Unemployment rates continue to reach new highs for the decade and 200 million workers, mostly in developing economies, could be pushed into extreme poverty.
What can be done to assist countries that are seeking to increase job creation and strengthen their social insurance systems?
Key Points
• During the recession, global unemployment is estimated to have risen by around 50 million while working poverty increased by 200 million, coming on top of a longer-term crisis in the quality of employment – 50% of employees globally remain in “vulnerable employment”
• Countries that had automatic stabilizers in the form of social welfare fared better than others during the recession, but jobs are created by companies
• Growth is now returning to the global economy and asset valuations are returning; but without a return to a growth in jobs – which is expected in 2013-2015 – the world risks political instability, populism and a return to protectionism
• There is growing global consensus within the G20 on the components of employment policy, and between companies, international organizations, employee organizations and states
• The focus should not just be on job retention, but also on permanent reskilling
• Flexibility within national labour markets and mobility between national labour markets remains essential
Synopsis
The return to growth in the global economy should be celebrated. Without confidence, companies will not take on new employees; without growth, meeting the employment challenge will be impossible. But the current economic recovery has not yet been matched by a jobs recovery. This disconnect may persist until 2013-2015, bringing the risk of political instability, populism and protectionism.
Achieving a jobs recovery requires radical thinking, taking its cue from the sometimes unorthodox but largely successful management of the global financial crisis. Multistakeholder forums, both at the national and global level, are essential.
For the long term, there needs to be a reconsideration of the relationship between economic output and human outcomes. Social security can serve a useful role in protecting jobs, empowering employees to take advantage of market opportunities, and sustaining economic demand. In the short term, countries such as South Africa have successfully used proactive, counter-cyclical measures to help retain jobs and help employees reskill, through temporary subsidies to employers and through extending child welfare payments from age 15 to 17, on condition that children remain in education.
But this cannot come at the price of flexibility – saving jobs that are no longer economically viable only reduces longer-term employment prospects. In the end, it is companies that provide jobs and markets that determine their viability.
The private sector may have a particular role to play. Under a scheme piloted in 2007, the French government put over 10,000 unemployed in the hands of private sector staffing agencies, with a 70% success rate in placing them. There is disagreement on the role of part-time employment, which some see as leading to lower unemployment overall, while others see as enhancing employment insecurity.
The precise policy mix will vary. While China is moving towards a universal pension and enhanced social welfare system, this may not be reasonable in the short-term for India, despite an increasing focus on rural development and employment, including minimum work arrangements.
In addition to the cyclical problems of retaining and providing employment, there are additional structural problems in countries such as India. The first is driven by demographic structure. India has a population of 320 million between the ages of 6 and 16, entering the workforce in the next decade. The second is economic structure. As the agricultural employment falls, there is strong inward pressure on urban areas. If rural populations are unable to move due to a lack of jobs, patience will run out.
Providing skills on this scale is a major challenge. Providing jobs depends partly on high growth –
9-10% for the next several years – and partly on continuing globalization. India can provide a major labour pool for the world. But this implies that globalization – a tremendous success in terms of enhancing opportunity and reducing poverty – retains the support of governments and publics alike.
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