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Growth
creates jobs! In the long term, for an economy to generate employment
opportunities to absorb an expanding labour supply, requires sustained growth
in real national output.
The
positive relationship between output and employment exists because labour as
a factor input is a derived demand. People are employed for the output they
are required to produce. If a country can raise the average rate of growth of
real national output it stands a much better chance of a permanent fall in
unemployment and a rise in economic activity. Some nations manage this better
than others.
The United States
stands out over the last four years for its employment-creation record. The
national pay-roll has expanded by more than 1% in each year since 1995.—not
least because real GDP has grown by over 3% per year on average.
The UK has a favourable record on new jobs created. Even in 1998, a
year of cyclical economic slowdown, employment grew by 1.2%, bringing
unemployment
down to a twenty year low. Most new jobs are concentrated in the service
sector—manufacturing employment is contracting.
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