CSR and Employment: Is There a Connection?

Submitted by Dr. Michael Hopkins

By Dr. Michael Hopkins

There is much talk about creating jobs today as unemployment inexorably stays high around the world.  Two issues immediately follow from such a statement.

First, what do we mean by unemployment, and second, why do we need jobs?  Many people would say that I am splitting hairs and people need jobs of almost any kind. But, before I move to exploring whether we can expect corporations to resolve the issue of jobs, let's take a quick look at the two questions.

What is Unemployment & Why are Jobs Needed?

The unemployment rate has a numerator: Number not employed, and a denominator: The labour force. These are both measured by labour force surveys and, the indicator most often cited is the definition provided by the ILO. According to this definition, one can be employed, for instance, even if income is ridiculously low. One cannot be unemployed if one has become discouraged from looking for work.

Thus the remarkable change in the unemployment rate from 9 percent to 8.6 percent in November 2011 in the U.S., for instance, was as much to do with the private sector increasing employment as it was with discouraged jobseekers withdrawing from the labour force.

But we must also think of the secondary question: What is a job?

People obviously need to work when that is the main way of receiving income. Yet, we treat all employment as the same when most struggle to survive on what they earn while, as the worsening income distribution statistics across the world demonstrate, others are benefiting enormously.  Distressingly, as Paul Krugman so often shows, most of these high income earners do nothing to create employment.

Worse, they make bets on outcomes that often make things worse.

With attacks on deficits through reduced public expenditures, we are increasingly left at the hands of the private sector to create jobs. Cutting public expenditures in recessionary times, especially those that are job-related, has struck many as foolish.

In fact, according to Krugman, the hope that the private sector will take up the slack because confidence will increase as the public sector declines, is like wishing for a magic ‘confidence fairy’. The hope that the private sector will invest in a recession belies the fact that corporations are hoarding a vast amount of wealth that is not being invested. 

Further, the private sector will tend to invest, not necessarily according to national priorities, but across oceans where emerging markets provide higher returns.

Basic Income

Some have suggested the need for a basic income to be paid to all individuals in society. This income would replace the myriad public subsidies currently allocated, provide security when there are no jobs, and be enough to meet basic needs. Clearly, production systems can provide the goods we need without full employment. A basic income would therefore, theoretically, be very attractive. But beyond the calculation of whether it could be afforded, comes the process of passing the necessary legislation through our democratic institutions. 

Today, the U.S. Congress will not pass anything that might raise public expenditure.

The Result

A worsening income distribution.

Europe has not escaped either and as Alexander Cockburn wrote in CounterPunch:

"The argument against the eurozone is that hard-faced Euro-bankers—their killer instincts honed at Goldman Sachs, Wall Street’s School of the Americas—have the power to act as the bully-boys of international capital and impose austerity regimes from Dublin to Athens, scalping the poor to bail out the rich."

This is what the Occupy movement is all about: Their starting point is highly unequal income distribution and their protest is to try and do something about it, as I have often argued.

Then, is CSR an answer? Coming up in Part 2.

Readers: Do corporations have a social responsibility to create employment? Share your opinions on Talkback!

This post is a shortened version of the original, published on MHC International.