Print Edition - 2014-09-25 | Oped
worldview: One Big Unhappy Economy
- Too few jobs in G-20 labor markets
Sep 24, 2014-
Unhappy economies, it turns out, are all unhappy in the same way. A recent report on job markets globally showed that too few jobs are being created worldwide, and even fewer good jobs are. Wages are flat or falling in all major economies as corporate profits claim an increasing share of productivity gains.
The report, prepared by the World Bank, the United Nations’ labor agency and the Organization for Economic Cooperation and Development, notes that poor job creation and stagnant wages, if unchanged, will result in permanently lower living standards for most people amid widening inequality. It also states that the situation will not repair itself--and, actually, is self-reinforcing.
In the advanced economies of the Group of 20, including the United States, Canada, France, Germany, Italy, Japan, Britain and the European Union, a lack of good jobs at good pay is stifling growth by undermining consumption and investment. In the group’s emerging economies, including India, Brazil, Mexico and Indonesia, underemployment and off-the-books jobs are mostly to blame for undermining output and productivity in the long term.
The report calls for action by the G-20 to break those negative feedback loops, including more government spending to bolster consumption, higher minimum wages to raise pay, and renewed commitment to social safety nets. What the report does not say is that none of that is likely to happen on the needed scale, individually or collectively, unless governments change their priorities.
When the United States and other advanced economies bailed out global banks, they were betting, wrongly, that a restored financial system would foster broad prosperity. When they turned their policy focus toward austerity measures and deficit reduction, and away from fiscal stimulus, they doubled down on that bad bet. The result has been prosperity for the few, at the expense of the many.
The report is clear that when consumption and investment wane, government is supposed to make up the shortfall to revitalize the economy. The evidence in the report also presents a global economy that remains weak and fragile. To be strong and resilient, it needs growth that, in the words of the report, is “job-rich and inclusive.” Theoretically, such growth is possible. Politically, it is still out of reach.
Published: 25-09-2014 09:30