Tomorrow, a senior banker will clear his desk and walk out of his office for the last time. As he closes the heavy door, he may dwell on his achievements - and perhaps what he could have done better in the financial turmoil. The past few months have been stressful, but he can reassure himself that he will be remembered for his efforts. Like many of his peers, he is out of a job. He joins an army of workers that are surplus to requirement.
However, Henry Paulson is luckier than most. He will probably find it easy to get another job, and he is only unemployed because of the change of administration in Washington. His boss, George W Bush, is also redundant, but he will no doubt join the lucrative lecture circuit. First, though, he wants to make his "wife a cup of coffee". But elsewhere in the country, thousands of jobs are being lost. The recession, dubbed the "worst since the Great Depression" by the US president-elect, Barack Obama, has finally taken hold.
From Dubai to Dallas to Dublin - and even to Dongguan in China, where two million workers have been sent packing in the past six months - jobs are being shed at an unprecedented rate around the world. And it is going to get worse. According to Jamie Dimon, the chief executive of JPMorgan Chase, the US recession will last for at least two more quarters and unemployment will rise to the highest rate in a quarter of a century. It has already hit a 15-year high of 7.2 per cent last month, higher than analysts estimated. Mr Dimon suggests unemployment could possibly rise to more than 10 per cent, the highest since June 1983, leading to further stress on banks that lend to consumers. More than 500,000 Americans lost their jobs last month. This month is unlikely to be much better.
If problems in the US look bad, China's may be even worse. The country's government prides itself on its growth, but with millions entering the workforce every year, it needs to grow at 8 per cent to stand still. China's two top economic officials have warned that they may not achieve it. Liu Mingkang, the chairman of the China Banking Regulatory Commission, says it will be "exceptionally arduous". Separately, the central bank governor, Zhou Xiaochuan, says there are "downside risks" to the target.
China's exports fell the most in almost a decade last month as the global recession cut demand for toys, clothes and electronics. Shipments dropped 2.8 per cent, according to the customs bureau. That compares with a 21.7 per cent gain a year earlier. Exports grew 17.2 per cent for all of last year, down from 25.7 per cent growth in 2007. Waning export demand has led to protests by fired factory employees, an exodus of 600,000 migrant workers from the manufacturing hub of Guangdong and an estimated urban unemployment rate of more than 9 per cent. The nation's premier, Wen Jiabao, pledged on Jan 11 to add to the nation's 4 trillion yuan (Dh2.14bn) stimulus package to create jobs and avoid social instability.
"There is little hope that exports will recover this year, as developed economies remain mired in recessions," says Sun Mingchun, a Hong Kong-based economist at Nomura Holdings. "Textile, steel and electronic exports are badly hurt." In Britain, the country's formerly booming financial sector is in disarray. Last Tuesday, Barclays Bank announced plans to lay off more than 2,000 bankers worldwide. Across the wider economy more than 50,000 job losses have been announced since Christmas, with 27,000 Woolworths employees joining the dole queues last week.
Unemployment on the broadest measure rose by about 250,000 last year to just under 1.9 million at the end of October. The Bank of England monetary policy committee's labour market expert, David Blanchflower, estimates that the total will have risen to two million by the end of last month and hit three million by the end of this year. Few parts of the economy are unscathed, from retail to tourism to manufacturing. The cheaper British pound has failed to help JCB, a manufacturer of digging equipment, sell its diggers around the world. Even Aga, a maker of high-quality cookers, has sacked 400 workers.
The picture is equally grim in Russia. The number of Moscow residents who are either unemployed or underemployed doubled during the New Year holidays, according to the Moscow Trade Union Federation. About 290,000 residents of the Russian capital are either unemployed, about to be fired, working shorter weeks or on unpaid leave, according to Mikhail Nagaytsev, a union boss. The figure was 67,200 on Oct 1, he says.
Even the continent least affected by the credit crunch, South America, has not escaped the fallout. About 7.6 per cent of Brazilian workers are unemployed, according to government statistics. This number, calculated for the six largest metropolitan areas in the country, is forecast to climb to about 8.5 per cent this year. Extrapolated nationwide, that would mean almost one million Brazilians will lose their jobs this year. In November, the number of government-registered jobs shrank for the first time since the president, Lula da Silva, took office in 2003.
Just about every sector appears to be affected, particularly those that depend on exports. Cia Vale do Rio Doce, the world's largest iron-ore exporter, sacked 1,300 workers last month and placed another 5,500 on forced leave. Other companies, such as car makers, are taking similar steps. On Dec 14, Vale's chief executive, Roger Agnelli, asked Mr Lula to make labour laws more flexible, at least temporarily. Mr Lula refused. "No businessman has reason to fire a worker. No one," he says, failing to acknowledge that the global economic slowdown is already affecting Brazilian exporters.
Countries with a flexible approach to both hiring and firing may recover first, but there are no guarantees. Ireland, for example, was dubbed the "Celtic tiger" following its sudden economic revival in the 1990s. However, the tiger has turned into a pussy cat that no longer purrs. The Irish prime minister, Brian Cowen, admitted on Irish radio that the economy is in "crisis". The property market is in turmoil, but the worst is the job cuts.
Dell, the computer manufacturer, which was courting prospective employees in Ireland only a decade ago, is to axe 1,900 jobs at its factory near Limerick, dealing a blow to a city where the company was the largest private employer. "It is a disaster," says Niall Sheehy, after hearing he will lose his job this year. "Limerick is finished." Dell was once Ireland's biggest exporter and the manufacturer's decision symbolises the country's battle to retain the international companies that helped double the size of the Irish economy over the past decade.
The economy, now shrinking at the fastest pace in the euro zone, has lost 10 per cent of its manufacturing jobs in the past seven years. Dell is moving Irish jobs to Poland as part of a plan to save US$3 billion (Dh11.01) a year by 2011. "This is a difficult decision, but the right one for Dell to become even more competitive," says Sean Corkery, the vice president of Dell's operations in Europe. The Irish government had lobbied US-based Dell to try to save jobs. The deputy prime minister, Mary Coughlan, last month visited the US for talks.
"For Limerick, it's a huge blow," says Donal Dineen, the head of Kemmy Business School at the University of Limerick. "For Ireland, it is the end of an era when large-scale manufacturing played a role." In Dubai, the property sector was the first to be affected, but this has now spread to the financial markets. More than 1,000 jobs have been cut, with Nakheel laying off 15 per cent of its workforce. Both Morgan Stanley and Goldman Sachs trimmed their staff numbers in Dubai, while Shuaa Capital, the country's largest investment bank, laid off 21 people. First Gulf Bank has sacked 30 people and the National Bank of Fujairah has laid off 28 people. There are reports of middle-class expatriate workers driving to the airport the minute they are sacked and getting the first plane home. The trouble is that they will struggle to find a job when they get there.
The Dubai Chamber of Commerce and the Department of Planning and Economics declined to comment. "During the first half of 2008, the financial services recruitment market, predominantly within Dubai but also across the Middle East, was relatively robust, particularly within the areas of retail and corporate banking, private equity, and investment banking. However, recently, there has been a general slowdown in hiring activity as banks and asset managers pause to assess what the knock-on effects may be from the turmoil in the global financial markets," says Christo Daniels, the manager of recruitment firm iQ Selection in Dubai.
He added that due to the influx of financial services professionals, particularly from Europe and the US, institutions now have a much wider pool of high-calibre talent to choose from compared with three to five years ago which, in turn, increases competition among individuals for jobs. Abu Dhabi looks a lone bright spot in the worldwide gloom. However, Aldar Laing O'Rourke, a joint venture between Abu Dhabi's largest property developer and a UK construction company, is to lay off more than 200 employees in a move to "realign" the company to the changing economic environment.
"In an environment like this, you have to be lean and agile," says Christopher Wilkinson, the company's managing director. "We have got plenty of work, but we don't think we are going to have the dramatic growth we were expecting." * with additional reporting by Sara Hamdan and Bloomberg rwright@thenational.ae