The Global Job Machine: Trends & Prospects
By Garry Jacobs *
Radical technological advancement and the emergence of a New Economy combined with rapid globalization pose serious challenges to companies, workers, governments and existing ways of work around the world. These challenges demand our serious attention. New perspectives, creative thinking, fresh approaches and innovative initiatives are urgently required. Added to these, we are now suffering the consequences of a global financial crisis which has sent shock waves through the world economy, displacing millions of workers and raising anxieties about a dismal future for young job aspirants. Coupled with the related fears generated by rapid mechanization, ever-expanding population, outsourcing and globalization, the actual or perceived threats to individuals, localities and countries have led some to think that we must urgently prepare ourselves for a future world with too little work.
Do these challenges inevitably point to a dire global shortage of jobs in future? Are we indeed fighting a perpetual uphill and inevitably losing battle against ruthless and relentless impersonal economic forces indifferent to human well-being? Does the global employment situation warrant such pessimism? Do the facts of recent history support the view that we are falling ever farther behind in our efforts to generate work for the world’s growing population. Apart from the temporary effects of the recent recession, is there reason to believe that our children and grandchildren may be heir to a world without work?
Do these questions about a distant future really even matter when the short-term prognosis is so worrying? Our view of the future does matter. It matters very much. If truly the near term prognosis for work is so bleak and hopeless, we may need to radically re-engineer our whole approach to work, livelihoods and consumption or face violent social upheavals by the growing numbers of economically disenfranchised unemployed. But if, instead, factual evidence indicates a rapid expansion of employment opportunities in the future – leading perhaps even to a global shortage of workers – then our response to the current deficit may be very different. It may not mitigate the real suffering brought about by the immediate challenge. But it would certainly make it easier for us to approach the current situation as a temporary aberration with far more confidence, energy, and determined political will.
The Historical Record 1950 - 2007
Compelling misconceptions clouded thinking about employment through much of the 20th Century and continue to hamper rational discussion today. Rapid industrialization fueled fears that machines will soon replace human beings as the principle producers of goods and services in the world. These fears were aggravated by the population explosion that began after World War II, which flooded the global labor market with hundreds of millions of new job seekers. Computerization, outsourcing, globalization and now a major recession have further added to the gloomy picture.
What does the historical evidence tell us about the world’s past performance and future prospects? Contrary to appearances, it tells a remarkable story that belies our fears and compels us to reexamine our underlying assumptions. It depicts the workings of a global economy – a veritable global job machine – that has been creating new jobs even faster than the world’s population has expanded or technological advances have replaced human labor with machines. Over the past sixty years it has generated more than two billion jobs, nearly three as many jobs as the world economy generated during the previous five centuries! It also provides compelling evidence that we need to move beyond traditional national models of employment and evolve a truly global understanding of the factors, forces and processes that govern the world of work.
Figure 1 shows growth in global population and employment since 1950. It shows that global job creation has been taking place at record rates for the past six decades. Between 1950 and 2007, global population increased by 168% from 2.5 billion to 6.7 billion.[1] During the same period, total global employment rose 237% from 900 million to 3.1 billion.[2]
This broad historical trend maintained its positive momentum right up to the onset of the current recession. From 1996 to 2007, global population increased by 16%, while total global employment grew 17%.[3] The world added approximately 400 million more people, yet the global employment to population ratio remained virtually constant as shown in Figure 2. If past trends continue, the global economy will create another 1.3 billion jobs during the next 35 years.[4]
In addition to unprecedented job growth, the last half century has also been a period in which the quality of jobs available worldwide has increased dramatically due to the progressive shift from manual work to mental work. This qualitative improvement in work is indicated by the falling percentage of the world’s work-force engaged in agriculture, one of the lowest paying manual job categories. Globally, employment in agriculture declined from 65% in 1950 to 36% in 2007.[5]
Employment in the OECD
A closer look at what occurred in the USA and other OECD countries is consistent with the global figures. During the 20th century America vigorously exposed its labor markets to the dual threats of technological development and open markets. Recent anxiety regarding the future of employment is similar to that which the US passed through in the 1890s when agricultural mechanization displaced millions of farm workers, generating double digit unemployment and visions of a dismal future. Yet, over the last 100 years, employment in the United States has grown by nearly 100 million jobs or 400%. Between 1990 and 2007, the US economy created 25 million additional jobs.
The OECD as a whole as performed in a similar manner. Figure 3 shows that between 1960 and 2007, total employment in OECD countries rose seven-fold, by 467 million jobs, a 78% increase in the proportion of the population employed, including a 49% increase in the participation of women in the workforce[6]. This trend continued right up to the start of the current recession.
Rising unemployment in the OECD appears to contradict this trend, but it is only an appearance resulting from growth in total population. More people have been working than ever before but in absolute numbers, more people are unemployed; because the population is larger and a higher proportion of the population seeks jobs. Between 1965 and 2007, unemployment in OECD countries rose by only 27 million persons, equivalent to only 6.5% of total job growth.[7] Over the past decade the ratio of employment to population actually rose slightly, while unemployment fell from an average of 7.8% to 6.4%.[8] Figure 4 shows that despite short term fluctuations, the unemployment rate remained remarkably stable at around 6%.
Future Trends: Engines of Job Growth
Two significant trends will strongly influence global employment prospects in the coming decades – rapid economic growth in the developing world and demographic trends in OECD countries. The traditional nation-based perspective of employment fails to take into account the enormous positive impact of global economic growth on job creation, because many of those jobs are created in other countries. Jobless growth is a misnomer. The most economically advanced countries are actually running a net negative unemployment, which is not immediately apparent because we focus only on jobs created in the domestic economy. High income countries are net job exporters.
The impact of job exports is probably highest and easiest to document in the USA. The US currently employs about 12 million workers in its own manufacturing industries, which accounts for about 9% of total employment. In addition it generates work for approximately 21 million additional workers in 12 low cost developing countries, including China, Korea, Mexico, India and other Asian nations. This approximate figure may be taken to represent the net addition to the US workforce after offsetting America’s own manufacturing and service exports to the world. If service imports such as IT and business outsourcing are also taken into account, the total net overseas job creation may be closer to 24 million. This is a rough estimate, but it should be sufficient to illustrate the point that as incomes rise, net job creation occurs both domestically and internationally. If correct, it means that America produces 18% additional jobs overseas and that in normal times it is running a net negative unemployment rate (after deducting domestic unemployment) equal to 12 or 13% of total domestic employment.
This helps explain the remarkable fact that total global employment has more than kept pace with population growth and technological development over the past sixty years. The offsetting factor is higher incomes and greater demand for goods and services, both domestically and internationally. Granted that the net contribution to global employment by most countries is probably much lower than the USA level in both absolute and relative terms, nevertheless the principle should hold universally. As living standards continue to rise in many middle income countries, they too will become net job importers. Even low wage developing countries are becoming job importers. India-China cross-border trade has recently crossed $52 billion. As their economies continue to grow rapidly over the next two decades, these two giant economies, representing 40% of the world’s people, will create hundreds of millions of new jobs, domestically and internationally.
Demographic Trends
The world is now in the early stages of another demographic revolution, which promises to have tremendous impact on the future of employment worldwide. This revolution is the result of a steep and steady decline in the birth rate and an increase in life-expectancy in the more economically-advanced countries.
In Western Europe life expectancy has risen from 47 years in 1900 to 80 years in 2007.[9] The result of this trend is a reduction in the number of young people entering the job market and a surge in the size of the elderly retired population. Already 50% of the population in industrialized countries is in the dependent age groups, which includes those under 15 and those over 64.[10] Over the last decade, the old-age dependency ratio – the percentage of people aged 65 and above compared to the number of people aged 15-64 – in these countries has risen from 19% to 22%.[11]
Table I gives the projected growth of the working age population over the next five decades. It shows that the labor force in Europe will level off by 2010 and begin to decline thereafter. Already population growth has become negative in some parts of Europe.
These trends will have enormous impact on the future of employment. The EU’s labor force is expected to shrink by about 0.2% a year between 2000 and 2030.[12] The old age dependency ratio will rise from 22% in 2000 to 35% in 2025 and 45% or 50% in 2050.[13] As the old age population grows, the working age population will shrink. The EU25 is expected to lose an average of one million workers a year.
A UN study released in March 2000 estimates that the EU-15 would have to accept 170 million new immigrants over the next 25 years in order to maintain present levels of working and tax-paying population.[14] A World Bank Study estimates that 68 million immigrants will be needed to meet labor requirements during the period from 2003-2050.[15] These estimates have been challenged, but there is little doubt that unless major policy initiatives are taken; the net result will be a dramatic decline in the relative size of the working age population in Europe and a shortage of workers to fill the available jobs.[16] Recognition of this fact is already prompting major policy shifts within the EU, which has adopted a goal of raising labor force participation rates to 70%, while the average for the EU-15 was only 65 years in 2005. It has also spurred efforts to increase participation of women in the workforce.
Similar trends will prevail in other countries. The same UN study estimated that Japan would need to admit 647,000 immigrants annually for the next 50 years in order to maintain the size of its working population at the 2000 level.[17] By 2013, labor-force growth in the United States will be zero. The US is forecast to have a shortage of 17 million working age people by 2020. China will be short 10 million.
India is expected to have a surplus of 47 million in 2020,[18] but there is evidence that even in India, the surpluses may prove illusory. Reliable data on employment growth in India is confined to the formal sector which represents less than 10% of total jobs. Empirical evidence suggests actual job growth is far higher than official measures. Otherwise with seven million new job seekers entering the labor market each year, unemployment would have swelled enormously in recent years; whereas in fact both urban and rural employers report increasing difficulty attracting the workers they need. As indirect evidence of a tightening labor market in India, salary levels in the formal sector are rising at 14% annually and are projected to be the fastest rising in Asia. Wages in unskilled work in some non-metropolitan and rural parts of the country are rising even more rapidly.
The projected job shortages in developing countries are based primarily on anticipated domestic economic growth and demographic trends. They do not fully take into account the growing demand for jobs created by rising economic prosperity in other countries.
Need for a Social Theory of Employment
Objective facts are not sufficient. We need also clarity of thought. Misconceptions have surrounded notions of employment for so long that they are likely to persist, even in the face of overwhelming evidence to the contrary, unless fact is supported by rational analysis. The circumstances that are now creating a favorable social environment for full employment are not merely an accident. They are driven by fundamental social forces.
A day may soon come when we look back on periods of high unemployment as a short term anomaly of adjustment that occurred during the transition from agrarian-industrial to post-industrial society. The past two centuries broke a pattern of economy that had been dominant for nearly 10,000 years. The dawn of the Industrial Revolution ushered in a period of radical transition. England was the first to make that transition. Employment in agriculture fell to 11% of total employment by 1900, at a time when agriculture still represented 40% of total employment in France, Germany and USA, and probably as much as 75% globally. Between 1870 and 1970, agricultural employment in the USA declined from 50% to 4% of the workforce, yet all these workers and twice as many additional workers were absorbed in other types of work. How were all these disenfranchised agricultural workers re-employed so quickly?
To the upheaval of economic transition was added the immense impact of two world wars, innumerable civil wars, unprecedented immigration, and the advent of modern antibiotics and medical care, which were responsible for a phenomenal 2.6-fold growth of world population after 1950. A similar process is now going on in developing countries, where the percentage of the workforce engages in agriculture is falling rapidly and new technology is being adopted at record speed. In spite of all these factors, we still find that growth of employment has actually outpaced population growth during this period. The question is ‘how?’
We cannot answer this question by viewing economy and employment in abstraction – as if they were determined by fixed, universal laws like the Laws of Thermodynamics – or in isolation – as if they functioned separately independently from society as a whole. A satisfactory answer can only be found by examining economy and employment as human processes which are governed by political, social and psychological forces determined by a wider and ever-evolving social context.
When we do this, the first thing we note is that employment is a function of human aspirations and those aspirations have been rising dramatically over the past two centuries, particularly after 1950. Human initiative depends on what people perceive as possible and desirable. For many centuries, the confining structure of feudal, autocratic, class-bound societies placed severe limits on those aspirations. A combination of political democracy, social liberalism, technological development and universal education have broken down the barriers to individual and social progress, resulting in a revolution of rising expectations which began in North America and Europe and has since circled the globe to awaken the aspirations of people everywhere. Higher aspirations generate greater energy, productivity, experimentation, innovation and pioneering initiatives. People want more and demand more, creating job opportunities for other people to fill. Rising aspirations have been the principal driving force behind unceasing productivity growth.
Nor is there any indication that this process is nearing a limit, even in the most economically advanced nations. In those countries, the desperate need for food and clothing has been replaced by an unquenchable quest for travel, better health care, higher levels of education, more information, recreation and entertainment. It is now possible for 2% of the population to produce all the food a nation requires, but it requires 80% or more to meet its rising demand for services. Demand for food is finite and subject to severe limits. Demand for services is virtually unlimited.
During the 20th century we witnessed many instances in which the advent of a new technology or foreign imports eliminated jobs. What we did not notice was the overall impact of rising levels of technological sophistication on the need for new types and larger numbers of workers in education, research, product development, sales and service or the corresponding growth of jobs in sectors that catered to growing foreign markets.
It is now becoming apparent that every advance in social development has this dual effect – eliminating jobs in older sectors and creating jobs in new fields. New jobs are created as a result of the development of new services (Internet), growth in consumer demand (mobile phones), higher productivity resulting in lower cost (personal computers), a growing spirit of entrepreneurship (internet start-ups), greater access to information (on-line job exchanges and marketplaces), technological innovation (iPod and iPhone), organizational innovation (micro-lending), higher quality standards (education), legislation and enforcement (food quality, energy conservation), greater administrative efficiency, greater health consciousness and environment awareness, higher skills (engineering), increased speed (air travel), change of attitudes (working women), etc. This unlimited capacity of society to generate new jobs was noted by the International Commission on Peace and Food in its report:
The notion that there are a fixed or inherently limited number of jobs that can be created by the economy is a fiction. It is not just advances in technology that work in this fashion. Every major advance in social attitudes, institutions, values and lifestyles has a dual effect on employment, creating jobs in some areas and destroying them in others. Higher standards of education not only raise productivity, but also stimulate higher expectations that lead to greater consumption. Changing attitudes toward the environment have created entirely new industries and generated new jobs in every field where impact on the environment is of concern. New types of organization such as fast-food restaurants, franchising and hire purchase or leasing create new jobs by hastening the growth or expanding the activities of the society. Shifting attitudes toward marriage and the role of women create greater demand for jobs but also more opportunities for employment, because working women consume more and require additional services.[19]
From the individual’s point of view, the relationship between human aspirations and employment generation is direct and self-evident. Every person who comes into the world brings with him a basic set of physical and non-material needs which have to be met largely by other people during a long period of childhood and an increasingly long period of old-age. We have already seen that that set of needs is increasing rapidly and not subject to any inherent limits. Assuming the average person works for 200 days a year during 50% of his lifespan, it is equivalent to working for less than 30% of total days he is alive. Consider also that our requirement for goods and services spans at least 16 hours a day and in some cases 24 hours, which is two to three times greater than the actual time we spend in working, meaning that we work only about 10-15% of the actual time we consume. Furthermore, those who work to provide us with our needs also work only 10-15% of the time they live, which means that if each of us required the full-time assistance of one person to provide for our needs round-the-clock, we would require 40 to 100 times as many work-providers as we have consumers, since each of them works only 10-15% of their own lifetime as well.
Obviously this cannot happen and does not happen. Rising levels of productivity resulting from technology, social organization, education and training make it possible for each human being to produce far more than is required for personal consumption. There is no inherent limit to this rising productivity. But there is also no inherent limit to the range and quantity of needs to be met. And at the higher end of the spectrum, needs such as education and medical care tend to require higher levels of labor input.
Evolving a Global Perspective of Employment
The remarkable performance of the global economy in generating new jobs over the past half century has been largely overlooked because employment is viewed primarily from the perspective of individual nations, rather than from the perspective of the world as a whole. It is easy to spot the loss of jobs resulting from outsourcing of production to foreign countries or adoption of mechanized production processes. But the overall effect of social change on the global economy is far more complex and difficult to measure. Jobs that move overseas today help spur income growth in other countries that results in higher consumption, greater demand for imports and greater job growth in other countries sometime later.
These facts do not mitigate the real negative impact of short term job losses, especially those that have come on very rapidly as the result of the international financial crisis. Individuals and some countries may be impacted quite severely by macro level global trends in the short term. Short term problems justify aggressive and innovative measures to cope with a localized problem, but they do not necessarily imply an unsolvable problem either for any individual nation or the world-at-large in the medium or long term. The medium term prognosis appears quite favorable for creating full employment at the global level.
To understand and fully respond to the challenges of rapid social transformation, we need to develop a comprehensive social theory of employment as well as global models which reflect the complex interacting forces that are reshaping world society in ways that differ substantially from earlier periods in history.
________________________
*Author is Vice-President of The Mother’s Service Society, Pondicherry, India
[1]. U.S. Census Bureau. (2008) U.S. and World Population Clocks – POPClocks [Internet]. Available from: <http://www.census.gov/main/www/popclock.html> [Accessed 20 August 2008].
[2] Ghose Ajit, Majid Nomaan and Ernst Christoph. (2008) The Global Employment challenge [Internet], International Labour Organization. pp.1, Available here [Accessed 12 August 2008].
[3] International Monetary Fund. (2006) World Economic and Financial Surveys [Internet]. Available here. [Accessed 21 August 2008].
[4] International Commission on Peace & Food. (1994) Uncommon Opportunities: Agenda for Peace and Equitable Development, [Internet], Zed Books, Chapter 4. Available from: <http://icpd.org/UncommonOpp/CHAP04.htm> [Accessed 15 August 2008].
[5] International Labor Organization. (2008) Global Employment Trends [Internet]. Available from: <http://www.ilo.org/public/english/employment/strat/download/get08.pdf> [Accessed 20 August 2008].
[6]International Labor Organization. (2008) Global Employment Trends for Women 2008 [Internet], Press Release, 6 March. Available here [Accessed 20 August 2008]
[7]OECD Stat Extracts. Dataset: LFS by sex and age [Internet]. Available here. [Accessed 14 August 2008].
[8] International Labor Organization. (2008) Global Employment Trends [Internet]. Available from: <http://www.ilo.org/public/english/employment/strat/download/get08.pdf> [Accessed 20 August 2008]. pp.11.
[9] Giarini, Orio and Liedtke, Patrick M. (1996) The Employment Dilemma and the Future of Work, Report to the Club of Rome, pp.64 and United Nations. (2006) World Populations Prospects: The 2006 Revision [Internet]. Available here.[Accessed 21 August 2008]. pp.80
[10] Giarini, Orio and Liedtke, Patrick M. (2006) Abstracts from The Employment Dilemma and the Future of Work [Internet]. European Papers On The New Welfare. Available from: <http://eng.newwelfare.org/?p=47&page=7> [Accessed 21 August 2008]. pp.7.
[11] Giarini, Orio and Liedtke, Patrick M. (1998) The Employment Dilemma and the Future of Work, Report to the Club of Rome, pp.61.
[12] Eberstadt, Nicholas and Groth, Hans. (2007) Healthy old Europe [Internet]. International Herald Tribune, April 20. Available from: < http://www.iht.com/articles/2007/04/19/opinion/edeber.php> [Accessed 18 August 2008].
[13] Munz, Rainer. (2004) Migration, Labor Markets and Migrants’ Integration in Europe: A Comparison [Internet]. Migration Research Group. June 28-29. Available here. [Accessed 13 August 2008]. pp.19.
[14] Fotakis, Constantinos. (2000) Demographic Ageing, Employment Growth and Pensions Sustainability in the EU: The Option of Migration [Internet]. Expert Group Meeting on Policy Responses to Population Ageing and Population Decline, United Nations Secretariat. October 16-18. Available here. [Accessed 12 August]. pp.6.
[15] Raihan, Ananya. (2004) Temporary movement of Natural Persons: Making Liberalisation in Services Trade Work for Poor [Internet]. Annual Bank Conference on Development Economics-Europe, May 10-11. Available here. [Accessed 20 August 2008]. pp.20.
[16] Slaus, Ivo. (2004) European Institute of Technology – An attempt of Euclidean Justification, South East European Division of the World Academy of Art and Science.
[17] United Nations Population Division, Replacement Migration. Population Indicators for Japan by Period for Each Scenario [Internet]. Available here. [Accessed 14 August 2008].
[18] Ramachandran, Sudha. (2006) Doubts over India's 'teeming millions' advantage [Internet]. Asia Times, May 5. Available from: <http://www.atimes.com/atimes/South_Asia/HE05Df01.html> [Accessed 25 August 2008].
[19] International Commission on Peace & Food (1994) Uncommon Opportunities: Agenda for Peace and Equitable Development [Internet]. Zed Books, pp.73. Available from: <http://icpd.org/UncommonOpp/CHAP04.htm> [Accessed 15 August 2008]
Print
Comment on Global Jobs Machine
I think your article is excellent in many ways. For example, I entirely agree with your statement toward the end: "...because employment is viewed primarily from the perspective of individual nations, rather than from the perspective of the world as a whole."
However, I disagree with your conclusion that the world economy has and will produce enough jobs. Your Figure 1 chart is misleading because it looks at total population rather than working age population (ages 16 - 64). Working age population became an increasingly large proportion of world population from 1980 (59%) to 2007 (65%) -- I did not go back earlier than that -- , so the ratio of employed to total population should have been rising, not declining slightly, as new potential workers flooded into the labor force.
The world economy did not perform as well in creating jobs as you state.
You rightly state that: "Radical technological advancement and the emergence of a New Economy combined with rapid globalization pose serious challenges to companies, workers, governments and existing ways of work around the world."
But, as I look at the details of those changes, I come to a different conclusion about global job growth. Western productivity growth is now being spread across the world at an ever accelerating pace because companies have to shed workers across the board to stay in the race in a world in which the scope of competition has expanded enormously.
Moreover, rapid advances in artificial intelligence software is shifting productivity growth from the traditional replacement of human physical activity (with its speed, power and accuracy limitations) with machines that consume enormous amounts of fossil fuel and nuclear energy to the replacement of human decision making in many areas work. This development puts service sector jobs, which have been vital to keeping employment rates up as jobs in agriculture, mining, and manufacturing disappear, in grave peril.
As I see the developing situation, the OECD labor force trends you report are spreading to more of the world very rapidly. So, you are right that we need "global models which reflect the complex interacting forces that are reshaping world society in ways that differ substantially from earlier periods in history." And the main reason is to combat the unfounded optimism embedded in free market thinking and get on with enacting changes in national economic policies and the governance of the world economy that ensure that the enormous wealth the world economy produces is equitably distributed even though employment opportunities are disappearing. That will require expanding existing paid non-work activities and creating new ones.
Everyone must have an entitlement to income either through engagement in work or engagement in socially sanctioned non-work activities.
Finally, since you have considerable expertise about global employment, I would greatly appreciate your visiting a new website I have set up and offering your comments and suggestions.
http://usjobsgoingdown.wordpress.com/
Best regards,
Jim Lunday
Comment on Global Jobs Machine
Dear Jim
Thank you for your thoughtful comment on my employment article. I wonder if I actually predicted the world economy will produce sufficient jobs? If so, your criticism is well founded. What I believe and meant to say was that the world economy has the capacity to produce sufficient jobs provided policies are modified to remove the bias against employment and in favor of capital, speculation and many other values which are either secondary to society or even detrimental.
Figure 1 has been redrawn in a longer more subsequent published article
However, your comment is still valid that chart data is not based on working age population. My argument is that during a period of unprecedented radical social change – population explosion, technological advancement and globalization – employment has more or less kept pace. Even if working age pop grew faster than employment during this period, the difference is minimal and points to at most a temporary period of readjustment. What does that tell us? It explodes the misconception that we are inevitably destined for high rates of unemployment in future. India has the fastest growing population in the world today (in absolute numbers) and projects to add 135 million new workers by 2020. Yet in most parts of the country, workers are increasingly scarce. It defies conventional wisdom, but it is a fact.
Granted, that is not the present situation in the USA and Europe. But then we have to ask why and what can be done about it. According to the environmental trends from 1950 – 1970, we should all be dead by now due to the poisoning of air (I grew up in LA) and water. We aren’t because society refused to accept the trend as inevitable and it acted. Whereas with regard to employment we are bound by superstitions that go by the name of scientific laws, which need to be challenged.
The problem for the USA is not outsourcing from India. It is basic social priorities. In today’s global financial market which you note on your website, we have $4-5 trillion circling the globe daily in search of speculative returns rather than productive investments, destabilizing financial markets and undermining economies, because society endorses a right to unbridled speculation, while ignoring the fundamental necessity and right of every human being to gainful employment.
Automation and shifting of production overseas are not new trends. They have been going on in USA for a century, but employment generation has kept pace with labor force growth through most of that period. If it is not doing so now, the question is why? At the same time, society is continuously creating and has the ability to create new types of employment, as it has expanded jobs in education, health care, entertainment, etc. Here again, why isn’t it faster? Vested interests in the health care industry which restrict licensing is one obvious reason. As a business consultant, I have found in practice that the automation and overseas outsourcing of work in many industries is largely driven by inability to find and attract sufficient workers with the right skills. Again we need to ask why and what can be done about skill shortages that are very real.
The essential question is whether society is doing everything it can and should be doing to address the employment issue or is it really helpless? My conclusion is any sense of helplessness arises out of faulty understanding, inadequate theory, wrong values and priorities, inadequate or shortsighted policies.
I whole-heartedly agree with your statement “Everyone must have an entitlement to income either through engagement in work or engagement in socially sanctioned non-work activities.”
I visited your website and agree with your emphasis on the impact of globalization which is so poorly factored into traditional theory. To arrive at a valid perspective we need to consider the employment potential of the world as a whole, without jumping to conventional assumptions that low wage countries will inevitably take all the good jobs away. If that were true, it was also true 120 years ago when basic wages in USA were up to 10 times higher than in Europe. The impact of trade and technology are not new. If we wish to draw conclusions about the future, we should start by applying our assumptions and models to the past to see how far they explain what has already happened. I have not found any so far that pass the test even in retrospect and believe it is because they are not founded an valid conception of the creative process of social development. Equilibrium theory may work short term under rigidly confined conditions, but society is an ever evolving entity.
Garry Jacobs
Comment on Global Jobs Machine
Thank you very much for your extensive response to my comments and for the reference to a more recent article. Our views are even more compatible than I initially concluded. Like you, I do not think increasing global unemployment is inevitable, but I do believe current policies and trends are taking us in that direction. Yes, we can do something about it. I strongly believe one of the starting points for better policies is a more accurate understanding of the scale of the forces that shape the global and U.S. employment trends we see and experience.
Being a U.S. citizen and resident, I am focused on the U.S. economic policy approach. But knowing that the U.S. is an enormously powerful force in the world economy, I believe the U.S. economic policy approach must be changed in such a way that it benefits the rest of the world as well as us. I believe that can be done, but not without a major shift in how the U.S. people understand our world.
You mention the policy changes that were made to reduce environmental pollution. My greatest fear is that global employment growth will be restored by throwing out large parts of the gains in wage levels, workplace safety, and environmental protection we now enjoy.
Best regards,
Jim
Comment on Global Jobs Machine
Further to your comment on employment growth since 1950, I found the figure for total working age population to 2010. It rose by 191% compared to employment growth of 175%. In addition, the percentage of that population seeking work rose dramatically, due to a major influx of women into the work force. This gap is no doubt one real for the pressure on job creation, but the high rate of population growth is a historical singularity which is already leveling, rather than a compelling future trend.
Garry Jacobs
Comment on Global Jobs Machine
Thanks for the update. Two months back I would have agreed with you about population growth leveling off, but a month or so ago I ran into a story about revised UN pop growth estimates. A web search gave me this: "ON MAY 3rd, the United Nations produced its two-yearly update of the world’s population, which includes projections. The numbers show small tweaks since 2008. The global population is likely to reach 7 billion in October 2011, not spring 2012. And it may still be rising in 2100 past 10 billion, rather than being flat by then." http://www.economist.com/blogs/dailychart/2011/05/world_population_projections
This suggests that the working age population will continue to increase for some time to come. And since at the global level all additions to the population is through births, this means the flood of young workers will continue longer than previously anticipated.
Two more contributing factors:
Of course, adding young workers adds consumers, but we do have to ask these questions:
Despite the pessimism in my analysis, I am not betting against the human race. It is said that necessity is the mother of invention. What I am betting on is a very large increase in the level of documented and felt necessity over the next decade, so I am really betting on a lot of social invention.
And I am betting on a lot of political upheaval as fights over who wins and who loses as social inventions enter the public dialog and gain organized and vocal popular expression and politically powerful allies. (I can't help but think of the current fight over shifting from incandescent lighting to more efficient lighting in the U.S. as a precursor of the tens of thousands of such fights that will rain down on the world's governments in coming years, with collections of those fights often coalescing into much larger and violent upheavals.)
I think the storm front we all must travel through is already in sight.
Setting aside the chance that we accidentally incinerate ourselves, dramatic changes in the relationships between the public and private economic sectors, how we do and do not exploit the world's natural resources, in the makeup of the world's basket of goods and services, how societies define and implement entitlements to income, and much, much more are coming our way. As has always been the case when prevailing economic and social practices become increasingly untenable, the adherents of today's untenable practices will eventually lose.
So, I am actually hopeful.
Jim
Article by Krugman
I thought this NY Times article by Krugman on the German model on job creation – including reducing current workers hours and subsidies to employee – is timely.
http://www.nytimes.com/2009/11/13/opinion/13krugman.html?_r=1&hp
I would like to add one new recommendation. There should be some sort of pressure group or force that compels profitable or very profitable businesses (as in Silicon valley) to work with government to help devise, formulate, and create new types of jobs using their pool of profit. E.g. for each 1% of profit above a certain amount, half should be invested in new job development. E.g. educate local poor or low or obsolete skilled workers to new possibilities and jobs. There are endless possibilities along these lines. Though US helps export and expand the base of many jobs to the rest of the world (like India through outsourcing), which is positive, there seems to be less of a movement from other countries to the US. Yet US has vast profit reserves in its private sector. Silicon Valley alone has nearly 200 billion in cash on hand without any debt. The companies don’t even know what to do with these vast sums of money! This way they can insure a more secure jobs future which will also allow for more stability in their own country. Without it, there could be a rebellion or insurrection afoot; something they would certainly not enjoy.
RPosner
Comment on 'Global Job Machine'
I agree with some of this and disagree with other parts. Mainly because the writer is saying a number of things, that are not completely compatible.
I don’t think I can do justice to The Global Job Machine in an email. Jacobs is mixing hope and reality and trends in a forceful positive view that shows few imbalances when the job market is looked at from a global view. I suppose there would be no balance of payments problems either when we look at things from a global perspective.
Just as the American politician said that All politics is local, so too is employment and unemployment both local and personal and fixed in a time period and remedies are sought within a jurisdiction. Remedies are sought locally because taxing power and sanctions are local. Global concerns usually remain as concerns because sanctions and remedies are almost always lacking.
Arthur
Impacting Job Flow in the World
Re: How the source of local employment often originates elsewhere, in other countries:
This would seem to indicate that we need to broaden our view of job generation, from a limited local one to a holistic global view.
It would be helpful to see these impacts on a dynamic, ever-changing global map where we see how organizations in one country or area create jobs in another. From these we can perceive positive impacts, as wells as gaps, imbalances, discrepancies, which can enable us to make decisions that have positive global and local effects.
From these we can also see, infer social forces and trends, and make decisions that have in greater positive impact.
If that is the case, then we would need global oversight institutions that can perceive the trends to set direction, policies, and plans that will fill in the gaps. The shifting global map of job movement can be linked to a global database of new emerging technologies and corresponding new job types that can match unemployed or those seeking better jobs, enabling the constant filling in of disparities and variances, enabling a perpetual rebalancing and equilibrium of job creation and flow in the world.
Very well synthesized and fact-based situation analysis
Very well synthesized and fact-based situation analysis. Worth keeping at hand and revisiting on the lines of conclusions in the paper and keeping in view the fertility decline, globalization, new technologies and opportunities.
Maharaj Muthoo