Workshop G: Industry and Labour

Please note that I used the expression “real unemployment.” Allow me to explain what I mean by that, because  that is our starting point to then suggest some solutions.

In May 2020, EIR magazine published a study which I led under the title “The World Needs 1.5 Billion New, Productive Jobs.” We looked at the level of real unemployment in the world by taking into account not only  official unemployment, but also disguised unemployment and underemployment, especially in the so-called  “informal” sector of the economy. We addressed this from the standpoint of the science of physical economy as developed by Lyndon LaRouche: productive employment means a person’s participation in the process of  producing the physical goods, and related necessary services (such as health and education), required to increase society’s power to provide an improved standard of living and culture to a growing population. Having a “job” in  the drug trade, or working in a Wall Street bank (which is often the same thing), is not productive labor: it  doesn’t produce real wealth.

LaRouche’s approach is radically different than the standard, textbook definition, such as that of the World Bank, which defines employment as “any activity to produce goods or provide services for pay or profit.” Notice that  the only criterion here is a monetarist one: receiving monetary or related compensation for any activity. No  distinction is made between earning $100 from building a house, engaging in criminal activity, treating patients  in a hospital, selling drugs, or simply begging or re-selling small items on a street corner – a common practice in  many developing sector countries.

Applying this approach, our 2020 study found that there are some 1.585 billion people worldwide who do not produce any physical economic value because, over the past half century and more, they have been dumped onto the human scrap heap by the British imperial system of the City of London and Wall Street—and barely survive from day to day. That is a 46% real unemployment rate.

Applying a similar methodology to Afghanistan, using available statistics for 2021 from the UN, World Bank,  IMF and ILO, we estimate – and I emphasize that this is only a first approximation, awaiting better data based  on first-hand knowledge of the situation on the ground – that out of a total potential labor force of 13 million,  some 7.4 million, or 57%, are in fact unemployed, i.e., not producing real physical-economic wealth. Here is how  we derived that conclusion.

The official labor force for 2021 was 8.2 million people, according to the IMF, down from 9.1 million in 2020 –  a sharp annual drop reflecting the overall collapse of the Afghan economy in the wake of the U.S. withdrawal,  the rapid drop in international aid, and the theft of over $9 billion in Afghan central bank funds. . That official  labor force of 8.2 million translates into a Labor Force Participation Rate (the total labor force as a percentage of  the total population in the 15-64 age bracket) of 38% — a very low ratio even by developing sector standards,  which averages closer to 60%. If Afghanistan were to have that same Labor Force Participation Rate of 60%, its “Industry and Labour, the Big Challenge” (3)

potential labor force would total 13.0 million. That fact strongly suggests that the difference between the two  (13.0 – 8.2 = 4.8 million) are people either in the informal sector or otherwise functionally outside the national statistical accounts for available labor – a form of disguised unemployment from the standpoint of physical  economy. It is also noteworthy that the average life expectancy in Afghanistan was only 62 in 2021, according to  the World Bank. To arrive at a total figure for real unemployment, we have to add to those 4.8 million people,  the 1.1 million officially counted as unemployed, as well as an estimate of 1.5 million out of the total number of  people otherwise working in the informal economy or in unproductive “service” jobs. That brings total real unemployment in Afghanistan to about 7.4 million, out of a total potential, i.e., employable labor force of 13.0  million – for a 57% real unemployment rate.

This is an all-too-familiar pattern among developing sector nations in terms of the sectoral composition of  the labor force: overweight agricultural and services sectors, with a diminutive manufacturing and industrial base.  This goes a long way to explaining the physical-economic low productivity of such economies.

It is instructive to see what occurred with other nations that once suffered from this same pattern, but were  eventually able to achieve substantial industrialization.