Economic Growth and Workers Essay

What basically the article of Mehring would want to states into the public would be the adverse effect of the economic growth on the labour market [workers]. It was states on his paper entitled â€Å"Vital Signs: A Not-So-Great ‘08† that market analysts predicts, as 2008 comes, the economy to be more dependent on the consumption level of the consumers. In this light, Mehring stressed that this would be impossible considering the current condition of one of the primary sector in the economy- housing. For the past years, housing sectors has been performing so badly after the end of 2005 as the demand of consumers for housing units declined dramatically giving the housing firm a hard hit on their financial capabilities. In this regard, members of the housing sectors were forced to lay-off some of their workers. Furthermore, the financial sector of the economy has not been performing well making the recovery of the housing sector to slow down. At the end of the day, it is the consumers, workers at the same time, which receives the entire burden since there is a big possibility for them to be fired from their jobs and/or to receive lower wages as the economy continuous to perform badly. From November last year up to the present, the number of jobless people continuously keeps on rising. Even though there are a lot of jobs that has been created at the start of this year, around 70,000 jobs, those are still not enough to compensate the job losses that occur in the labor market. Due to the fact that there workers receives lower incomes, logically, they can only consume less thus making the profit of the businesses to decline. It was identified that retail stores experienced significant drop on their sales even during the holiday season. Due to this, their profitability and outlook in the economy started to become dependent on the performance of the consumption level of the consumer group. Since the profit of the producers are negatively affected by the lower consumption of the consumers, as well as due to the fact that there is a large pool of unemployed people available in the labor market, there is a leeway for businesses to offer lower wages to their employees, and the cycle of burden goes on. Although, export market keeps on lowering down the bad performance of the economy through convincing the investors that there is still hope for our economy for avert the negative effects of recession to the entire economy. Because of the alarming effects of the bad economic performance of the country, the government has been identifying ways on how to increase the growth of the labor sector to improve the consumption levels of the consumers and thus improving the profitability of the business firms operating in the market especially those coming from the construction and housing sector. There are already around 350,000 job losses that occurred by the end of December 22 and the current level that we have is higher than with the average level of 2007. Meanwhile, most of the job growth falls under the service sector and they are accounted for around 150,000 of the 192,000 jobs that are added in October last year (Mehring 4). Inside the service sector, it is the professional services, health care, leisure and entertainment that contributes for the improvement of the service sector. In order for the government to fully address the problem regarding unemployment, they must focus their policies and programs for the betterment of the financial sector, private as well as the providing measures on how to increase the growth rate of the labor market. In short, finds ways on moving the economy away from the midst of recession and secure the concerned sectors of the economy for a sustainable economic growth. Critique and Insight Based from the article of Mehring, there is a clear relationship of economic growth and the labor sector which is comprises by the working class. Actually, Mehring presented in his paper how the cycle of recession and unemployment exists in our economy nowadays. Actually, it is a good thing that he mentioned it in his paper since it provides us of the reasons why the government is actually bound of which party they would protect the most, is it the private or the consumer group which could also be classified as workers. The not-so-good- performance of our economy for the past two years has been imposing serious threats to major industries and one of this is the housing industry. Here is the logic, by the time the demand housing units declined by the end of 2005, members of the housing industry starts to experience lower profitability. Due to this scenario, this housing industry starts to become incapable of sustaining the current level wage rate and what they will do is to either lay-off some workers and/or lowers down the wage rate that they pay for their workers in order to secure their profitability which eventually further decaying the income and purchasing power of the consumers [workers] and the cycle continuous. There have been studies saying that in order for the economy to progress impressively, the government must find ways to maintain a lower unemployment rate. But what is happening in our case would be a different one considering the response of the consumer group and the market condition of major business sectors. Here, the government must not only focus on the unemployment rate but also considering the welfare of the business firms in making actions to address the problem. There are times wherein the government is too much engross in solving the unemployment rate but sacrificing the welfare of the businesses and at the end of the day the problem still remain and become worse. I think, it would be better for our government to find solutions to increase the rate of job growth that will not affect negatively the businesses in the economy like lowering down the restrictions of FDI into the country in order for the foreign investors to be encourage establishing their businesses here, thus, making creating more jobs. Moreover, the government could lower down the taxes of the taxes of the domestic companies in exchange of not laying-off of workers. Another possible solution that the government could implement would be to lessen the trade barriers of the government to give way for the multinational companies to set up their branches here in the country and thus creating more jobs to the economy. The reason why I have been to much in particular of solving the problem regarding unemployment because when a person has a job he could earn an income and used it to his needs or simply as consumption. By the time consumption improves, then, businesses starts to perform better and so with the entire economy. In this scenario, we could see that economic growth and workers are really related to one another. Moreover, it is good that Mehring identified in his paper the connection of the financial sector in revitalizing not only the growth of the business firms but also its importance on upgrading the financial capabilities of the consumers. Growth of businesses firms [economic growth] as well as upgrading of financial capabilities of consumers [workers] is made possible by the financial sector if they would lower down their interest rate from borrowing in order for the businesses and consumers to borrow money from them and used this money to increase their purchasing power and their budget for operation. Since in this scenario consumer will be having more money [through borrowing], then, their consumption level will improved and so with the profitability of the business firms especially the housing and construction sectors which are currently in bad shape in terms of demand and profitability. In this regard, it would be necessary to say that economic growth and workers are interrelated to one another, and the performance of one could affect the other through various economic factors such as consumption pattern and supply level.