbus Americas, about the consortium's selection of Mobile, Alabama as the site of forthcoming A320 manufacture after originally selecting it to build the shelved tankers:

It's the same with our relationships with the people of Alabama. When our team first started looking for an industrial base to manufacture a refueling tanker for the U.S. Air Force, hundreds of cities stepped forward. After an exhaustive evaluation process, Mobile emerged as the obvious choice.

Sure, it met our technical requirements. But so did others. A differentiator for Alabama was the unity and supportive purpose shown by every entity in the state supporting Mobile. City, state and federal representatives (Republicans and Democrats alike) came together with one goal: Show the Airbus team that Alabama would be its partner for the long term.

They spoke with one voice, which impressed our selection committees. And when the U.S. tanker project was lost, instead of hanging their heads and walking away, they said, "What else could we do?" It was indicative of the good relationship Airbus has with Mobile and Alabama—instead of giving up, we found another way to make it work. As a result, Alabama got an even better, larger-impact project.

Infrastructure was another key factor: The site was perfect, with an airport and ocean port, and adequate land at Brookley Aeroplex. Workforce was also vital. We were encouraged by the auto industry's success in Alabama because its manufacturing aspect is a trained skill similar to that of aircraft assembly. 

All's well and good, but an unspoken reason here regarding human capital is that foreign investors prefer investing in the American South--the Sun Belt--is because of its largely non-unionized workforce compared to the Rust Belt. I was struck how Alabama's officialdom explicitly mentions this selling point that Mercedes-Benz there has little use for unions:

Alabama's Mercedes-Benz plant, the subject of an active organizing campaign by the United Auto Workers, doesn't need a union, Gov. Robert Bentley said. The governor was at the Tuscaloosa County plant last week to participate in a sendoff for its president and chief executive, Markus Schaefer, who is taking an executive role at the automaker's headquarters in Stuttgart, Germany.
After the event, Bentley said the plant is a close-knit organization that works well together as a team."I really don't believe they have any need for unionization and an intermediary between them and management," he said in an interview in response to a reporter's question about the UAW campaign. "I don't think it's going to happen."

The governor added that Alabama's status as a right-to-work state helps him recruit new business. Bentley's comments are the most pointed public ones to date from a state official about the UAW's latest campaign at the Mercedes plant, which launched Alabama's auto industry in the 1990s. Previous organizing attempts there have failed.

Having escaped the clutches of European unions, you'd hardly think they'd be enthusiastic about setting up shop in America only to find that it too is thick with them. Hence the continuing popularity of Southern right-to-work states; keep the unionized whingers in the Midwest (and Western Europe too for that matter).

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Unionization, Or Why American Carriers Stink

[NOTE: This post won't win me any points with the Barack Obama / Dean Baker / union apologist crowd, but this blog couldn't care less about parochial US concerns. This is the international political economy zone, buddy.] Everyone knows that American carriers are among the worst in the world, and are certainly the worst in the developed world. Given that Americans came up with the concept of services marketing, it is galling that the most visible services those of us in the rest of the world experience firsthand when voyaging there are their el crappo airlines. The planes are ancient. The food is bad (if there's any at all). And, worst of all for an industry that used to capitalize on the glamor of flight--sorry for being politically incorrect once again--the flight attendants are geezerized, surly and big enough to be beat you into a pulp. Before you accuse me of all sorts of things, here is WSJ travel correspondent Jennifer Chen illustrating that this is not mere male bias at work with her characteristic in-flight horror story:

Less than an hour into the [domestic] flight, I was regretting my choice. Flying coach, I expected uncomfortable seats, lackluster food and surly service, but what I hadn’t counted on was being turned away from the toilet. As I reached out to open the door, a flight attendant preparing a drinks cart two feet away barked, “You can’t go in there. I’m busy. Go to the one in the front.” When the other toilets turned out to be occupied, I turned back to discover the occupied sign was on. “I’m not letting you in,” the flight attendant insisted.

The reason for American airborne mediocrity, of course, has much to do with unionization:

Why are Asian airlines generally so much better? And why have the standards on U.S. airlines fallen so low? The differences lie in history. Since airline deregulation in the late 1970’s, America’s big three have struggled with “legacy issues”—an industry term for older workforces, higher salaries, pensions and union contracts that all add up to higher costs.

Not only are Asian airlines relatively unhampered by these issues, but they’re also blessed by the fact that their region is seeing phenomenal growth in passenger traffic. Asian airlines in recent years have accounted for half of total industry profits. And those earnings are wisely reinvested into newer planes, cutting-edge seats and innovative entertainment systems. Even Chinese airlines are noticeably improving, leading a regional buying spree of planes. “[Asian airlines] are constantly thinking six or seven years ahead, and they have the money to invest,” Brendan Sobie, an analyst with the Centre for Asia Pacific Aviation, told me.

Industry awards tell the tale as US carriers are nowhere to be found while Asian carriers are among six out of ten of the world's best airlines. US carriers routinely fly in and out of bankruptcy, with American Airlines doing so most recently. And yet even more of their workers are planning to--get this--unionize? Board AA on the flight to unionized financial hell. Last I heard, US Airways was also headed there.

To be perfectly honest, Asian flight crews are often chosen and trained to be easy on the eyes and courteous to boot. Being a member of flight crew should be a young person's trade. In this day and age of sky-high fares, those are small but significant rewards for flying on Asian carriers. To be gender-neutral, I obviously have no objection to hunky male attendants for female passengers, either. At any rate, you won't find them on American carriers since they are about as superannuated as the female flight crew--fat, balding, and the rest of it.

So American carriers are uncompetitive, habitual money losers awash with decrepit capital goods and geezerized Anglo fatties with attitude problems. In short, the US airline industry is a microcosm of America itself; they expect you to fork over good money for the privilege of being abused. If you want a poster child for the problems of organized labour Stateside, you don't have to look far. The rest of us see the folly of America and prefer to do without.

And no, you cannot have another bag of peanuts.

DISCLAIMER: My old boss used to be chairman of Malaysia Airlines (2012 winner for "Best Cabin Staff")

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FILTH No More: Expats 'Endangered' in Asia

"Bye-bye, laowai!" (foreign devil) I kept hearing last year while playing the ultra-violent video game Deus Ex: Human Revolution which partly occurs in the fictional Chinese megacity of Hengsha. Set in the not-so-distant future where China has overtaken the United States as the world's dominant economy, I guess it is prescient in more than one respect. For, instead of Chinese gangbangers trying to get rid of the American video game protagonist in DX:HR, we have a similar real-life situation going on in terms of MNCs being reluctant to bring Yanks and Brits to work in Asia.

I have previously discussed the FILTH phenomenon of British office slaves (usually bankers) decamping to Hong Kong: Failed In London, Try Hongkong. I even coined my own term for the selfsame folks thinking they can make it big in the PRC: Failed In London, CHina Bound (FILCH). However, the heyday of FILTH is ebbing, while that of FILCH may never even reach a golden age--or at least says a recent feature from Global Connections.

Forget expats. Western companies doing business in Asia are now looking to locals to fill the most important jobs in the region. Behind the switch, experts say, are several factors, including a leveled playing field in which Western companies must approach newly empowered Asian companies and consumers as equals and clients—not just manufacturing partners.

Companies now want executives who can secure deals with local businesses and governments without the aid of a translator, and who understand that sitting through a three-hour dinner banquet is often a key part of the negotiating process in Asia, experts say. In fact, three out of four senior executives hired in Asia by multinationals were Asian natives already living in the region, according to a Spencer Stuart analysis of 1,500 placements made from 2005 to 2010. Just 6% were noncitizens from outside of Asia. 

The new pecking order is headed by Asians with a Western education who are fluent in the local language--like me! They are increasingly the elite of Asian business since they are familiar not only with the management styles of Western MNCs but also the vagaries of doing business in Asian countries where connections matter more and unspoken codes of conduct predominate:

To help companies fill Asia-based executive roles, at least two search firms—Spencer Stuart and Korn/Ferry International—say they have begun classifying executives in four broad categories: Asia natives steeped in local culture but educated in the U.S. or Europe; the foreigner who has lived or worked in Asia for a long time; a person of Asian descent who was born or raised in a Western country but has had little exposure to Asia; and the local Asian executive who has no Western experience. For companies seeking local expertise, both firms said the first category is by far the most sought-after. But Mr. Johnston said those candidates are difficult to find and retain, and they can command salaries of $750,000 to $1 million—on par with, and sometimes more than, their expat counterparts.

Meanwhile, the expat with no Asia experience does not impress even with a CV full of accomplishments from other parts of the world. Gone are the days when the white sahib would come and lord it over us coloureds:

Foreigners with no Asia experience, on the other hand, need not apply, recruiters said. Spencer Stuart's Mr. Johnston said he occasionally receives inquiries from Western middle managers, proclaiming that they are finally ready to make a career move to the region. He advises them that "there is nothing about their experience that is interesting or relevant to Asia." In hubs like Singapore and Hong Kong, expats receive as much as $200,000 a year in subsidies for housing, transportation and private schooling, Mr. Johnston said. Payments to offset taxes for these benefits add up to another $100,000. Altogether, a bad match can cost a company as much as $1 million, after figuring in relocation costs, he said.

Monster Worldwide Inc. Chief Executive Sal Iannuzzi said the company has been hiring locally for several years, in part because he found deploying expatriates cost too much. "It takes them six months to figure out how to take a ferry, they're there for 12 months, and then they spend the next six months figuring out how to get home," he said. Like some other companies, Monster now tracks its own workers to ensure a pipeline of talent. 

As the darned video game said, bye-bye, laowai!

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Jobless USA: Industry Training vs College Education

Ho hum, another month, another jobs disaster Stateside as less than 100,000 jobs were created --a pace which only prolongs what is already the most protracted recovery from job losses suffered from a recession. While the unemployment rate "dipped," this artifactual occurrence is largely down to many leaving the labour force for one reason or another.

Although many Americans--including largely self-serving academics--repeat the mantra that college is the solution to US job woes, I remain unconvinced. Not only are college graduate wages falling, but college expenses are rising at a rate far outstripping inflation. If college was the magic bullet to the employment situation Stateside, then the situation should not be so dire to begin with given that enrollment is at or near all-time highs. It does not compute.

In addition to college's worsening cost-benefit proposition, another thing the "college fundamentalists" (education's equivalent of religious and market fundamentalists) haven't adequately explored is the the prevalence of job-skill mismatches. That is, colleges cannot answer the simple question of whether they are equipping their graduates with skills useful to modern employers. Hence my continuing support for the Geman apprenticeship system as opposed to what I call the US/UK uni-jobless system. While snooty Anglos may like their hoity-toity degrees as opposed to vocational qualifications, it ultimately boils down to employment outcomes (BLS statistics included). Or, more accurately for America, the lack thereof.

Thankfully, even the stubborn (and stubbornly unemployed) Yanks are seeing the light. A recent FT article highlights how industrial employers' groups are copying elements of the German example in providing skills that are actually useful:

While larger groups can afford in-house training schemes, small and medium-sized US industrial companies facing a lack of qualified young workers are increasingly taking the situation in to their own hands and forming partnerships with educational institutions to train workers with the skills they need.

Only one in five employers use training and development programmes to fill the skills gap internally, while only 6 per cent team up with outside educational programmes, a recent survey by Manpower Group has found...

Such partnerships are still unusual, however. Although 93 per cent of manufacturers said they faced some kind of skills shortage, in a survey last year by the Manufacturing Institute, an industry body, only 14 per cent are working with technical and community colleges. But the institute’s Jennifer McNelly says the numbers are increasing. “We are seeing it become part of the solution,” she says.

Again, the larger point is that it's high time that folks questioned the utility of a college education as more and more employers perceive such education as being quite pointless to them in addition to being cost-ineffective for students: 

The focus on four-year college degrees is a perennial gripe of US industrial companies, many of which argue that technical training would better serve young people when they come to look for employment.

According to Ms McNelly, many college courses that offer training for manufacturing jobs are not actually helping, because they are not designed in consultation with industry. “A lot of people go through manufacturing education but are they achieving industry certifications? Not all are right now,” she says.

In response, the Manufacturing Institute has developed its own national credential to teach a set of standard competencies for industrial jobs. The US federal government is encouraging companies to train young people, asking them to commit to taking on a certain number. More than 300,000 commitments have been secured this year, says Adriana Kugler, chief economist at the Department of Labor.

The Manpower report mentioned in the article enumerates further instances where employers are taking the initiative to deal with the obviously deficient products of the American education system. Alike its other quaint institutions, I ultimately think the US university system will soon be subject to the gales of creative destruction as its economic rationale is quickly eroding.

As with many things wrong in America, let Germany--a country that actually works--show them the way. That so many other countries have followed the US rather than the German education system should likewise be rectified as employment outcomes tell the tale.

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Wacky Ways of Middle East Youth Unemployment

Over a year ago I penned a much-visited post depicting the world's worst levels of youth unemployment in the Middle East / North Africa (MENA) region that continue to contribute to pressures for regime change in any number of MENA countries. Today, I have an update on certain peculiarities of the MENA situation that make it unique from the rest of the world. While there are any number of regions with a problem with youth unemployment--North America and Western Europe are certainly not exempted--remedies for the MENA region must take its contextual specificities into account.

The IMF's Masood Ahmed recently enumerated a number of.these challenges. Of particular interest for being atypical are the following:
 
(1) In contrast to much of the rest of the world, the better educated are more likely to be unemployed since they are holding out for better employment opportunities. Think of the implications here: Were scores of the young Arab Springers in reality a bunch of brats who lived lives of leisure out of choice and blamed others for their predicaments? It's certainly a researchable proposition...

Unusually, education in this region is not a guarantee against unemployment. In fact, unemployment tends to increase with schooling, exceeding 15% for those with tertiary education in Egypt, Jordan and Tunisia.

In most regions of the world, the duration of unemployment spells is shorter for youth than for adults, reflecting the natural tendency of youth to more frequently move between jobs. In most MENA countries, however, youth unemployment appears to be the result of waiting for the right job. Thus, unemployment spells may be longer, especially for educated youth, who may require more time to find a good job match for their skills.

Take that, "education is the solution to everything" fantasists. Snootiness aside, it may also be the case that skill mismatches are rife among the unemployed holdouts:

Labour market mismatches have been driven by the inability of the economy to create highly skilled work but also by the inappropriate content and delivery of education...

In addition, entrepreneurs regularly cite the lack of suitable skills as an important constraint to hiring and unemployment rates are highest among the most educated. Taken together, this suggests that education systems in the region fail to produce graduates with needed skills.

(2) Government jobs are not only more common than elsewhere but also more remunerative. In effect, the relative cushiness of civil service makes working in the private sector unattractive with less pay and job security:

The MENA region also has the highest central government wage bill in the world (as a percentage of GDP) – 9.8% of GDP compared to a global average of 5.4%. The high wage bill partly reflects the fact that government employment in MENA is comparatively high, but it also reflects the fact that public sector wages in MENA were on average 30% higher than private sector wages, compared to 20% lower worldwide. Around the turn of this century, the public sector accounted for about one-third of total employment in Syria, 22% in Tunisia, and about 35% in Jordan and Egypt.

Public-sector employment shares are even higher as a percentage of nonagricultural employment – reaching 42% in Jordan and 70% in Egypt. The dominant role of the public sector as employer throughout MENA has distorted labour market outcomes and diverted resources away from a potentially more dynamic private sector. Government hiring practices have typically inflated wage expectations and placed a premium on diplomas over actual skills, influencing educational choices and contributing to skill mismatches.

(3) Once more, these comparatively cushy government sector jobs only makes private sector work look like the pits--especially to the hordes of unemployed youth who would prefer to remain so:

The comparatively greater job security, higher wages, and more generous on-wage benefits offered by the public sector have inflated wage expectations among new entrants. In fact, public sector wages are 48% and 36% higher than those offered by the private sector in Egypt and Tunisia, respectively. Relatively high wages and benefits encourage workers to seek jobs in the public sector instead of potentially more productive jobs in the private sector.

In addition, generous childcare and maternity leave policies encourage females to focus on obtaining public sector jobs. However, public sector jobs remain valued because of job security, high compensation and benefits, and lack of opportunities in the private sector. It appears that the system essentially has created a dual labour market, with the public sector representing the high-wage, high-benefit sector.

It's been quite a while since someone from the IMF authored such an overtly anti-government largesse piece, but I suppose there is a purpose here. Foremost in my mind is Egypt once again vowing to avail of a $3.2B bailout package from the IMF. That is, in addition to crimping fat energy subsidies, there will likely be IMF conditionalities on "rationalizing" the public sector imposed on Egypt. We'll see.

In the meantime, the suggestions provided for improving the unemployment situation there are certainly worth thinking about.

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Stiglitz Recycles Marx (But Fails to Quote Beardy)

While Joe Stiglitz is pretty hirsute himself, he's certainly no match for Karl Marx when it comes to luxuriant facial hair. Esquire considers Herr Marx's to be one of the best beards in history, and who am I to disagree. However, it seems Stiglitz is not only aping Marx's grooming habits but also his argument on the economy-wide effects of rising inequality. Return to the classic argument about the internal contradiction of capitalism that when wealth is increasingly concentrated in fewer hands, demand for the goods and services made by the capitalists will eventually dissipate, eventually threatening the sustainability of the entire capitalist system.

With labour's share of income plummeting in a highly racialized and inequitable society like the United States, Stiglitz is not exactly the first to notice this trend. Other mainstream economists like Nouriel Roubini having noted the same. Anyway, Vanity Fair has an excerpt of his new book The Price of Inequality where he observes:

When too much money is concentrated at the top of society, spending by the average American is necessarily reduced—or at least it will be in the absence of some artificial prop. Moving money from the bottom to the top lowers consumption because higher-income individuals consume, as a fraction of their income, less than lower-income individuals do...

The relationship is straightforward and ironclad: as more money becomes concentrated at the top, aggregate demand goes into a decline. Unless something else happens by way of intervention, total demand in the economy will be less than what the economy is capable of supplying—and that means that there will be growing unemployment, which will dampen demand even further. In the 1990s that “something else” was the tech bubble. In the first dec­ade of the 21st century, it was the housing bubble. Today, the only recourse, amid deep recession, is government spending—which is exactly what those at the top are now hoping to curb.

While I appreciate the Marxist turn, I would have liked to have seen more numbers to back up this stock assertion. As far as I can tell, Americans are still spending their brains out with household savings rates still nowhere near double digit percentages and consumption accounting for 70% of the US GDP.

BTW, the rest appears to be a rehash of what I among several others have noted on why the "American Dream" is a sick joke on the aspirations of those who still believe in that downwardly-mobile place [1, 2, 3]. Elsewhere it's an anti-finance screed you've probably seen many, many times before.

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Egypt, Spain & Far Beyond: Youth Unemployment

As an educator, I believe there is a personal responsibility on my part to ensure that my students are able to find gainful employment. I am not paid so that those seeking work won't be...simple as that. While there are others in academia who see themselves as  "preparing people for life outside of work" instead of "preparing people for working life," I must disagree. The hoity-toity idea of a liberal education being removed from the humdrum existence of everyday life has deep roots starting from ancient Greece. But, the ubiquity of capitalism and democracy--both disliked by then Greeks way back when (and arguably even today[!])--necessitates a practical approach. That is, contemplating higher pursuits in life doesn't quite work if you don't have the means to support it. To get all structuralist on you, someone must have laboured to erect those ivory towers.

Unfortunate college-educated unemployed and underemployed aside, what does this have to do with IPE, you ask? Plenty. Egypt has been paralyzed by unemployed youth with nothing better to do than protest again and again. So they overthrew Mubarak, but things have gotten even worse economically. Some change, and certainly not the sort you'd expect to help land jobs for the youth. Same thing in Spain: With the unemployment rate for those aged 15-24 reportedly above 50%, headlines numbers like these are hardly inspiring. While the relationship between youth unemployment and economic crisis is complex, you can at the very least say that high rates of the former are indicative of the latter.

The International Labour Organization (ILO) has a neat publication from late last year that notes that these trends are not unique to certain troubled countries but are evident the world over. For another woeful statistic, consider that about 40% of those unemployed worldwide are the youth:

Of the world's estimated 207 million unemployed people in 2010, nearly 40 per cent – about 75 million – were between 15 and 24 years of age. In many countries, this grim unemployment picture is further aggravated by the large number of youth engaged in poor quality and low paid jobs, often in the informal economy. Many youth are poor or underemployed: some 228 million working poor youth in the world, live on less than the equivalent of US$ 2 per day.

The abstract does not hide the bleak global situation:

In August 2010, the ILO published the Global Employment Trends for Youth: Special issue on the impact of the global economic crisis on youth. The report presented an analysis of the latest available world and regional aggregates of key labour market indicators for young people aged 15 to 24 years, with a specific focus on how young people fared in the face of the recent global economic crisis. One year later, with an environment of growing uncertainty in the economic recovery and stalled recovery in the job market, the ILO revisits the much publicized youth labour market figures and draws the unfortunate conclusion that the situation facing youth in the labour market has not improved and that prospects for the future are not much better. Not only do youth unemployment rates continue to rise in developed economies, but also the increasing length of the job search is leading some young people to become discouraged and fall out of the labour force entirely. In developing regions, on the other hand, many young people continue to work while living in conditions of extreme poverty.

It is certainly worrisome in a number of senses. First, where has all the education gone? Despite massive increases in enrollment the world over, it has been noted that work opportunities remain scarce for supposedly better-educated people. The ILO publication makes for a very sobering read that suggests such employment for youth is often the exception rather than the rule--especially nowadays. Second, various nations being unable to accommodate their justifiably angry youngsters is a political-economic threat of the highest order. 

There is certainly no lack of poster children for dysfunctional education systems nowadays alike erstwhile models the Anglo-Saxons. While it may have few answers, the ILO report at least suggests where to start. Make no mistake, youth unemployment is no small issue, and it's certainly one with severe ramifications the world over if it continues unaddressed. Ask Tunisia, Egypt, Greece and Spain...I fear this list will run and run.

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German Apprenticeship vs US/UK Uni-Jobless System

It is no big secret that there is a lack of good employment prospects for young people in Anglo-Saxon economies at the present time.* As I have illustrated, wages for US college graduates have been on a steady downward trend. At the same time, tuition fees are rising at a rate far outstripping the rate of inflation. This phenomenon is said to be driven by various (virtually broke) US states now charging the bejesus out of the students in their university systems--including those who previously could avail of significantly lower in-state tuition rates. Combine these two and you see that US higher education is a really lousy marketing prospect: pay far more, earn less. What a deal. Like the American dream, college education as a key to success is something of a sick joke. And of course that assumes you can find work at the current time which is far from guaranteed with youth unemployment (ages 16-24) being 18.4% in the US in 2010. Good luck with those increasingly onerous student debt loads, Joe College, as IOUs eclipse the $1 trillion mark in 2012.

The picture is no better in that other Anglo-Saxon economy the United Kingdom.The headline numbers are shocking: 21-year-old university graduates are nearly as likely (25%) to be unemployed as 16-year-old school leavers (26%) who have just taken their GCSEs. UK youth unemployment meanwhile has recently shot past the 1 million mark. If anything else, fees have risen at an even faster rate in the UK with tuition trebling to £9,000 at quality institutions and student protests breaking out all over Blighty. In the final analysis, however, it's the same banana for British students: pay far more, earn less (if uni grads can find work).

Being a practical sort, I think of myself as an educator first and a researcher second. IMHO, an "educator" doesn't deserve the title if s/he does not have an abiding interest in ensuring that one's students find work. Of course, the system does not often work this way in Anglo-Saxon institutions where professors are more concerned with publishing their work than ensuring that their students find work. It's a messed up priority system that brings you the results above.

Contrast these tales of Anglo-Saxon woe with the famed German apprenticeship system:

In Germany, seen by many as a model in this regard, a quarter of employers provide formal apprenticeship schemes and nearly two-thirds of schoolchildren undertake apprenticeships. Students in vocational schools spend around three days a week as part-time salaried apprentices of companies for two to four years. The cost is shared by the company and the government, and it is common for apprenticeships to turn into jobs at the end of the training. The youth-unemployment rate in Germany, at 9.5%, is one of the lowest in the EU. Apprentice-style approaches practised in the Netherlands and Austria have had similar results.

Contrary to what the same article quoted from above claims, the popular impression that the German model is driven largely by Germany's manufacturing exports is something of a stereotype which falsely excuses other from emulating Deutschland. David Soskice of "Varieties of Capitalism" fame highlights that the most popular apprenticeships are not necessarily export-oriented trades for males: auto mechanic, electrician, joiner, clerical worker and bank clerk. For women, they are: hairdresser, clerical worker, and medical assistant. The honest truth from manning agencies which should know what they're talking about is that the bulk of jobs in demand are not of the Thomas Friedman-ish "knowledge worker" variety but those of a more blue-collar sort. Yet they are quite remunerative once you get past biases against technical / vocational training.

It is high time we questioned why the Anglo-Saxon university system of higher education has gained more traction worldwide than the German apprenticeship system when the latter is more attractive in avoiding job-skill mismatches. There has been too much glamourization of university when the results obtained fall so far short of the mark. Perhaps it's a reflection of the Brits and Americans colonizing far more parts of the world to engage in the white man's burden. In any case, it's certainly an open question as to why so many other nations still pattern their educational systems on clearly broken societies than that of one which works. It is no coincidence that aside from having an excellent university system, Singapore also boasts the region's finest technical and vocational training.**

Make no mistake: American and British educational systems are dysfunctional not only in basic education but also higher education.*** It belies theories such as Douglass North's new institutional economics (NIE) that imply more efficient institutions thrive, especially if finding remunerative work is a goal. If so, the German model would have beaten the stuffing out of the Anglo-Saxon uni-jobless system a long time ago. Just as a rational consumer would on the balance prefer a German car to an American clunker or...well, they don't really make "British" cars anymore do they...so should any number of countries adopt a system that works rather than one that doesn't. Like all hat, no cattle Obama once implied, change is needed away from the inefficient university system towards apprenticeships that are not only more likely to provide skills employers actually need but leave out the guesswork in choosing qualifications. Let Germany show us the way.
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* There may even be an uptick in that American pastime of university shootings where they enjoy killing each other for the heck of it because of bleak prospects in this century, but that's another interesting hypothesis for another time. To get your Freakonomics on, try regressing university shooting deaths against the US unemployment rate.

** While the bulk of German school leavers go into apprenticeships, a little over a quarter do go into university education.

*** Moreover, I don't get why Americans keep complaining about a lack of job opportunities anyway when they are so b--chy about working with job satisfaction levels at all-time lows. That's modern America for you.

3/29 UPDATE: In crisis-hit Europe, Germany has just recorded a record low post-reunification unemployment rate. I guess some people know what they're doing. 

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Not-So-Still Life: A Greek Riot Scene

I'm a bit strapped for time today so here's something that captures the moment in Greece. On Facebook, my Greek friends have been posting these sorts of riot pictures and videos for several years now. I suppose it's conventional scenery when the IMF is called into action. Whether the IMF's presence raises the probability of these scenes happening or whether social disturbances are more indicative of government mismanagement is certainly a question for debate. It's back to the old debate of whether the IMF is merely the "doctor" called in when a nation's financial situation is already dire, or if the IMF makes matters worse by prescribing cures alike austerity measures that give rise to social disturbances that are worse than the (financial) ailment.

For all that, some research suggests that the IMF softens labour conditionalities where unions are influential--like Greece. The commonality of scenes like these seems to belie that argument, though.

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WTO on 'Making Globalization Socially Sustainable'

There is already a towering amount of reading material on the subject matter out there, but for what it's worth, the WTO and ILO have prepared a new publication on the theme of Making Globalization Socially Sustainable. In a way, it's a helpful step being taken by the WTO in understanding its critics' concerns about matters such as trade liberalization. Instead of emphasizing principles of comparative advantage ad infinitum, acknowledging that gains and losses are unevenly distributed and that these differences help explain varying appetites for, say, completing multilateral trade deals, may be an avenue worth exploring. Contributors here include Dani Rodrik and others who've explored these themes in their previous work. From the press blurb:

“Making Globalization Socially Sustainable” underlines globalization’s potential to stimulate productivity and growth but highlights the importance of pursuing trade, employment and social policies together in order to harness this potential. The book contains contributions from leading academic experts who analyse the various channels through which globalization affects jobs and wages...

The publication reasserts the positive role that trade liberalization can play in improving efficiency and thus growth. It emphasizes the important role for governments in investing in public goods and in strengthening the functioning of markets that are crucial for globalization to be growth-enhancing. The key role of social protection is highlighted, as is the need to adjust social protection systems to local conditions...

The publication highlights three challenges faced by policy-makers as they seek to ensure the social sustainability of globalization. First, the structure and levels of employment resulting from increased openness can be more or less favourable to the labour force and to economic growth. Second, openness — while helping to offset domestic difficulties — can increase the vulnerability of domestic labour markets to external factors, as witnessed during the Great Recession. Third, the gains from globalization are not distributed equally and some workers and firms may lose in the short and even medium term. The authors of this book discuss policy responses to these three challenges.

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Explaining Fainting Factory Workers in Cambodia

It is a regrettable fact that, since the onset of the Industrial Revolution, we have yet to fully understand the consequences of young women entering the labour force in large numbers all at once. Certainly, the social consequences of this movement have for a long time provided fodder for contemporary writings about the onset of modernity. For instance, recall William Blake's search for the New Jerusalem when confronted with the "dark Satanic mills" of England during his time. All the same, economists like Paul Krugman tend to explain away the existence of sweatshops in a predictable way: What is the alternative to dull, hazardous and low-paying work in sweatshops but unemployment (or even duller, more hazardous and lower-paying work)?*

Today we are encountering this timeworn phenomena in Cambodia. Those working in Cambodia garments factories have recently begun swooning in droves with few apparent medical symptoms causing them to do so:

Last week a team of experts from the U.N.'s International Labour Organization (ILO) gathered in Phnom Penh to seek an answer to the first question. In the past three months, at least 1,200 workers at seven garment and shoe factories have reported feeling dizzy, nauseated, exhausted or short of breath, and hundreds have been briefly hospitalized. No definitive explanation has yet been given for these so-called mass faintings. One baffled reporter described them as "unique to Cambodia."

There are many explanation out there. While the abovementioned ILO searches for inadequate workplace conditions, industrial psychologists have latched on to mass hysteria as an explanation for why apparently healthy workers suddenly succumb en masse to fainting fits alike teenyboppers at a Justin Bieber concert:

All these are examples of mass hysteria, a bizarre yet surprisingly common phenomenon that is increasingly recognized as a significant health and social problem. For centuries it has crossed cultures and religions, taking on different forms to keep pace with popular obsessions and fears...

[Y]oung women are particularly vulnerable — and in Cambodia they make up most of the garment industry's 350,000-strong workforce. Conditions for workers have improved over the years, says the ILO, but few would envy their lot. Women leave their villages to toil in suburban factories for long hours and low pay, often making products for famous Western brands such as Puma and H&M. They live in grim communal shacks, eating sparingly so that they can send as much money as possible back to their homes.(Read about the burden of good intentions in manufacturing.)

"Stress, boredom, concern about their children and other factors among young females could trigger psychogenic fainting or other illnesses," says Ruth Engs, a professor of applied health sciences at Indiana University who investigated an outbreak of mass hysteria at a Midwestern university in 1995 after false reports of a toxic leak caused dozens of people to fall ill. "Poor ventilation, few breaks, stress from piecework production and other workplace conditions would all be contributing factors."

While these things have been going on for some time since Cambodia's turn to export-led development, media attention has only now latched on to this phenomena:

There have been dozens of similar episodes in Cambodian factories since the garment industry began rapidly expanding in the late 1990s. The recent incidents involved groups of up to 80 workers at a time, but the women didn't actually faint. "They don't lose consciousness," says Tuomo Poutiainen, chief technical adviser for Better Factories Cambodia, an ILO program seeking to improve factory working conditions. "They become powerless and lie down, and that's repeated by some co-workers."

After medical checks and rest, the women returned to work, with no apparent ill effects. "The good thing is none of the workers has a serious medical condition," Poutiainen says. "But it's also troubling because employers and managers can't get to the root cause." He admits that "some kind of mass-hysteria element" might be involved, but adds that the ILO wants first to eliminate other factors. Its investigative team includes experts in health and safety, industrial hygiene and nutrition — but not in behavioral psychology.

As it was with the beginning of light manufacturing in 18th century, so it remains a problem in 21st century Southeast Asia. Why is it that we know so little about how to definitively address these issues after all this time? While being in praise of sweatshops as a step on the road to development may have its virtues, there is certainly no reason for it to be such a fraught stage of progression given that so many other countries have already gone through similar processes of women entering the workforce. And such challenges, dear friends, are part of the reason why the social sciences remain far more inexact than the hard sciences.

* BTW: Is it just me or does Krugman's "conscience of a liberal" extend less to those unlike him?

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