March 10, 2010
One of the saddest and most revealing books I have ever read was written about the Great Depression. ‘The Unemployed Man and His Family’ was written by an American academic called Mirra Komarovsky.
She interviewed 59 white men who had lost their jobs in the depression and tried to assess the impact on their families.
I read it when I was in university and it has stayed with me for the past 20 years. If you want to know why unemployment and the reduction in unemployment — not the banks, the bondholders or some secondary issue to do with the financial markets — has to be the cornerstone of our economic policy, read it.
If you don’t have the time to read it, just look at what is happening around you.
The original American study was the first to relate the loss of a job to the loss in self-esteem; it was the first to highlight alcoholism and depression associated with redundancy. It was also the first to link marital breakdown and domestic violence to unemployment.
In ‘The Unemployed Man and his Family’, the writer went deep into families and documented how the redundant father lost the respect of his children as well as the wider society, how the sex lives of the couples were destroyed and how many men didn’t recover from long spells of unemployment — even those who did get jobs eventually when the economy recovered.
In the 1930s, unemployed families and couples stopped socialising, not just because of a lack of money but also because of the embarrassment. Anyone who has experienced unemployment in the family will know that the family can become quite remote from their neighbours and friends. The family sometimes cuts itself off. This puts huge pressure on the family and in many cases the family is not strong enough to deal with this.
The world has obviously changed dramatically since the 1930s — not least gender equality changes and the entrance of women to the workplace — but the lessons are still valid.
The detrimental impact of unemployment happens at any age. One of the most annoying things I have heard in recent months regarding unemployment among young people and graduates is when older people dismiss it with the “get off your arse” line.
Equally infuriating is the assumption that because they are young, a stint of unemployment won’t affect them too dramatically. Again, the evidence from the United States reveals the opposite. The young unemployed go off the rails very quickly and very easily.
In Japan, which in the 1990s went through what we are going through now in terms of unemployment and economic collapse, the evidence is startling. The Japanese Centre for Socio-Economic Development reveals that the generation who started in the workforce in the 1990s and had to deal with high levels of unemployment in their early career now make up six out of every 10 cases of depression and stress.
Something similar is happening all over our country at the moment. So, what are we going to do about it? Are we going to let our doctors and our pharmacies deal with this? Are we going to let dealers make a fortune while we pick up the tab?
If we look at all economic recoveries, they are always led by small businesses. So small businesses will drag us out of this mire and in the main will be the key driver for employment growth. But at the moment in Ireland most small businesses are not in the position to employ people. The margins are too tight and demand is not strong enough, in fact it is weakening. In addition, if you have worked in a small business, you will know that training people can cost a huge amount in terms of time and cost. So we must do something that makes it easy for small companies to hire.
On the flip side, there are thousands of graduates who don’t really know what they want to do, but might have an idea of what type of industries interest them. How many of us have been faced with the dilemma of “how do I get in the door”? How often, particularly when we were younger, did we lament, “if only I can get a chance to impress these people”?
So, how do we get in the door when the people inside the door don’t even know that we are there? This is where the labour market has to be changed. We have to make it easy for small firms to take people on.
FAS has a scheme where young graduates can join companies for up to nine months to gain work experience on no pay, but they retain their unemployment benefits. This scheme should not be limited to young people. It should be open to all the unemployed.
Retraining is what is needed here and it can be done at a fraction of the cost by unleashing this programme to make it as open as possible. For instance, the scheme is restricted to companies of between 10 and 20 employees, which can hire only two additional staff on this basis. If the company can take on five people instead of two, why hold it back?
There is a myth that companies will somehow exploit such a system, but that is nonsense. Providing training within small companies is a hugely expensive task and is engaged in with care. No firm trains up somebody, not least a small firm, to risk seeing them walk out the door in six to nine months.
This is a win-win at little cost to the State. And there is a deeper opportunity here. For more mature businesses, let’s deal with an age-old dilemma that has held back employment — the initial cost of hiring staff.
When a company sees the potential for a new hire, it must weigh up the cost of taking on somebody for the position. Will it be worth it to train them? This is a cost to the company and deters employment.
What if, across Ireland, we adopted the policy that when someone is being hired, they are not hired at full salary from the get-go but would be given incremental increases as they learned their new role?
We could set out a period to full salary within a six-month period. This would have powerful knock-on effects. First, it would make it far more attractive for companies to hire. The expensive cost of early employment would be mitigated. Secondly, it would allow companies to take more risk in hiring as the costs of getting it wrong are reduced. For the potential employee, it gives them a chance to prove to employers that they were a good hire and a worthwhile investment.
Why not do this now? We are paying the dole anyway and the huge positive effect of employment can’t be underestimated. Open the scheme to everyone and see what happens.