Friday, October 10, 2014

Ideas for Action From the G20 Labor and Employment Report – Good, but Not Enough

Two weeks ago I posted on an important report, issued by the International Labour Organization, the Organisation for Economic Co-operation and Development, and the World Bank Group, on jobs in the world’s 20 largest economies.  As well as a fine dose of straight information, explaining how the document terms the “jobs gap,” and what I have been calling the permanent jobs crisis, is unfolding in large countries from Germany to Indonesia, the report includes ideas for dealing with the problems we face.  What do these organizations recommend, and how good would those things be?

The first suggestion in the fourth section of the report, “Achieving strong, sustainable, and job-rich growth,” is increasing consumer demand, which, as correctly stated, is not only a result of poor employment but a cause of it.  Breaking out of this vicious circle is an advantage of federal stimuli, which, though sometimes necessary as at the beginning of the Great Recession, cannot go on indefinitely.  More government work in countries with the worst employment problems, also advocated in the document, is a better idea.  Overall, we have a conflict with tax revenues;  on one hand, we want to make them more progressive, as to impact fewer people and thus to hurt consumer demand the least, and on the other, the most regressive sources, such as VATs and sales taxes, are the most impervious to decreasing from a shrinking number of people working.  Resolving that will be our largest related challenge. 

The second area of recommendations is on improving employment.  The report mentions the destructive effect of long-term joblessness on the workers themselves, and correctly advocates strong social programs for the unemployed.  The United States, better off than many of the other G20 countries, has been remiss in not extending jobless benefits from its generally current 6 months, and we have simply had too much difficulty and controversy with food stamps.  European countries have done better here, but the poorer large countries, where such programs are needed more than anywhere else, have not.  When more acknowledge the jobs crisis as permanent, the need for such benefits will naturally be accepted by more and more conservatives, here and elsewhere.

Third, the report takes on increasing labor force participation, which it first correctly notes is not going anywhere in the more developed countries without more jobs, then likewise mentions it can be helped by incentives for companies to provide jobs, which is badly lacking now in the United States.  It also remarks on accommodations for older workers, which would indeed help more of them want work, if not to actually locate it more often.

Fourth, the document falls into a common trap – advocating much more jobseeker education and training.  As with efforts to give preferential treatment to women and minorities, more schooling does not help the population as a whole, but only raises competition for existing positions.  While some people do need something, greatly increased occupational training is no priority for either today’s or tomorrow’s total employment situation.

The last area the report addresses is economic inequality.  To its credit, its approach is to connect efforts to make income outcomes more equal with general employment growth, instead of trying to make the case that differences in financial results are inherently bad.  It mentions the need for higher-paying jobs, but does not recommend higher minimum wages for countries with already substantial ones.  The issue of workers shut out from even the lowest-paying positions is more of a problem in some developing G20 countries, where people have much less adequate anti-discrimination legal protection. 

In all, the ILO/OECD/WB report is thoughtful and moderate on recommended solutions, which should, as it implies in spots, vary vastly between countries.  What is missing is a look at more fundamental, instead of incremental, ways of dealing with this 200-year crisis, which would continue to transform lives even if all of the ideas listed here were successfully implemented for all 20 countries.  That is what we need the most.                

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