March 7, 2010
Anyone who has experienced unemployment – either themselves or in their family – knows how tough it is. The first few weeks are bearable, but then desperation gradually sets in. As rejection letters pile up, optimism breaks down.
The human costs of unemployment and idleness are family breakdown, mental illness, depression and crime. These costs go way beyond the financial costs, which capture only a small proportion of the impact.
Ultimately, financial costs are only measured in money, which is considerably less important than the emotional and personal trauma associated with being told by someone else that you are no longer wanted.
If you want to see the real effect on our society of this entirely homemade recession, don’t talk to an economist, talk to a local GP. My cousin is a doctor in a commuter town and she has been shocked by the change in the type of people now coming to her clinic.
In the past, it was usually the old and very young queuing up to see the local doctor. Now she is inundated with young men and women in their 30s and 40s who have just lost their jobs and are suffering from depression. They can’t cope, can’t sleep and don’t know which way to turn.
She knows full well that medicine won’t solve the underlying cause.
This weekend, Ireland is home to thousands of wounded people who have been told that they are redundant .Their self-worth has been reduced to a measly severance cheque, a squeeze of the shoulder and an insincere pep talk about the needs of the company in the current climate.
These are real people and they are humiliated and frightened. In some cases, they are in mid-career, they have huge experience, contacts and networks. Yet they are being told they won’t work again because they are too expensive or are ‘overqualified for the job’.
Many don’t have the energy to face the enormous effort needed to start again on their own. Their confidence is shot. As a result, they will hoard their savings and won’t have the courage to throw their precious nest-egg into a new venture.
They will shrink from risk and become the walking casualties of the depression. We will see these soon-to-be-middle-aged zombies, the ‘might have beens’, walking around our towns or glued to afternoon TV, wasting away. Yet they have so much to offer. If only we could find away of using their years of experience constructively.
At the other end of the scale, we have thousands of young people, ambitious graduates and school leavers, who can’t find a job. One in three young men is on the dole, but they have everything to offer. This is the generation of Irish people who have nothing to fear; they have buckets of energy and can set up on their own, creating businesses from ideas.
But how will they commercialise this raw enthusiasm? What they have in energy, they lack in experience. What they have in vision, they lack in contacts, and what they have in stamina and technological savvy, they lack in business nous and sales smarts. This is where the older people come in .Would it be possible to fuse together the two generations, the recently redundant middle-aged and the hugely robust twenty somethings?
It is crucial to realise that, although it feels as if we in Ireland are on our own, plenty of other countries have gone through crises and come out the far side.
Take Argentina, a country I have visited a number of times. In 2001,Argentina suffered a dreadful depression. The following year, unemployment skyrocketed and, with no jobs around, young people were forced to set up their own small businesses to survive. These small businesses sprang up all over the place and, because the local economy was in tatters, the companies had to export to survive.
Precisely, the same will be the case in Ireland. It is small businesses employing a few people that will drag the country out of recession. This is always the way. In Argentina in 2003, these embryonic companies didn’t know where to start. How could they? For most, this was their first venture. They knew nothing about marketing or banking and neither did they have contacts.
At the same time, thousands of middle aged executives with tens of thousands of hours’ experience were being laid off every day. They were destined for the scrap heap.
At the time, a friend of mine was brought in to be the chief of cabinet of Argentina’s finance ministry. He was 35 years old at the time and many of his friends had given up and were emigrating to Spain.
He told mehe spent nights with his head in his hands trying to figure out what to do when everyone was telling him it was over for the country. Then he came up with the idea of a state-sponsored ‘match-making’ service to match ‘young companies with old heads’. To do this, the Argentinian finance ministry used a website which matched old experience with young companies. You can visit it here (www.experienciapyme.mp.gba.gov.ar).
The new start-up companies interviewed the old, recently-redundant executives. The state, instead of paying benefit, paid a much-reduced salary to the older guys, who got some small equity in the new companies. The scheme worked amazingly well. Thousands of companies were set up and thousands of people went back to work.
Most crucially, the older heads contributed enormously to the success of the new companies with their knowledge and experience. Their contacts with international counterparts and multinational systems of management and production were invaluable. Yet, had it not been for this initiative, this invaluable resource would have been lost between the ears of thousands of people, never to be used productively again.
Many middle-aged executives even went back to work for nothing and were reinvigorated. They acted as custodians for the new companies that dragged Argentina out of the depression. In addition, thousands of companies were saved from making the elementary mistakes that tend to scupper start-ups, because such potential mistakes were often spotted by those who had been in business for years.
Crucially, the older heads were not hands-off consultants. They worked for the new companies. If the relationship was working, after five months, the new companies started to pay their wages in full and the state stepped out, having done its match making job.
This is a perfect example of how a simple idea can translate into a fantastic outcome and of how using our noggins in the depression can transform a crisis into an opportunity. The key now for all of us is not to despair, but rather to focus on using our skills positively.
This means active government intervention in the labour market to ensure that our doctors don’t become the last line of defence against unemployment.