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The challenges beyond the crisis

There are strong forces besides the global economic crisis affecting labour markets worldwide. Understanding and shaping policies to respond to them will determine the present and future of the world of work. By José Manuel Salazar-Xirinachs*

Comment | 25 November 2012

José Manuel Salazar-Xirinachs
GENEVA (ILO News) – The challenge for the world economy and individual countries today is not only to recover from the global financial and economic crisis but to do so at a time when labour markets are undergoing tremendous structural changes.

Six “major forces” are at play and they affect every aspect of the world of work, from the way we work to the number and types of jobs that are available.

The first force is technology: A new wave of technological changes seems to be advancing at an ever increasing speed. Robots, computers and automation are increasing productivity but reducing the potential of the manufacturing sector to create jobs.

Several countries, including Japan, have experienced a drop in the number of jobs in this sector due to technological innovations. The fastest growing categories of employment in developed countries are the so-called “interaction jobs” in the service sector: managers, engineers, salespeople, doctors, lawyers and teachers.

Another force is the rise of emerging economies: It is not only a new geography of growth and consumption that is emerging but, due to rising education levels in emerging and developing countries, also a new geography of skills.

In just ten years, from 1996 to 2007, the numbers of undergraduate and postgraduate enrolments increased from 72 million to 136 million in a group of 113 emerging and developing countries.

This is changing the nature of the global competition for talents. The idea that developed economies have a monopoly over smart people doing smart things in smart ways is no longer applicable.

Skill mismatches: The persistent and, in some cases, growing gap between the skills employers seek and those available - is also an increasing problem. Many companies are not able to fill vacancies, despite unemployment being so high. The paradoxical result is higher unemployment levels, coupled with skills shortages.

Demographic change, especially population ageing in Europe, Japan and China – is another trend posing unique challenges. For example, how will these countries pay for pensions and healthcare when the proportion of old-age to working age population doubles in 30 or 40 years? How will they confront the labour and skills shortages?
Increasing the labour force participation of women, young people and of the elderly are some of the solutions for countries with ageing populations.

The fifth “force” at play is the increasing global consensus, reflected in the Rio+20 outcome document The Future We Want, around the urgent need to follow energy-efficient, low carbon growth paths.

There are great opportunities in green jobs but also an important job destruction potential in non-competitive unsustainable technologies. So we have to make sure that workers have the right set of skills for economies to be able to transition from traditional to greener industries.

Finally, growing income inequalities pose a threat to social cohesion. Not only that, they affect growth and have an impact on public finances and rising debt. In some countries, inequality has been driven by a rising share of non-regular, part-time or temporary work. Informal work is a problem no longer limited to the developing world.

These forces are game-changers. Together with the on-going effects of the global economic crisis, they are determining present opportunities and constraints and shaping the future of labour markets worldwide in the process.

They are part of a “Great Restructuring” that we need to recognize and tackle, in order to make growth inclusive and globalization fair for everyone, not just a few.

*ILO Executive-Director for Employment

Tags: labour economics, employment, economic policy

Regions and countries covered: Global

Unit responsible: Department of Communication (DCOMM)

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