Employment in the Global Knowledge Society Garry Jacobs World Academy of Art & Science

Myths about Employment Population growth creates unemployment Technology destroys jobs Globalization generates unemployment Rising levels of unemployment are inevitable

Population & Employment 1950-2000

Population Growth & Employment 1994 – 2004 Population grew by 763 M (14%) Employment grew by 400 M (17% ) Job creation is at record rates Shift from manual to mental work has resulted in a dramatic improvement in the quality of jobs created

Unemployment 1994 -- 2004 Unemployment rose from 140 M to 180 M (21%) 6% of global labor force of 3 B unemployed Labor force participation rose 1.5% resulting in an additional 90 M job seekers since 1990 – largely due to more working women and delayed retirement of the elderly

Youth Unemployment (under 25) Unemployment is concentrated among youth & in cities Youth are entering workforce faster than job creation due to high pop growth in 1970-80s Youth UE: USA – 11%, France – 28%, Croatia – 37%, Spain – 50%, World – 14% Mismatch between education, training & jobs

Impact of Aging on Employment Significant labor and skill shortages will develop in OECD countries Working age population is declining in OECD countries -- 8% in EU25 by 2030 – could result in labor shortage of 70-150 M in EU15. Labor shortages by 2020: USA 17M, China 10M Will propel massive migration of people and jobs

Impact of Technology Technological development results in localized direct low-wage job destruction in labor-intensive sectors and invisible indirect job creation in many other sectors. Technology is stimulus to higher wage indirect job creation in machine production, R&D, education, services with multiplier effect from higher incomes & consumption. US labor force grew from 29 M to 130 M in a century of rapid technology adoption.

Invisible Job Creation: Computers Computer research, design and manufacturing Same for peripherals & allied products Software design, engg, servicing, maintenance Making and selling computer games Electronics retailers Computer training companies Web publishing, e-commerce, other web businesses Self-employment – web-based & other Recycling old computers

Globalization Does transfer jobs from high cost to low cost locations, causing disruptions. Offset by higher purchasing power at home & reciprocal demand from abroad. High labor costs alone is not the cause of job destruction. US labor costs were 10 times higher than Europe in the late 19th Century. Total productivity of the economy is the key, i.e. application of Knowledge.

Global Shortage of Skills, not Jobs USA has shortfall of 126,000 nurses & estimates shortfall of 200,000 MDs & 800,000 nurses by 2020. In Germany, 80% of enterprises with fewer than 20 employees reported difficulties in filling positions. In Austria, 42% of enterprises face skilled-labor shortage. 50% of firms in developing countries face skills shortage. Mismatch between skills & jobs due to little or inappropriate education & training Only 5% of India workforce have formal vocational training

Natural Employment Generation Average person works only 1/3rd of lifetime but requires goods and services 3/3rds Since the providers of those goods and services also work only 1/3rd of their lifetime, the ratio of working lifetime contributed to working lifetime required of others = 1:9

Fractional Job Creation School going child creates fractional jobs for Teachers & school administrators Authors, printers, publishers Medical care providers & researchers Garment makers Toymakers Farmers & food processors Retail store & restaurant staff

Structural Unemployment Symptom of the artificial functioning of the society hindered by its structures 9% in Europe 5.6% in USA

How society stimulates employment New products New services Growth in demand Higher productivity Entrepreneurship Access to information Technological innovation Organizational innovation Higher quality standards Legislation & enforcement Administrative efficiency Health consciousness Environment awareness Higher skills Increased speed Change of attitudes

Job Creation in India 7 M new job seekers annually No significant rise in unemployment Only 8% of jobs in formal sector Little information on where & how jobs are created in informal sector Process of job creation poorly understood Strategy to create 10 M jobs per year Indian Employment Guarantee Act 2005

Job Creation Strategies Publicize opportunities in the media -- knowledge Remove structural impediments & disincentives Increase access to credit Incentives for new initiatives Strengthen or enforce legislation Impart training (computer-based) Use insurance as a stimulus Promote entrepreneurship & self-employment Promote new organizations Raise minimum levels of education Create purchasing power (money) Publicize – jathropa, Lux, internet-based jobs EU – employment impact assessment Credit: SHGs – ABN Amro Insurance – reduce lending, credit or borrowing risks (business certified) New organizations – contract farming, STD

Need for Further Research Natural process of job creation Project occupation demand Project skills requirements

Conclusions Now is not the time for fatalism or complacency. Full employment is an achievable goal. Knowledge, education, training & human values such as freedom & respect for the individual are the keys. Right to employment should be guaranteed. The nation that guarantees it will achieve it. Future of Employment is in our hands.