Questions about the 6th Kondratieff
Here an overview of the often asked questions about the sixth Kondratieff,
answered by Leo Nefiodow
1. Why is in many countries a high unemployment and in the U.S.A and Germany full employment?
Leo Nefiodow, December 2016
Underemployment and unemployment can have several reasons: bad economic policy, (like too high bureaucracy), social unrests (high criminality, nepotism, and corruption), insufficient educational background, insufficient investments into those markets were job activity lies. The discussion of the causes and its proposed solutions are strongly macroeconomic oriented and mostly ignore the last cause. This is why I would like to go more into this particular subject.
Firstly we should ask why the U.S.A. has achieved full employment although the economic growth was noticeable low with less than 2 percent in the first half of 2016. The unemployment lied in this year steadily under 5 percent.
In what way distinguishes the U.S.A. itself towards most of the other industrialised countries? One disparity that catches the eye is the high amount of expenditures in health care. The portion of the gross domestic product is meanwhile nearly 18 percent while in most of the other industrialised countries this percentage lies between 9 to 12 percent. If one adds to this the health care expenditures from the private health care sector then this increases to over 22 percent .
Germany enjoys also full employment. Unemployment is under 6 percent in 2016. The health economy belongs with its gross value of more than 320 Billion Euros to the biggest sectors in 2015. The expenditures for health related products were at 420 Billion Euros. This was a share of 19 percent of the overall consume expenditures . 16 percent of all jobs that is 6.8 Million are to be economically allocated to the health economy. If one adds to it those jobs that are directly, indirectly connected or induced to the health economy, like the software industry, health related tourism or fitness equipment, then this number rises to more than 10 Million. This was 22 percent of all jobs. This high and still growing employment was achieved in Germany with a low economic growth of less than 1.8 percent.
The health economy belongs also in the U.S.A. to the biggest employers. In 2015 more than 20 Million people were employed in the private and public health sector. If you add here too (in similar proportion as to Germany) those jobs that are directly or indirectly or induced connected to the health economy, then the amount of jobs rise to 30 Million. This is more than 20 percent of all jobs taken together.
The jobs in the health economy offer two advances: They are crisis-resistant because the last place to cut costs in recessions will be those into health. Even during the deep recession 2008-2009 new jobs were created in health care, see Chart below).
And secondly: Those jobs are future-proof. The barriers for growth in this sector are not yet visible. According to the newest study of the US-Bureau of Labor Statistics for the period of 2014 to 2024 we can assume that the amount of jobs in this health sector will constantly increase and in 2024 the health sector will be the biggest employer in the U.S.A.: ”Healthcare occupations and industries are expected to have the fastest employment growth and to add the most jobs between 2014 and 2024 .“
The chances that this forecast from 2015 will be correct are high because it can be confirmed from a scientific standpoint. According to the Theory of Long Waves a new Kondratieff cycle has started with the turn of the century. This new cycle, the sixth Kondratieff, will have as a carrier the health economy. The end of this cycle is to be expected around the middle of this century.
The full employment in the U.S.A. and Germany can be primarily attributed to the many new and future oriented jobs in the health economy. Due to the low productivity many jobs are not full time positions and are insufficiently paid. If they lie outside the health care system then they are at the same time endangered by technological development (e.g. digitalisation). To achieve a stable full time employment you have to increase the productivity in first of all in the health care system.
Development of employment in the U.S.A.
Source: US-Bureau of Labor Statistics
Health expenditures are often seen today as costs that have to be kept low. This understanding is not up to date anymore. Health has to be regarded as an investment, in fact as a forward-looking investment, because health improves the productivity on all levels of society: on the individual, the economical, institutional, and societal level. And improvements in productivity remain in industrialised countries the main source for economic growth and sustainable in social prosperity.
 Source: Bundesministeriums für Wirtschaft und Energie. Federal Ministry for Economy and Energy Germany: Gesundheitswirtschaft. Fakten & Zahlen 2015. Health economy. Facts and Numbers 2015. March 2016.