Boosting growth has long been thought to be the most excellent method to create jobs and improve living standards. However, governments should now consider the situation in reverse: by better preparing their population to navigate the workplace; countries may more effectively increase their economic growth and development.
Growth is slowing in Europe, the United States, China, Japan, and other major countries, as the International Monetary Fund and the World Bank recently noted by significantly lowering their global growth predictions for this year. Around the same part, government and corporate leaders recognize that in an era of growing automation, stagnating salaries, and increased part-time, temporary, and contingent employment, more has to be done to prepare workers for the job market.
The above twin concerns – reviving economic development and preparing people for the future of work – are intertwined, but not in the traditional sense that macroeconomic stimulus or increased efficiency is the most effective way to generate jobs and boost living standards. Growth alone will not be adequate to address the growing inequality and insecurity that comes with restructuring employment, as seen by previous decades’ experience. Furthermore, authorities have fewer traditional instruments to stimulate the economy in the case of another crisis due to high debt levels and historically low-interest rates.
Government and corporate leaders must examine the link between growth and labor markets in a fresh light in this period. Countries may most effectively increase their economic growth and development by improving their social contracts and better preparing their citizens to navigate the world of labor.
That was the conclusion reached recently by the International Labour Organization’s independent Global Commission on the Future of Work, co-chaired by South African President Cyril Ramaphosa and Swedish Prime Minister Stefan Löfven.
The panel identified three practical initiatives that governments might take to increase social inclusion and economic growth at the same time. All three steps include investing more in people. In a period of fast technological change, investing more in people is not simply necessary to enhance governments’ social contracts with citizens. It could also serve as the foundation for a new, more human-centered growth and development model; which could be the best hope for keeping the global economy moving forward as the two growth powerbanks on which many countries have relied for years if not decades – extraordinary macroeconomic stimulus and export-led industrial production – lose steam.
Initially, governments should enhance public and private investment in individuals’ capacities, as this is the most effective approach to boost productivity growth in the long run. Unfortunately, some governments have a history of underfunding excellent education and skill development. However, as populations, age and technology undermine both manufacturings, on which developing nations have historically relied to industrialize, and services, where much advanced-economy employment is centered, governments throughout the world must do more. As a result, the commission urged governments to create a universal framework to encourage lifelong learning, including more robust and well-funded labor-market training and adjustment programs, enhanced public employment services, and a versatile social-protection floor.
Secondly, authorities, mainly the governments, should improve national labor laws and institutions in collaboration with businesses and workers’ groups. These factors impact the number and distribution of job openings and salaries and the amount of purchasing power and aggregate demand in the economy. The commission called for a Universal Labor Guarantee in which all workers, regardless of contract or employment status, would have fundamental rights, such as an “adequate living wage” as described in the ILO’s foundational founding document a century ago, highest hours worked, and occupational health and safety safeguards.
Furthermore, government measures should ensure that employees and employers are represented collectively through organized social interaction as a public good. To enhance gender equality in the workplace, the regulations must encourage sharing unpaid care duties in the home, from parental leave to public services. In this sense, strengthening female voices and leadership, eradicating workplace violence and harassment, and enacting pay transparency standards are vital.
Finally, governments should enhance public and private investment in labor-intensive economic sectors that provide broader societal benefits. Sustainable water, energy, digital, transportation infrastructure, care sectors, the rural economy, and education and training are among them. According to the Business and Sustainable Development Commission, achieving the United Nations Sustainable Development goals could generate $12 trillion in market opportunities in just four areas – food and agriculture, cities, materials and energy, and health and happiness – and create up to 380 million new jobs by 2030. Taking advantage of these opportunities might assist governments in compensating for the labor-displacing and possibly demand-suppressing consequences of automation and economic integration.
Together three methods provide a strategy for all countries, regardless of economic development level, to promote social fairness and economic prosperity – and, by extension, public trust in democratic institutions.
Amid the financial crisis a decade ago, G20 leaders committed to establishing a more balanced and sustainable growth model that included lessons from past economic imbalances and policy missteps. Since then, the world has made little headway in achieving this aim. However, the route forward must be clear: continued more significant investment in people’s capacities, purchasing power, and employment prospects.
