Looking beyond the current woes of unemployment, or the need to work toward a more productive economy, one that can support higher wages and offset the growing burden of pensions and concurrent increase of health and education spending, with the future approaching faster than one might hope, the future of employment remains a big question mark for countries across the world.
What is the future of employment? Will there be work for everyone? If so, what kind will it be? Looking at advanced economies, these questions arise in a context of what in the United States is called jobless recoveries: in the lower stages of the cycle, jobs are destroyed. But now, unlike what happened before, in good years, employment only sees a partial uptick. That growth, once closely linked with employment, now seems to be an independent factor. Since 1950, fewer jobs have been created with each passing decade , even reaching negative numbers in the last decade.
And if we shift our focus from quantity to the quality of employment, we will see that both job destruction and wage stagnation particularly affect jobs requiring medium-level qualifications: those requiring high qualifications are safe, albeit not as much as before, while some of the low-skilled jobs require a physical presence (caretakers or waiters) and are saved from globalization, while others stay alive because the robots that could replace them are still too expensive.
So the selection of jobs is thinning out: between the blue-collar grandfather and the architect grandson, there are fewer vacancies for an administrative father. The elevator of social mobility is apparently out of order. The job market is polarized. How will the building of a single global market and the digital revolution impact the future of employment? The wise answer is to say that we do not know. Clearly, we should not project the present situation years into the future. But nor should we look back and reassure ourselves with the fact that two centuries after the first power looms there are many more jobs now than there were then, as that would neglect the fate of generations of artisans that filled the ranks of the industrial proletariat.
There are biased visions of the strategy, some catastrophic and others idyllic; all with a grain of truth, since free trade and technology harbor both promises and threats; both can be friends or foes of humanity. There is no bird’s-eye view available: we do not know what laws the future holds. Nevertheless, as change is constantly dependent on us, we should be able to influence it to prevent its most harmful effects.
But how can we influence the unknown? Not by trying to follow some immovable laws but instead by establishing criteria for us to assess the likely outcomes of globalization and technology for their service to the population, and striving to live according to these criteria. The focus on private profit, often disguised as the pursuit of efficiency, has carried too much weight : a project is measured by its profitability, whether proximate or remote, the success of an economic policy for GDP growth, regardless of whether one or the other are detrimental to employment. Nevertheless, we consider employment to be a need as vital as food and clothing, we will evaluate the quality of a policy in terms of the jobs it creates, and we will promote technological developments that help people do their work rather than deprive them of it, and we will base the division of labor less on increasing productivity and more on the need to provide work for everyone.
Of course the idea is not to lose sight of profitability – which allows projects to move forward –, or to reject a balanced budget – which allows for freedom of activity – but rather to make sure both are in their rightful place. This consideration of employment as a vital necessity is not arbitrary. It is very much in line with reality. Adopting this approach as an ethical principle and acting on it could help us face an unknown future by channeling globalization and technological change into human progress.
Edition of the article published in La Vanguardia on November 25, 2014
Alfredo Pastor, PhD in Economics from the Massachusetts Institute of Technology (1973), is a professor in the Department of Economics and the holder of IESE’s Banco Sabadell Chair of Emerging Markets.
He was Spain’s Secretary of State for Economics (1993-1995), and a Country Economist at the World Bank (1980-1981), among other positions. He was the Dean of China Europe Business School (CEIBS) from 2001 to 2004. In his career, Alfredo Pastor received the Grand Cross of the Order of Civil Merit in 2004 for his work at CEIBS, and the Godó Award in Journalism in 2011.
This is an excellent article for ethical investors.
However, job creation is not a priority for most big banks, investors and financial institutions.
Until we have an efficient business model which is not based on the maximization of profits, investors will most of the time (if not always) opt for investments that yield maximum profits, regardless of their impact on new jobs.
The only way this can change is in a new business model where investors and entrepreneurs become real partners, if they make real profits they share them in a fair way, and if they make a loss they also share it in a fair way (i.e. without the bank taking possession of all the entrepreneur’s assets).
The (Too Big to Fail) structure of banks and financial institutions must also change if we are serious about creating jobs for the youth, and the near monopoly of big multinationals must also end, in order to give a real chance for more young entrepreneurs to succeed and create more jobs.
Also, high tech industries should not be the only focus, as the agricultural sector can absorb a good part of the working population who prefer to work in the countryside, even if they receive lower wages. Today, the value added of this sector can be increased with additional income of needed energy from renewable sources, like solar & wind energy.
Can this be done?