| Lack of economic opportunity or unemployment: Structural deterioration of labor prospects or labor standards and/or persistent barriers to realizing economic potential and security. Includes, but is not limited to: erosion of workers’ rights; stagnant wages; rising unemployment and underemployment; displacement by automation or the green transition; stagnant social mobility; and unequal access to educational, technological and economic opportunities. The question in this article is what risks lack of economic opportunity or unemployment poses. To this end, I examine this phenomenon from socioeconomic-societal, (geo-)political, and military perspectives. The question thus becomes, “What are the socioeconomic-societal, (geo-)political, and military implications of lack of economic opportunity or unemployment? | I write this text in my own title, not that of any organization. The 2025 Global Risk Report – WEF gives this definition |
Author: Manu Steens
Social implications of lack of economic opportunity or unemployment
A lack of economic opportunity and unemployment here has consequences at the individual, family, community and societal levels:
Individual level:
On an individual level, in terms of health, there will be an increase in mental problems. We then speak of people with depression, anxiety disorders for e.g. not being able to stand up for themselves in a hard world and thus also reduced self-confidence. (In “Unemployment and mental health: a global study of unemployment’s influence on various mental disorders,” Yang Yang, Lisi Niu, Saqib Amin and Iftikhar Yasin conclude that “The analysis reveals a significant positive association between unemployment and mental disorders, particularly anxiety, depression, and bipolar disorder.”)
On a personal level, there is a huge social problem with material deprivation. Basic needs such as housing, food and health care become difficult to provide for the breadwinners of the family. Psychological issues also follow from this. It may be partly at the root of a loss of meaning and reduced school performance.
Family and family level:
Such issues at the individual social level also cause tension in relationships. (For example, Laurie Long Kwan Ho, William Ho Cheung Li, Ankie Tan Cheung, Yuanhui Luo, Wei Xia, Joyce Oi Kwan Chung write in “Impact of Poverty on Parent-Child Relationships, Parental Stress, and Parenting Practices” that “The parents were found to have an impaired relationship with their children.”) Financial and psychological stress lead to conflict.
In addition to relationship conflicts within the same generation, intergenerational effects also arise. As described in ‘ Wealth and income inequality‘, children from families with long-term unemployment often have fewer opportunities themselves. Thus, opportunity poverty appears to be contagious across generations.
Community level:
With individualistic types, there is a decrease in trust and mutual solidarity: everyone tries to take care of things for themselves.
Managing those affairs is also done in a criminal way. There may be an increase of this where people are facing high unemployment rates. People lose their fear of the legal consequences of criminal actions. (See ‘ Wealth and income inequality ‘)
With both individualistic and egalitarian motivations, the more talented people are leaving regions with few opportunities. Demographic and economic migration occurs. Many of those migrants then send monetary resources to those back home, to support them financially. This form of spontaneous development cooperation exceeds what the countries themselves organize structurally in development cooperation.
Social level:
Growing distrust in institutions creates polarization of the political system. This encourages populism. Many vulnerable people become susceptible to (too) simple solutions to complex problems. This goes hand in hand with scapegoat thinking.
Scapegoat thinking, and socially unequal opportunities (and poor social mobility) lead to protests and demonstrations. (See “Wealth and income inequality“) Such phenomena act psychologically and lead to a hardening of attitudes between classes.
Economic implications of lack of economic opportunity or unemployment
This has implications at the macroeconomic level, in the labor market, for businesses, fiscally, and also in the longer term.
Macroeconomic:
There is a shortage in the utilization of human capital and productive capacity due to less economic growth. As a result, many families also have less income (because not all human capital is utilized). This leads to less consumption.
As a result, the country is indirectly experiencing higher fiscal pressure through increased spending on social services at the same time as reduced tax revenues.
The failure to fully utilize human capital, along with generational “contagion” (in ‘ The Rise of American Ingenuity: Innovation and Inventors of the Golden Age ‘ Ufuk Akcigit, John Grigsby and Tom Nicholas write that “We show that inventors were highly educated and that father’s income and education were important intergenerational transmission channels”), and thus reduced utilization of human ingenuity, mortgages the rate of innovation. This also leads to a lower probability of competitiveness of the national economy. In the longer term, this leads to a weakening of the national economic position.
The labor market:
With a poor economic situation and accompanying poorer education, there is a skills mismatch. There is a growing gap between the skills one offers and those that the market needs.
A wage pressure emerges among low-skilled workers. There is also an oversupply of low-skilled workers. With flexibility as a result. Employment contracts become increasingly precarious. Such situations lead to a black market economy that prevails with lower social protection of the weak.
For businesses:
Because talented people do not use their skills for a long time, skill loss occurs. This leads to a vicious cycle: productivity challenges arise from not finding suitable workers despite high unemployment. ‘Upskilling’ and ‘reskilling’ will be and remain necessary.
Fiscal:
Nationally, a reduction in income tax occurs. As a result, social security comes under pressure.
Due to continuity of national spending (including on living wages), there is a growing public debt. This has consequences for social security, specifically pensions and health care facilities.
Long-term effects:
These effects contribute to long-term effects such as long-term unemployment, a widening gap between rich and poor, regional and sectoral imbalances and low economic resilience.
(Geo)political implications of lack of economic opportunity or unemployment
This is accompanied by domestic political consequences, geopolitical consequences, international security is compromised, and further, a strategic response by governments follows.
Domestic political implications
As mentioned in ‘ Wealth and income inequality ‘, a number of domestic political consequences occur here as well. These are: more frequent changes of government; rising populism; erosion of trust in government, business and democratic processes; political and social polarization; weakening of democracy; protectionist economic measures and regional tensions.
Geopolitical implications
There is, as mentioned earlier, increasing migration across borders. In addition, economic rivalry is growing between states to create jobs for their own people, including by raking in investment.
Also, trade conflicts arise from the aforementioned protectionism. Along with this, international partnerships are reorienting based on shared or complementary economic interests. This leads to (economic) power shifts to countries that can offer economic opportunities. Weaker countries therefore become dependent and susceptible to political interference.
Impact on international security
It is more often argued that radicalization occurs in areas of chronic unemployment with initial internal conflict. However, Therese F. Azeng & Thierry U. Yogo write in “YOUTH UNEMPLOYMENT AND POLITICAL INSTABILITY IN SELECTED DEVELOPING COUNTRIES” that “Obviously, the existence of serious grievances-either economic, demographic or social-is not sufficient for collective violent action to erupt. The likelihood that motives are redressed through political violence increases when opportunity arises from availability of financial means, low costs or a weak state. In addition, while opportunity factors may better explain why civil wars break out, this does not necessarily mean that actors cannot also have strong motives.” This leads to a vulnerability of government capacity. Thus, “Channel duty guidance: Protecting people susceptible to radicalization” states, “…the local authority chief executive officer, or the equivalent head of paid service, should be satisfied that the designated chair has the required skills and experience and sufficient capacity and resource to fulfill these functions.”
Crime becomes international: There is a growth of illegal economic activities and the emergence of real supply chains for illegal goods, counterfeiting and smuggling with security implications for their consumers. (See also “What are problems with counterfeiting? A set of examples.”) Examples include weapons, drugs, counterfeit branded goods.
Such cases create power vacuums in which non-state actors can have their way in areas of legal economic underdevelopment.
Strategic response by governments:
There arises the responsibility to find new balances between economic growth to be recreated and social protection to be launched.
This presents a need to protect already existing strategic sectors and technologies for employment, and attract capital to realize them.
This allows international cooperation initiatives to emerge. However, that labor market policy and economic development are accompanied by the increasing importance of strategic autonomy. This requires economic self-sufficiency in critical sectors. But not isolation.
Sometimes this leads to opportunities for regional development strategies, namely targeted investments in backward areas. These can become complementary to areas with critical sectors, in which the country needs to become self-sufficient.
Also related to this, Éric Van den Abeele’s paper ‘ Towards a new paradigm in open strategic autonomy? ‘ moreover states the following: “Then, the expression ‘Union’s open economy’ comes before ‘strategic autonomy’, underlining that the concept of strategic autonomy falls within the framework of an open economy where the Union’s industrial competitiveness takes precedence. This means that strategic autonomy is subject to two concurrent imperatives: that of keeping supply flows open and that of improving the competitiveness of the economy.”
Military implications of lack of economic opportunity or unemployment
Recruitment and military
Recruiting of military personnel may skyrocket. A military career will become more attractive. More people will volunteer. This will allow the armed forces to be more selective when there is high unemployment.
In doing so, regions and populations hit harder will apply more. In the study ‘Are Economic Upturns Bad for Military Recruitment? A Study on Swedish Regional Data 2011-2015‘ by Peter Bäckström (DOI:10.1080/10242694.2018.1522572) states, “As such, the results suggest that the civilian labor market environment in Sweden can give rise to non-trivial fluctuations in the supply of applications to initiate basic military training within the Swedish Armed Forces.” A citation reads, “In the context of volunteer forces, the number of volunteers was found to be countercyclical in Belgium (Balcaen and Du Bois, 2023), Sweden (Bäckström, 2019), and the US (Ellwood and Wise, 1987;Asch et al., 2010;Simon and Warner, 2007;Warner et al., 2003).”
However, due to reduced tax revenues for the state, cuts will have to be made. Even if defense gets more money through potential military or hybrid external pressures, it will be acted upon in the spirit of austerity.
Indeed, investment in new technologies and equipment is needed due to previous fiscal constraints. The defense industrial base must also be strengthened, which can create jobs there as well.
Internal security
One may be able to use military personnel to maintain order in response to social unrest. However, this depends on several factors, including the severity of the unrest, government policy and available resources. Thus, military deployment is not a universal response to such situations.
If it does happen, the relationship between civil society and the armed forces may change profoundly. There will be a more negative view of the military and its deployment.
Strategic vulnerabilities
After a success of higher recruitment, over time a brain drain will happen from the military. Highly trained military personnel will move to private sectors with better pay conditions.
There may be a redistribution of military burdens within alliances. Countries are going to share responsibility.
Also, military power imbalances occur because of uneven economic and military-industrial development. Where one country has advanced military-industrial development, another is almost obliged to purchase its military equipment externally. Some countries will specialize in high-tech components while relying on other countries to implement them in military equipment. This may create a complex web of investment and economic compensation.
Conflict risks
Not only will the military recruit among unemployed youth, NSA’s (non-state actors) do the same, as well as among children. The unemployed (especially the young) are a vulnerable group for extremist movements that recruit from this group. (Adesoji Adelaja and Justin George write in “Is Youth Unemployment Related to Domestic Terrorism?“: “Our results show a positive relationship between youth unemployment and domestic terrorism, conditional upon different development factors, including corruption, government ineffectiveness and the absence of the rule of law. However, as expected, across countries, youth unemployment is not a significant predictor of transnational terrorism.”)
Military doctrine
Hybrid warfare is becoming increasingly important. Non-conventional tactics seem to be an economically cheaper alternative. This mainly includes cyber capabilities as an alternative.