A Story About Modern Slavery

With International Women´s Day on March 8th, human rights is a topic that is close to my heart and one of the main issues I have been researching for many years now. In one of my previous posts from November 24th 2017, What is Gender Equality in The 21st Century?, I discussed the current state of gender equality and referred to for instance the World Economic Forum´s Global Gender Gap Report 2017.
The 2018 version of WEF´s Global Gender Gap Report can be accessed here: WEF The Global Gender Gap Report 2018. Research on gender equality is a human rights question, and the need for this kind of research indicates how much work there still is to do worldwide before we can speak about gender equal societies. With females representing around 50 % of global population it is actually ridiculous that we even have to discuss the fact that females have the right to equal treatment and possibilities as males. Equally or even more concerning is that in addition to females facing many kinds of discrimination for instance in workforce around the world, our world deals with serious human rights violations such as modern slavery.
According to ILO (International Labour Organization), forced labour i.e. modern slavery includes any work that is performed involuntary and under the threat of any penalty if the individual refuses to participate in this kind of activity. With a few exceptions to forced labour, such as work in emergency situations, the Abolition of Forced Labour Convention No. 105 clearly prohibits the use of forced labour for instance as a means of labour discipline. Finland ratified this agreement on May 27th 1960. Almost 59 years ago.
Nevertheless, the current employment system in Finland, led by the Ministry of Economic Affairs and Employment of Finland allows for corporations/organizations to employ unemployed citizens of the country with state allowances/subsidies, thus signifying that this kind of system makes modern slavery possible: in Finland, a modern welfare society where citizens currently have access to many public services that are financed mainly through a progressive taxation system, all unemployed people and job seekers have the right to receive state allowances while in-between jobs. What makes this problematic, however, is that unemployed people can basically be employed by companies/organizations with fixed-term contracts without paying any kind of salary.
Year after year politicians from certain political groups in Finland have been discussing how these company subsidies should be abolished and made illegal, yet no one actually does anything. Empty talk.
 
In the meanwhile, the Finnish state is allowing for companies and organizations to legally employ and recycle unemployed people with fixed-term contracts and without any kind of obligation to pay a salary or to even insure the unemployed worker, who during this fixed-term “employment” period continues to have the right to receive state allowances while working up to 30 hours per week for an organization that pays him/her no salary, and that usually “employ” another unemployed individual as soon as the maximum fixed-term period of the previous unemployed has come to an end.
 
This is all legally taking place in a western country that has been a member state of the European Union since 1995.
How does this kind of system support sustainable economic growth?
How does it support the birth of new employment and jobs?
How does it improve equality on the job market?
How does it improve the purchasing power of consumers? 
How does it improve the national economy of the country?
The system was first legalized and introduced after Finland’s great slump in the early 1990’s, when the state had to devalue its old currency and save a few banks from bankruptcy, which led to disastrous consequences for many Finnish citizens and entrepreneurs.
What this kind of system leads to in a welfare state is:
  • A growing gap between the rich and the poor.
  • Less new jobs, since unemployed people are forced to work for free and thus preventing companies and organizations from new (paid) job openings.
  • More inequality on the employment market: some people get paid for their work, while others do the same jobs for free (on a state allowance).
  • It leads to increasingly much poverty among population, since state allowances are at a level that are officially below the poverty rate in Finland and living with such conditions on a market like Finland is definitely worsening the purchasing power of consumers/citizens/unemployed people who must try to live under such economic conditions, regardless of amount of previous educational level or years of work experience.

A country´s labor force participation rate on the employment market is one of the key indicators for a country´s sovereign credit ratings that are officially being issued by credit rating agencies such as Moody´s, Standard & Poor´s, and Fitch Ratings. Hence, in national economy, general unemployment rates have a direct impact on the credit rating and state lending terms of a country. The better the official credit rating of a country, the better the terms and conditions for state loans.

For example S&P Global Ratings´ Sovereign Risk Indicators 2018 Estimates takes into consideration factors such as nominal and real GDP, investments rate on GDP and unemployment rate of a country in its country risk analysis. Furthermore, S&P country risk assessment includes four sub-factors: economic risk, political risk, financial system risk, payment culture and rule-of-law risk (S&P).

When a country like Finland wants to keep or improve its country credit rating, it is thus important for its government to enhance workforce participation on the labor market, whereby a low unemployment rate gives the country more credibility on international lending markets and helps it attract investors. It is, however, questionable when a country uses certain methods to “clean up” its unemployment records, such as removing unemployed people from the unemployment statistics if and when they participate in labor market activities such as basically forced labor with state allowances in corporations and organizations around the country. Is this not a distortion of facts and reality?

 

 

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