The whole world has not suffered the economic crisis to the extent that it has been felt in Europe and America. Job Growth and importance for the economy and stock market is something that occupies the minds of westerners, primarily. The crisis has not been so severe in other countries.
Countries like Britain and America are still not yet out of the woods, and the number of jobs being created is barely enough to sustain economic recovery. The recovery will be slow if jobs are not created quickly. Small businesses will have to do it because large corporations cannot.
If the number of jobs does grow in any country the economy will improve, and that will be the catalyst that invigorates stock markets. But in market driven economies it is difficult for governments to manipulate markets. The conventional wisdom is that markets must be allowed to correct themselves. Government interference in markets in the past has so often proved disastrous.
The laws of supply and demand rule in market driven economies. Jobs on railway systems were plentiful in 1942, but the demand shrivelled in the face of mechanisation and in 1990 they had all but dried up.
Some people in European countries have been slow to adapt, and have had the option of falling back on the social welfare systems as mechanization replaced jobs. It has been made possible for them to live without working.
Information technology has produced phalanxes of new jobs but unfortunately a measure of training is necessary if the job is to be done. Indian workers have shown themselves adept at training themselves to be effective IT workers, and this has implications for countries like Britain and America.
But new jobs, even more than the old ones, demand productivity because there is little point in paying people more than they are worth. This is a painful truth that has become apparent as the remuneration of investment bankers has come under scrutiny. It is also why jobs in the manufacturing sectors have migrated to the East where Chinese and Indian works don’t insist on so many holidays
However many new opportunities are created two inescapable requirements remain. Workers must be prepared to retrain and work productively so that entrepreneurs can turn a profit. In this regard Indian and Chinese have proved so superior that firms shut up shop in America and Europe, and moved their operations to the East where greater profit was possible. Western workers may have sneered about ‘sweat shops’ and ‘human rights’ but the hard facts of profit prevail over sentiment.
The situation could turn around as Chinese and Indian workers begin to improve the quality of their lives. There will then be a greater demand for the sort of leisure products that are produced in the West, and a more equitable distribution of jobs throughout the world.
The phenomenon of globalization is much maligned in the West because it is seen to diminish the supply of jobs. Yet, it could be the solution to job growth and its importance for the economy and the stock market. If countries learn to collaborate rather than squabble with each other the whole world could benefit.
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