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Why the World Needs 1.5 Billion New, Productive Jobs: A Look at the Real Unemployment Rate

May 14, 2020 (EIRNS)—What is unemployment, really? Textbook definitions will tell you that it refers to someone who wants to work, but does not hold a paying job, i.e. who doesn’t receive income. But that is entirely misleading—it is monetarist economics at its worst.

The science of physical economy, on the other hand, considers employment from the standpoint of a person’s participation in the process of producing the physical goods, and related necessary services (such as education and health), required to increase society’s power to provide an improved standard of living and culture to a growing population—a power Lyndon LaRouche referred to as potential relative population-density. Having a “job” in the drug trade and making $1 million a year is not actual productive employment.

To delve into the real unemployment problem on a world scale, we have to not only look at official unemployment statistics (which grossly understate the reality), but also the masses of people who hustle and scramble so that they and their families can eat from one day to the next, but who don’t actually produce anything. This is the case with so-called “informal” employment worldwide, which involves a staggering number of people: more than 2 billion, in fact, which is over 60% of the planet’s total labor force.

The International Labor Organization (ILO) published a 164-page study in 2018, “Women and Men in the Informal Economy: A Statistical Picture,” which provides a useful window into the real problem of unemployment worldwide. The ILO cross-grids what they call “informal employment” with “employment in the informal sector,” for a combined definition of informal employment, as follows:

“The informal sector consists of units engaged in the production of goods or services with the primary objective of generating employment and incomes to the persons concerned.... The main intended destination of the production is wholly for own final use.”

For the purpose of reconceptualizing this total informal employment from the standpoint of Lyndon LaRouche’s “bar diagram” analysis of a society’s total population, we can break this total down into three segments:

1) informal employment in agriculture: desperately poor peasants and their families engaged in subsistence agriculture (this is about 25% of the total informal employment);

2) a smaller number of informal (or “off the books”) employees in the formal sector as such (about 10% of the total); and

3) the deregulated netherworld of street salesmen, service workers and—in the worst cases—virtual slaves of Dope, Inc.’s drug trade and prostitution/pornography black economy, run by the British Empire’s banks (about two-thirds of the total).

It can be argued that the first group at least produces enough for their own and their families’ immediate consumption, albeit at a horribly low level of productivity. We will consider them as “employed,” along with the second group, in an effort to present a conservative estimate of real unemployment. The third group, however, produces zero net physical economic value. They are de facto unemployed, from the standpoint of the physical economy.

The following data are derived in that fashion from the ILO’s 2018 study, updating their 2016 data to 2019. It indicates the enormity of the physical economic problem the planet was facing at the end of 2019—i.e., before the coronavirus pandemic struck:

World Real Unemployment (2019)

Total Population = 7,711 million

Total Labor Force = 3,482 million

Official Unemployment = 188 million

Total Employment = 3,294 million

Total Informal Employment = 2,023 million

Non-Agro Informal Employment = 1,664 million

De Facto Unemployment = 1,397 million†

Total Real Unemployment = 1,585 million

Total Real Unemployment Rate = 46% million

†De Facto Unemployment = Non-Agro Informal Employment – Informal Employment in the Formal Sector

Total real unemployment for the planet can thus be estimated at about 46% of the labor force. That is 1.585 billion people who do not produce any physical economic value because, over the last half-century and more, they have been dumped on the human scrapheap by the British Imperial system of the City of London and Wall Street, and who barely survive from day to day. In the case of Africa, the real unemployment rate is 65%. In the case of Ibero-America (often referred to as Latin America and the Caribbean), it is 42%.

The regional breakdown of percentage of total employment coming from informal activities is also highly revealing. The world average is 61%; in Africa it is a staggering 86%; in underdeveloped Arab countries 69%; in Ibero-America 54%.

Youth are also particularly victimized by the disease of informality. In the 15-24 age cohort, 77% of all employment is informal, worldwide.

Now that the coronavirus pandemic is striking the underdeveloped sector with a vengeance, even the meager daily incomes and food supply of the gigantic informal sector is going up in smoke. The ILO estimates that people in the informal sector already had a 60% drop in income in the first month of the coronavirus crisis. In Africa and Ibero-America, the drop was much greater: 81%. As ILO Director Guy Ryder succinctly put it on April 29: “These are the real faces of the world of work. If we don’t help them now, they will simply perish.”

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