by Garry Jacobs and Ashok Natarajan
Compelling myths which clouded the future of employment through much of the 20th Century are now being dispelled by five irreversible trends. Despite massive population growth in developing countries, globally employment generation is growing faster than population. An increasing shortage of workers in OECD countries resulting from falling birth rates and rising life expectancy is generating pressure for more immigration, outsourcing and automation. The mismatch between employable skills and the needs of an increasingly sophisticated economy have created a major shortage of productive skills and necessitated greater focus on quality of education and life-long learning. Better utilization of the existing work force, most especially the elderly, is a crucial dimension of an effective employment strategy. The elderly possess the health, longevity, rich knowledge and skill base needed to make a far more significant contribution, provided the right policy measures are adopted. Apart from policy measures to meet the emerging shortage of workers in OECD countries, there is a more basic need to evolve a human-centered theory of employment that recognizes the underlying social forces which are raising human aspirations and driving job creation worldwide. It is also time to recognize employment as a fundamental human right that can and must be ensured to every citizen. The right to employment is the essential policy basis for achieving full employment.
During the turbulent transition period following the end of the Cold War, there was widespread anxiety regarding the future of work. Unemployment rose significantly during this period as the result of the reunification of Germany, the breakup of Comecon, and the economic impact of the war in Iraq coupled with a surge in the global labor force due to rapid population growth in previous decades. Concern was magnified by fears that globalization, automation and outsourcing would combine to destroy huge numbers of jobs in OECD countries. Predictions abounded of a future in which more people chase after fewer jobs and chronically unacceptable levels of unemployment become a permanent feature of the global economy.
This bleak outlook did not go altogether unchallenged. A report submitted to the UN by the International Commission on Peace and Food in 1994 predicted a decline in unemployment in the coming decade as the economic transition in East Europe stabilizes, demographic pressures subside and rapid growth in developing countries such as India and China absorbs excess labor. “Despite the paramount concern raised by the persistence of high rates of unemployment in recent years, available data do not confirm a long-term trend towards rising rates of global unemployment.” 1The report also challenged and contradicted the notions that trade and technological development would eliminate huge numbers of job opportunities in OECD countries and pointed out the strong positive correlation between technological development and growth of employment historically. The report concluded that full employment is an achievable goal, nationally and globally.
A decade later, it is now evident that the gloomy vision of the early 1990s was grossly distorted and the future of work looks very different than it did at that time. We can now see more clearly that the most pressing problem for the West in future decades is likely to be a shortage of qualified workers rather than a shortage of jobs. Yet old conceptions die hard and new myths quickly rise to replace those that have been debunked. Highly publicized news about the outsourcing of service jobs to developing countries in recent times – like the news of exported manufacturing jobs in the 1980s and 90s – is not going to alter the basic equation. The automation of manufacturing processes in OECD countries in previous decades was as much a result as a cause. It was driven largely by difficulties in attracting new workers into factory jobs. The same is true of outsourcing today. It is largely driven by the increasing difficulty which corporations face in recruiting qualified and well-trained manpower in their home markets, especially for high end engineering and scientific positions.
Many readers may find much to contend with in these opening paragraphs. Anxieties run high on an issue of such vital importance to the security and well-being of people everywhere. Therefore, let us begin by examining facts regarding long term trends before coming to the pressing issues we face today.
Over the past fifty years, the world economy has generated more than one billion jobs, nearly twice as many jobs as it did during the previous five centuries!
Figure 1 shows growth in global population and employment since 1950. Between 1950 and 2008, global population increased from 2.5 billion to 6.72 billion, a growth of 168%. 2>During the same period, total global employment rose from 900 million to 3.1 billion, a growth of 237%. 3 More recently, between 1996 and 2007, global population increased by 966 million or 16%, while total global employment grew by 445 million or 17%. 4
These facts indicate that global job creation is taking place at record rates. In addition, this trend is taking place during a period in which the quality of jobs available has increased dramatically due to the progressive shift from manual work to mental work. To illustrate, the total percentage of humanity engaged in agriculture has declined from 64.87% in 1950 to 34.9% in 2007. 5
If past trends continue, the global economy will create another 1.3 billion jobs during the next 35 years.6 Anxiety regarding the future of employment is similar to that which the United States passed through in the 1890s when agricultural mechanization displaced 4.4 million farm workers, generating double digit unemployment and visions of a dismal future. Yet, over the last 100 years, employment in the United States – a country that has vigorously embraced every new technological innovation – grew by nearly 100 million jobs or 400%. Between 1990 and 2007, it increased by another 24.9 million. During the last 15 years, total employment in the EU-15 rose by 31.8 million or 23%. 7 The same process of structural transition is repeating itself today in both developed and developing countries.
Over the past decade the ratio of employment to population in developed countries rose from 55.9% to 56.4% while unemployment fell from an average of 7.8% to 6.4%.8 Between 1960 and 2007, total employment in OECD countries rose by 467 million jobs (a 6.97 fold increase), which represents a 78% increase in the proportion of the population employed, including a 49.1% increase in the participation of women in the workforce . 9
Figure 2 shows that globally the total ratio of employment to population declined marginally during the same period from 62.6% to 61.8%, but this slight decline is largely explained by the increasing proportion of young people who continue their education for more years. The percentage of youth aged 15 to 24 in the work force declined from 51% in 1996 to 47.8% in 2007. 10 Figure 3 indicates that despite short term fluctuations, the unemployment rate remains remarkably stable at around 6%.
Between 1965 and 2007, unemployment in OECD countries rose by only 27 million persons, equivalent to only 6.5% of total job growth. 11 More people are working than ever before. In absolute numbers, more people are unemployed, because the population is larger and a larger proportion of the population seeks jobs.
These average figures disguise significant differences in performance of countries within the OECD. Since 1965, Japan’s employment rate has risen dramatically from 46% to70.66% of total population, while unemployment has risen from 1% to around 3%. 12 The overall proportion of the working age population employed in the European Union (EU15) has declined by 1.6% since 1965 and is presently 65.4%, whereas in other OECD regions it has risen significantly – to exceed 71% in Australia, Canada, New Zealand, Switzerland, Scandinavia, UK and USA.
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. Life expectancy in Western Europe rose from 47 years in 1900 to 67 years in 1950 and then to 79.55 years in 2007. 13
The result of these trends 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. 14 During the past decade, the old-age dependency ratio in these countries has risen from 19% in 1995 to 22% in 2005. 15
Table I shows 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 2030.16 By 2030 there will be 110 million people over the age of 65 in the EU25, up from 71 million in 2000. This means that the old age dependency ratio – the percentage of people aged 65 and above compared to the number of people aged 15-64 – will increase from 23% in 2000 to 35% in 2025 and 45% to 50% in 2050.17 As the old age population grows, the working age population will shrink. By 2030 the working age population in the EU25 will stand at 280 million compared to 303 million today. The EU25 would lose an average of one million workers a year. By 2050, the over-60 years’ population in OECD countries will rise from 8% to 19% and the number of children will drop by 33% below today’s level.
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. 18 A World Bank Study estimates that 68 million immigrants will be needed to meet labor requirements during the period from 2003-2050. 19
These estimates have been challenged, but there is no 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. 20
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. The overall female employment rate for the EU-15 saw welcome progress between 1997 (51%) and 200 (64.7%) .21 But employment rates are around 20% points lower for women than for men in the EU-15 and the gap is more around 25% points in Greece, Spain and Italy. Denmark, Finland, Norway and Sweden are the only nations that have a gender gap of less than 10% points. 22
The UN study also 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. 23
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 2020.24 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.
While fears of chronically high levels of unemployment begin to fade, firms are already experiencing a contrary phenomenon which promises to become increasingly common in future. Not a shortage of jobs, but a shortage of skilled workers. Employment in agriculture has been largely replaced by machinery. Low skilled manufacturing jobs have been largely exported to lower wage developing countries. At the same time, the demand for workers with higher levels of education, technical knowledge and skill has been rising rapidly. There is less demand for older workers who have not continued to upgrade their knowledge and skills. Educational institutions have responded slowly and inadequately to this change in demand.
Rising skill requirements combined with a shortage of skills is creating a growing mismatch between the skills of the workforce and the needs of the economy. Numerous studies confirm the existence of a substantial shortage of workers with the required level of skills to fill vacant positions. The USA is already suffering a shortfall of 126,000 nurses and estimates indicate a shortfall of 200,000 physicians and 400,000 nurses by 2020. 25 2627Tool, die and machining manufacturers in the USA report that they are forced to invest in automated equipment because of their inability to recruit sufficient people even for high paying jobs in manufacturing. The National Association of Plumbing-Heating-Cooling Contractors in the USA says that 91% of member company owners rate finding qualified technicians as an important business issue. The lack of qualified human resources is the one obstacle holding back the nonresidential construction market. 28
The situation in Europe is similar. A study by International Data Corporation projects a shortfall in networking skills in Europe of 615,000 by 2008. 29 Klaus Zimmermann, head of the German Institute for Economic Research (DIW) said, "We need more immigration because we already have a dearth of skilled workers -- it's a problem that's going to become massively acute in the next 10 to 15 years." A more recent article dated June 14, 2007 in The Wall Street Journal reports that there are already 600,000 unfilled jobs in Germany, among them 48,000 missing engineers and other high-skilled jobs, which businesses are unable to fill. 30Another study estimated that 80% of small firms in Germany find it difficult to recruit the skilled people they require. In 2004, the Cologne Institute for Business Research (IW) projected that labor shortages will reach “alarming proportions” by 2050, by which time demographic changes are expected to reduce the labor force by 30%. 31
In Austria, 42% of enterprises report skilled-labor shortage. A UK study published in 2000 revealed significant skill shortages in a wide range of engineering professions as measured by the percentage of ‘hard to fill’ job vacancies reported by firms.
Table 2:“Hard to fill vacancies” as a % of vacancies in engineering occupations across different business sectors. 32
It found that two-thirds of all vacancies at craft and skilled operative level are classified as hard-to-fill, as are over half of all vacancies at engineering professional level. 33 This data is eight years old. It is very likely that the shortages are significantly higher today.
The technical skills shortage applies to jobs in every sector. Firms also find it difficult to recruit people with essential non-technical skills, especially basic interpersonal skills for selling, customer service and working in teams. Equipping job seekers with the types of skills firms are seeking can significantly accelerate job creation and business growth. Even in India, which produces 400,000 engineers annually, corporations are finding it increasingly difficult to find the qualified workers they require. India’s National Association of Software Services Companies estimates a potential shortfall of 500,000 technology professionals by 2010. 34
The shortage of skills is closely linked to levels of education. As economies become more sophisticated and technologically complex, work demands a much higher and wider range of skills. The skills required are not merely physical or technical. Organization, interpersonal and managerial skills become far more important. Research shows that the capacity of the work force to meet the requirement for skills is very closely correlated to levels of education. The level of educational attainment directly impacts on an individual’s chances of finding a job. In Europe, the employment rate of low-skilled people stands at about 49%, compared to 83% for the high skilled. The gap exceeds 35% points in Belgium, Italy, Ireland, Finland and the UK. The overall EU employment rate for low-skilled women is a strikingly low 37% in 2002 and in Italy the figure is as low as 27%. 35
Demographic, economic, technological, educational and social factors are combining to rapidly transform the employment landscape of OECD countries. The precise magnitude and speed of change is difficult to estimate, but the broad general directions and central issues have become much clearer over the past decade. These trends can be summarized as follows:
1. Growth of employment opportunities exceeds the rate of population growth and will continue to do so in future.
2. This trend has been accentuated until recently by the lowering of the retirement age, which has accelerated the loss of experienced workers from the workforce.
3. It has been further accentuated by falling birth rates, resulting in the influx of fewer young workers to replace those who retire.
4. The proportion of the population in retirement has also risen to peak levels and will continue to rise unless offset by massive immigration.
5. At the same time, educational and skill requirements have increased faster than the capabilities of the workforce.
All these factors combine to create an increasing shortage of skilled workers to meet the needs of OECD countries.
Governments and business in OECD countries are utilizing a variety of policy options to compensate for these trends.
1. An increase in the participation of women in the work force
2. Adoption of technological solutions to reduce dependence on labor.
3. Greater outsourcing of manufacturing and service jobs to other countries.
4. Relaxation of immigration policies to increase the inflow of foreign workers to OECD countries.
5. Better utilization of the domestic work force.
All of these options will continue to play an important role in future. But the potentials of the last one have yet to be fully recognized and exploited.
Several options are available for improving the utilization of the domestic work force:
1. More education to raise the qualifications of young workers.
2. On-going training to upgrade skills to keep pace with changing needs.
3. Extension of the retirement age and removal of disincentives to work beyond the retirement age.
4. Policies and incentives to facilitate part-time work so that those who are unable or unwilling to work full-time can still participate in the work force.
All of these policy options need to be seriously pursued and all are being implemented or considered to varying degrees in some countries.
Thus far, we have been examining the issue of employment from the viewpoint of social needs. But it is equally important to view the issue from the perspective of individual citizens. During the heydays of the baby boom generation, there was a tendency to encourage earlier retirement of the elderly in order to make way for the younger generation to fill their jobs. Now the situation is reversing and both social attitudes and policies need to change with it.
There was a time when sixty years of age was considered a ripe old age for most people, but that is no longer the case. Increasing health and life expectancy enable many people to play active constructive economic roles well into their 70s and beyond. Between 1970 and 2004, the length of pensioned life for men and women in some Western European countries fully doubled. A study by the Cologne Institute for Business Research reports that in Germany, only 37% of inhabitants between the ages of 55 and 64 (inclusive) were still in employment in 2001, compared with nearly 50% some 30 years ago and compared to 48% for all OECD countries. 36 In Switzerland and Sweden the rate was 67% in 2001. The trend toward earlier retirement flies directly in the face of demographic facts. Between 2000 and 2030 OECD is projecting a 0.2% annual decline in European Union’s labor force. Longer life, better health and lower birth rates all argue in favor of reserving this trend. Now is a time when the elderly should be encouraged to prolong their productive careers beyond current retirement age.
In the past, there has also been a tendency to undervalue the contribution which the elderly can make to economic growth. While it is true that some older workers have not been given the retraining needed to keep pace with the demands of modern technology, this has been more the fault of society than incapacity of the individuals to continuously upgrade their skills. The elderly are a vast reservoir of knowledge, skill and work experience. Extending their working life and finding innovative ways to continue to harness their rich capabilities even after retirement can make a vital contribution to the future of OECD countries.
We need to start viewing the elderly as a precious national resource and frame policies designed to optimize their contribution to society rather than marginalize them at an early age. This calls for a re-evaluation of the entire notion of a retirement age. One attractive policy option is to lift the age limit for retirement. According to a landmark study by Orio Giarini and Patrick Liedtke for the Club of Rome 1996, the extension of the working age population definition from now 15 to 64 by another five years to then 15 to 69, would immediately add 2.37% of the US, 3.86% of the French and 6.02% of the German population to the independent age group.37
This policy change offers multiple benefits:
• It enables highly qualified and experienced workers to contribute longer, providing an additional source of skills.
• It reduces the growth of the dependent elderly population.
• It reduces pressure on immigration which is a source of social tensions.
Work in modern society is not merely a means of livelihood and sustenance. It is also a principle source of an individual’s identity and self-esteem. Often we find that the aging process accelerates after retirement, resulting in deterioration of both physical and mental health, because people no longer have a productive outlet for their energies. While many of the elderly do not need to work for economic reasons, they can benefit enormously by continuing to lead active productive lives through organized work.
Therefore, it is necessary to consider the issue of work for the elderly both in terms of the economic necessity that many aging families have for a continued source of income to support them during prolonged lifetimes as well as the social and psychological necessity for individuals to remain active and productive in order to maintain their physical and mental health. These two issues are distinct but interrelated and need to be addressed in concert.
General employment trends support the view that elderly workers in good health should be provided with opportunities to extend their working lifetimes beyond current retirement ages and even indefinitely, as long as their health permits and the economics of their productivity justify it. On the other hand, there are many elderly who do not need to work for additional income but can still make a valuable contribution to society while enhancing the quality of their own lives.
The potential for making a productive contribution to society has been dramatically enhanced since the advent and development of the Internet. Now it is possible for the elderly to participate in a wide variety of socially-useful activities without even leaving their homes. To site a single example, Wikipedia was founded as a free Internet-based encyclopedia in 2001. The project functions with very minimal funds based almost entirely on voluntary editorial submissions by more than 100,000 contributors. In less than six years since its inception, Wikipedia has grown to include more than 7.5 million articles in 253 different languages. The English edition includes 1.8 million articles, compared to Encyclopedia Britannica which was founded in 1768 and contains 120,000 articles. Wikipedia is not among the top 10 most-visited websites on the Internet.
This astonishing achievement is the voluntary work of thousands of informed individuals around the world, many of whom may be retired teachers and experts sharing their knowledge on their specific fields of expertise after their professional careers have drawn to a close. It is cited here as an example of the enormous untapped potential for socially useful contributions by the elderly. Given the very poor quality of education in most countries, including that offered to many youth even in OECD nations, and given the increasing demand for people to continue learning on a life-long basis in order to keep pace with rapid advances in knowledge, there is vital need and ample scope for creating a global educational curriculum based on and delivered over the Internet. Elderly professionals in every field can make a major contribution to such a project, since they are most qualified by their experience and often most able because of their access to leisure time.
For those who are not economically independent, the Internet also offers vast opportunities for income generating activities – as translators, interpreters, technical writers, proofreaders, graphic artists, business consultants, executive counselors, family counselors, etc. Other types of social useful activities are already being delivered over the Internet in which the elderly can make a meaningful and psychologically rewarding contribution, such as providing counseling to the employed, youth, married couples, entrepreneurs and government officials in areas in which they are qualified – providing technical solutions, managerial and organizational expertise, legal and financial advice, interpersonal insight and skill building, online teaching courses, e-business etc. The scope is enormous. The elderly can deliver live, real-time educational programs to individuals and groups with text, voice and video transmission. The Internet now makes it possible to also offer personal companionship and support to those who live in isolation. Many other types of non-monetized services can be introduced.
Objective facts and policy prescriptions are not sufficient. We need also clarity of thought. Myth and superstition 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 has been dominant for nearly 10,000 years. The dawn of the Industrial Revolution ushered in a period of radical transition. UK was the first to make that transition. Employment in agriculture had already fallen to 11% of total employment by 1900. In 1900 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. 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 was principally responsible for a phenomenal 2.6-fold growth of world population after 1950. 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. It can only be done by examining them in their real context as human activities. 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, 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 arising 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 effort, higher 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 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 70% 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 demand (mobile phones), higher productivity and efficiency resulting in lower cost (computers), a growing spirit of entrepreneurship (IT), greater access to information (on-line job exchanges), technological innovation (Ipod), organizational innovation (micro-lending), higher quality standards (education), legislation & enforcement (food quality), greater administrative efficiency (business growth), 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.
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.
A more fundamental issue remains still to be address that underlies concern about shortage of jobs, shortage of workers, retirement age, immigration, part-time work, and related issues. It is the right to employment. Full employment was a primary objective of the OECD at the time it was established. Yet as unemployment levels rose in subsequent decades, discussion of this subject was dismissed as utopian. Now is the time to re-examine it.
In the agrarian societies of the past, each individual was more or less free to undertake activities to ensure his own livelihood. Today that is no longer so. Society is so highly structured and regulated that freedom of employment is highly restricted. Government intervenes in virtually every aspect of society’s economic existence, restricting the freedom of the individual to seek his or her own livelihood and determining the type and number of job opportunities available. Every public policy regarding business, taxation, wage laws, interest rates, budget deficits, environment, labor, unions, commerce, zoning, construction, patents, copyrights, licensing, manufacturing, even defense spending, etc. has a direct or indirect impact on the scope for employment. The policy of allowing depreciation allowances for investment in capital goods while charging payroll and social security taxes for employing labor illustrates an in-built bias toward mechanization and against employment of labor. Many of these policies are, no doubt, vital to the survival and health of society, but their impact cannot be denied or dismissed. The power to regulate for the betterment of society brings with it the responsibility to regulate justly. And what could be more fundamental to human justice in economic terms than ensuring every citizen access to gainful employment?
In a social-economic system in which employment is the principal means for individuals to ensure economic self-sufficiency, social respectability and personal self-esteem, employment cannot be considered a luxury for the lucky or the most qualified or a privilege accorded only to a majority. Employment must be considered a fundamental human right guaranteed to every citizen. Some economic theories in the past attempted to define incontrovertible, universal laws governing employment that were simply to be accepted as economic reality. We now know for certain that employment is a matter of public policies and human choice, not the laws of nature. It is possible for any society – at least for any developed modern society – to ensure sufficient employment opportunities for every citizen. It is simply a question of political and social will.
Conditions today are ripe for raising this fundamental issue and have it recognized as public policy, not only in OECD countries but even in developing nations such as India, where full employment seems a far more distant and utopian goal. In recent years the Government of India has adopted landmark legislation guaranteeing a minimum number of days of employment each year to the poorest citizens in 200 districts of the country. Thus far, approximately 22.6 million people have benefited from the program, which is to be extended to all districts of India within five years.39 This is a courageous beginning and an inspiring example for other nations to emulate.
Guaranteeing full employment does not mean that governments can or should create public sector jobs for all who require them. Nor does it mean to confine policy initiatives simply to macro-economic measures. There are many precise policy options that can stimulate employment generation, such as initiatives to promote part-time employment which have been so successful in Netherlands, greater investment in vocational training, raising the mandatory level of basic education by one or two years, removal of disincentives for those who are on welfare to return to the workforce, measures to promote self-employment, publicizing career opportunities, incentives for computerization which stimulates new job opportunities, etc. Probably the most important for both developed and developing countries is to identify the gaps that exist between supply and demand for all types of vocational skills and take initiatives to reduce the mismatch.
As the International Commission on Peace and Food put it in their report,
The essential basis for meeting the world’s employment needs is the realization that employment is an absolute necessity for survival in modern society and must be recognized as a fundamental right of every human being. Pragmatism as well as idealism compels this step. Recognizing the right of every citizen to employment is the essential basis and the most effective strategy for generating the necessary political will to provide jobs for all. 40
We need fresh thinking on employment. The issue is too vital to the future of humankind to be left to the politicians, policy experts or any particular scientific discipline. Employment is an activity which spans the full gamut of human concerns. It is vital for peace, social stability and harmony, economic security and personal fulfillment. Rapid advances in technology and rapid evolution of social organization have opened up vast new opportunities for remunerative employment which are not yet sufficiently recognized or exploited.
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