Economic and Social Council

2012 Annual Ministerial Review

Preparatory Meeting (AM)

Economic and Social Council Speakers Highlight Urgent Need for Job Creation,

Policy Options to Align Education, Training with Employment Demands

Council Holds Preparatory Meeting for July Ministerial Review;

Panel Addresses “Promoting the Implementation of the Global Jobs Pact”

With its upcoming annual high-level session set to tackle the ongoing jobs crisis, the Economic and Social Council today convened an expert preparatory meeting to address the growing global demand for more — and better — jobs, and to weigh policy options that might better align education and training with current employment demands.

“An inter-sectoral approach is required to tackle the employment issue; economic, social and environmental polices need to be developed together with employment polices,” said Council President Miloš Koterec (Slovakia) as he summed up today’s global preparatory meeting, intended to pave the way for its Annual Ministerial Review.  Taking place at Headquarters from 2 to 3 July, the Review will focus on “Promoting productive capacity, employment and decent work to eradicate poverty in the context of inclusive, sustainable and equitable economic growth at all levels for achieving the Millennium Development Goals”.

He suggested that Council members might consider adding a standing agenda item on “full employment and decent work for all” as a way to promote coherent and complementary polices, stronger monitoring of commitments, mainstreaming into the activities of the United Nations, and more effective integration of the three pillars of sustainable development — economic growth, social development, and environmental protection.  He also urged a shift in focus towards enhancing employment for youth and women, with the right policy mix to promote micro, small and medium enterprises, investment in training and education, rural agriculture and infrastructure, and targeting resources for productive sectors.

“There is clearly a strong consensus on the urgent need for job creation,” Sha Zukang, Under-Secretary-General for Economic and Social Affairs said in his closing remarks.  “More coordinated global action is needed to stimulate decent employment,” he added, pointing to the need for fiscal policy coherence on all fronts for that purpose, especially for youth employment.

In addition, he stressed that Governments must take a balanced approach in investment and training, and social protections needed to be prioritized.  In regard to development goals, employment must be central in post-2012 planning and the roadmap of the International Labour Organization (ILO) would be critical in that effort.  Small and medium enterprises, agriculture and the greening of economies were important points of focus.  Any post-2015 development must also be sustainable, he stressed, pointing to the link between this year’s Ministerial review and the upcoming Rio+20 Conference.

The day’s event featured a keynote address by Professor Erik Brynjolfsson, Sloan School of Management at the Massachusetts Institute of technology (MIT), and two expert interactive discussions; the first led by José Antonio Alonso, Director, Complutense Institute of Foreign Studies at the Complutense University of Madrid.  The other featured presentations by:  Aurelio Parisotto, Senior Economist, Policy Integration Department of the International Labour Organization (ILO); Eve Crowley, Deputy Director, Gender, Equity and Rural Employment Division of the Food and Agriculture Organization (FAO); and Degol Hailu, Senior Adviser, Poverty Practice, Bureau for Development Policy at the United Nations Development Programme (UNDP).

Setting the stage for the discussions, Mr. Koterec said the 2012 Annual Ministerial Review would provide an opportunity to discuss measures and institutions that had been proven effective in encouraging job and enterprise creation, in boosting skills and productive inclusion, in supporting successful labour market transitions and ensuring that workers had adequate social protection and adequate compensation.

He said that the links between those measures and the progress towards poverty eradication and the other internationally agreed development goals necessitated the need for immediate, coherent and globally coordinated macroeconomic policies to boost output, create quality jobs and incomes, in line with the principles and objectives of the Global Jobs pact.  In that context, he said the Annual Ministerial Review would address the particular labour market vulnerabilities of young people, as well as a nationally defined social protection floor for social and economic resilience.

Mr. Brynjolfsson focused on the theme of his recent book, Race Against the Machine, which outlined the promise and peril of the digital revolution.  “Right now is a time of paradox; innovation is taking place at an unheralded pace, but people are more pessimistic than ever,” he said, explaining that, while technology continued its rapid progress, median wages and employment had both stagnated, leaving millions of people worse off.  The ripple effects of that trend now upending livelihoods and business models in the West would soon radiate throughout the developing world, with deep consequences for skills, labour and jobs.

This trend made it clear that organizations and skills were not keeping up with technology and, as a result, millions of people were being left behind.  Indeed, the rapid digitization of the economy had generated both vast gaps in wealth and gaps between highly-skilled and low-skilled workers.  “The economy is moving towards people who own machines and away from those who do the work,” he said.  To illustrate that phenomenon, he highlighted the recent success of Google’s self-driving car, which safely navigated city streets while a bind man sat behind the wheel speaking commands.  Further, IBM’s Watson computer had famously and successfully faced off against champions on the popular game show Jeopardy!

In an environment characterized by the relentless drive to improve both hardware and software, he said jobs worldwide would be eliminated by robots and other technological advances.  It would be a mistake to counter that trend by trying to slow the spread of technology, he said, explaining that the correct response would be to simultaneously speed up both technology and training.  “Business as usual will not solve the problem.  We have to think big and be creative to bring skills and organizations up to the pace of technological change,” he declared, calling for “fundamentally transforming how we develop skills”, including radically changing education at all levels, as well as vocational and on-the-job training.

Mr. Parisotto said ILO currently estimated the global number of unemployed at some 200 million in 2012, and was projected to grow to 206 million over the next four years.  About 75 million of those people were young men and women.  Moreover, in the developing world, unemployment, casual work and vulnerable employment remained widespread, he continued, adding that one out of three workers worldwide was still living with his or her family and struggling to survive on $2 a day.

Turning to a related alarming trend, he said that, in spite of relatively high rates of economic growth in the past few years, the structure of labour markets in the developing world had not changed.  Good, stable jobs in modern sectors were rare and “severely rationed”.  Precarious and informal employment remained the norm, preventing most people from taking advantage of market opportunities to develop their skills and enhance their productivity, their purchasing power and their savings.  “The convergence between the industrial and the developing world, has its peculiar translation in the labour market; it is a convergence down towards more precarious work in both worlds,” he said.

In light of such challenges, the Review would present an incredible opportunity for a genuine policy dialogue towards shaping a new and stronger development agenda; “an agenda cast around robust interconnections between productive capacities, decent jobs and the objective of sustainable, inclusive and equitable growth and development.”  He also called for policy actions that coordinated action to raise aggregate global demand; devised new discretionary measures to build future productive capacities and trigger longer-term, broad-based economic transformation; and which placed attention on the quality of jobs, which was fundamental for more inclusive and sustainable growth.

Keynote Address

Setting the tone for the discussions, ERIK BRYNJOLFSSON, Schussel Family Professor at the Sloan School for Management at the Massachusetts Institute of Technology (MIT), and co-author of Race Against the Machine:  How the digital revolution accelerates innovation, drives productivity and irreversibly transforms employment and the economy,said the ripple effects of the rapidly digitizing economy now upending livelihoods and business models in the West would soon radiate throughout the developing world, with deep consequences for skills, labour and jobs.

“Right now is time of paradox; innovation is taking place at an unheralded pace, but people are more pessimistic than ever,” he said, labelling that trend “bounty and spread”, which was characterized by dynamic increases in wealth and a widening gap in inequality.  Noting that most of his research was based on trends in the United States, he went on to say that even during the current difficult economic climate, that country’s productivity had increased more rapidly over the past decade than it ever had, even during the “booming 1990s”.  However, there had been a complete stagnation in job creation.  “This is the first decade when there were actually fewer people working than there were in the previous 10-year period,” he said, adding that median income had also stagnated.

Even as trillions of dollars in wealth were being created, the vast majority of that wealth had accrued to a tiny group of people, he explained.  Over the past 10 years, 63 per cent of the total wealth in the United States had been earned by just 1 per cent of population.  In the last two years, that number had jumped to 93 per cent.  That concerning trend made it clear that United States’ organizations and skills were not keeping up with technology and as a result millions of people were being left behind.  “Their jobs and incomes are being destroyed and they are actually worse off than before the digital revolution,” he added.

Continuing, Professor Brynjolfsson said the rapid digitization of the economy had generated both vast gaps in wealth and vast gaps between highly-skilled and low-skilled workers.  Indeed, highly digitized companies such as Seamans were having difficulty finding enough Americans with the right skills to work, even at a time of high unemployment.  He called such a paradox “skills biased technical change” in which technology was creating high-skilled jobs, while erasing low-skilled ones.  Another “gap” was between what he called “the superstars and everyone else”, where technological advances, wealth or fame accrued to one business model or personality, like Lady Gaga, Madonna or Bill Gates.

Another gap identified by his research at MIT was that between capital and labour investment.  He said that, while profits had never been higher, the share of income going to labour was at a record low.  After the Second World War, about 62 per cent of wealth in the United States was earned by workers — in manufacturing or agriculture.  That figure was less than 50 per cent today.  “The economy is moving towards people who owned machines and away from those who do the work,” he said, adding that all three of those trends were now “very visible” in the United States and other developed countries, but would become more pronounced in the developing world over the next decade.

“But, this is just a taste of what’s to come; computers are now beginning to do things that used to be the sole domain of humans, with profound implications on our futures,” he said.  To illustrate that phenomenon, he explained the recent success of Google’s self-driving car, which safely navigated ordinary highways and city streets while a bind man sat behind the wheel speaking commands.  While the Google Car was quite expensive, as the cost of the technology fell, that and other innovations would become more widespread.  He went on to note similar technological leaps in the wake of the creation by IBM of its Watson computer, which had famously and successfully faced off against champions on the popular United States game show Jeopardy!.  Watson’s technology was now being adapted for the financial and medical industries.

In a current environment characterized by relentless progress for improving hardware and software, he said “we will see greater bounty and greater spread, as jobs worldwide were being eliminated by robots and other technological advances.”  Digital technologies would continue to accelerate and skills and organizations would lag behind.  The wrong answer to that trend would be to slow technology, he said, explaining that the correct response would be to simultaneously speed up both technology and training . “Business as usual will not solve the problem.  We have to think big and be creative to bring skills and organization up to the pace of technological change.”

The most effective way to do that would be through vast improvements in education, driven by “fundamentally transforming how we develop skills,” including changing all levels of education, as well as vocational and on-the-job training.  He also called for unprecedented changes in entrepreneurship.  In any society, there were always jobs being destroyed or created.  What had changed was the pace at which such trends were taking place today.  New jobs in new industries were being invented and entrepreneurs must be likewise encouraged to use new labour practices.  “There was no better time than today to be a skilled entrepreneur, but it’s also a terrible time to be a worker with no skills,” he said.

The Committee’s views were presented by JOSÉ ANTONIO ALONSO, the Director of the Complutense Institute of Foreign Studies and Professor of Applied Economics, Complutense University of Madrid, Spain.  Mr. Alonso affirmed that the creation of decent work was the best way of putting an end to poverty.  Employment was not only a source of income, but a critical part of personal identity.  As the regularity of growth was a critical factor in generating jobs, stable and continuous growth was needed, along with a diversified production matrix that could sustain itself through cycles of competition.  Labour markets that worked well, and continuous education to increase the skills and assets that people provide, was also required.

The good news, he said, was that there had been continuous economic growth over the decades preceding the financial crisis, which had increased employment.  However, during the period of expansion, conditions were not created for building long-term employment growth.  The trade priority had been given to opening markets, and the financial markets tended to emphasize the cyclical nature of economies.  Some countries accumulated external surpluses to insulate themselves from cycles, but that created new imbalances globally.  In developing countries, priority had been given to swift international insertion, without an emphasis on diversification.  There was a growing segmentation of labour markets and a reduction in protection, reducing the stability of employment.  Those thrust into the informal or temporary sectors were then more vulnerable to unemployment.  On the educational front, demand-driven skills augmentation had not developed quickly enough.

Nominal stability, he said, required regulation, with adequate social and infrastructure investment, but it was difficult to implement such policies without the proper global climate.  The necessary tools in the micro- and macro-economic sphere must be utilized in developing countries for diversification, including legislation that both encourages labour mobility and mitigates brain drain.  There must also be changes in the modes of investment.  In the poorest countries, where 80 per cent of the population lived on agriculture, there must been active improvement in agricultural techniques, including infrastructure improvement, credit and technological input, which must be adapted for transfer from developed to developing countries for that purpose.  Safety nets for the most vulnerable were needed, which again required financial sustainability and a priority of increasing human capital.

Interactive Discussion

In a discussion following those presentations, country representatives expressed appreciation for the contextualization provided by the featured speakers, but asked that more attention be paid to the particular situation of the least-developed countries.  The representative of Bangladesh said that, in the winner-take-all environment, the least-developed countries were trying to develop capacities in both human capital and “superstar” production, but had many severe disadvantages in that effort in comparison to high- and middle-income countries.  The representative of Nepal called for the creation of a technology bank and other mechanisms, including scaled-up and targeted official development assistance (ODA) and favourable trade regimes, to overcome such disadvantages.  Germany’s representative asked how advanced technology could be better shaped to connect the poorest to their life needs.

Mr. BRYNJOLFSSON replied that new technologies and globalization would indeed connect people in the poorest countries to allow them to contribute their labour to the world economy.  Unfortunately, the poorest, especially those in emerging economies, would still suffer the most unemployment from automation, if the proper conditions were not created.  Responding to a query from the Chinese representative, he said that the transition to the service economy had not ended and there was still growing employment in services, although those jobs, too, would be affected by technology.  Replying to comments of other speakers, he said that energy consumption for digital tasks was much less than use of energy in traditional ways of working, and that poor people were, in fact, benefitting from communications technologies in many cases.  Governmental and commercial institutional structure was critical to increasing employment from all such enterprise, he said.

Mr. Alonso agreed that the least-developed countries faced particular obstacles in “playing the game” in the current economic environment, in the context of increasing employment.  His Committee had been carefully following up on the vulnerabilities of the poorest countries, particularly the structural deficiencies they faced.  He suggested that donor countries pay more attention to that information in targeting their assistance.  In addition, he said that the needs for specialized services and products in the current climate could become a greater opportunity for developing countries.  Re-mapping the international division of labour was, therefore, essential and, for that reason, changes in institutions and the building of human capital was critical in that context.

Panel Discussion on “Promoting the Implementation of the Global Jobs Pact”

Following those addresses, the Council held a panel discussion on the Global Jobs Pact that featured expert presentations by:  Aurelio Parisotto, Senior Economist, Policy Integration Department of the International Labour Organization (ILO); Eve Crowley, Deputy Director, Gender, Equity and Rural Employment Division of the Food and Agriculture Organization (FAO), and Degol Hailu, Senior Adviser, Poverty Practice, Bureau for Development Policy at the United Nations Development Programme (UNDP).

Speaking first, Mr. Parisotto said that this year’s Annual Ministerial Review would present an incredible opportunity for a genuine policy dialogue towards shaping a new and stronger development agenda; “an agenda cast around robust interconnections between productive capacities, decent jobs and the objective of sustainable, inclusive and equitable growth and development.”  He focused his presentation on the global economic situation, national and international polices to address the protracted jobs crisis, and the role that was being played by the United Nations.

He said ILO currently estimated the global number of unemployed at some 200 million in 2012.  That number was projected to grow to 206 million over the next four years.  A large portion of the unemployed population — about 75 million — was young men and women, as the economic and financial crisis had hit that sector extremely hard.  Providing a global snapshot of “alarmingly high” youth unemployment rates, he said nearly 50 per cent of youth in Spain and Greece were without work; around 30 per cent in Slovakia, Ireland, Portugal and Italy, and about 16 per cent in the United States.  In the developing world, unemployment, casual work and vulnerable employment remained widespread, he continued, adding that one out of three workers worldwide was still living with his or her family and struggling to survive on $2 a day.

Turning to a related alarming trend, he said that, in spite of relatively high rates of economic growth in the past few years, the structure of labour markets in the developing world had not changed.  Good, stable jobs in modern sectors were rare and “severely rationed”.  Precarious and informal employment remained the norm, preventing most people from taking advantage of market opportunities to develop their skills and enhance their productivity, their purchasing power and their savings.  “The convergence between the industrial and the developing world, has its peculiar translation in the labour market; it is a convergence down towards more precarious work in both worlds,” he said.

In light of such challenges, he called for policy actions that coordinated action to raise aggregate global demand; devised new discretionary measures to build future productive capacities and trigger longer-term broad-based economic transformation; and which placed attention on the quality of jobs, which was fundamental for more inclusive and sustainable growth.  He said that delegations participating in the Annual Ministerial Review must think creatively and use the Council’s convening authority to craft a global initiative that could meet the scope of the global employment challenge.  The Review could, among other things, provide space for a frank discussion on why some policies succeeded and others did not, so that stakeholders could take advantage of best practices and lessons learned.  It could also strengthen the policy dialogue, partnership and collaboration across the United Nations system and the international financial institutions to make multilateral actors better able to assist Governments in capacity-building.

Next, Ms. Crowley called for a renewed focus on rural areas in developing countries; areas where most people lived, where jobs were the “least decent” and where the working poor were most concentrated in agricultural sectors.  “What we are talking about is farmers, fishers, food-producers, self-employed people, contributing family members and part-time wage earners,” she said, adding that those people worked in sectors that were largely bereft of occupational safety and health standards, and rife with the perils of child labour.

With that in mind, she called for measures that would reduce the gaps in productive employment — especially gender disparity — and for bolstering “climate smart” investment in agriculture.  That approach would boost sustainability, promote “green farming” and reduce harvest waste — which alone could generate hundreds of thousands of jobs.  As an example, she said that studies had revealed that sustainable forest management alone could produce 10 million jobs worldwide.  Calling for increasing the employability of the rural workforce and extending social protection coverage for rural areas, she said that such changes needed to be supported by financial measures and regulatory practices.

She said that strategies needed to be forward thinking and should clearly define the unique needs of both rural and urban areas.  Poverty was complex and multi-dimensional, requiring comprehensive strategies to tackle it.  As such, “one of our biggest challenges is upgrading skills and education,” she said, urging broad changes that would bolster basic life skills, while simultaneously promoting focused employment skills.  Human capital development must go hand in hand with infrastructure development, she said, explaining that there was no way women in rural areas could engage in wage labour, because so much of their time was being spent coping with dilapidated infrastructure, such as poor roads and outdated water systems.

The final presenter, Mr. Hailou said it was unlikely that the employment targets set by the Millennium Development Goals would be met by 2015.  Part of the reason behind that troubling trend was that national employment policies had lagged behind policy-making in other critical areas, such as education.  Also, many countries that were dependent on extractive industries were unable to generate enough employment in other sectors.  Those trends had ripple effects.  A loss of income caused:  drops in nutrition levels; disruption in social cohesion; high drop out rates; and widespread inequality.  All those possible outcomes held serious implications for achieving the Millennium Goal targets.

He said that public investment could be targeted to bring jobs back up to pre-crisis levels.  Indeed, such investment could be focused on training and education, as well as on providing assistance for small and medium enterprise start-ups.  There was also space for companies in small developing countries to expand into areas that were being abandoned by rapidly developing countries or emerging economies, such as toy manufacturing and the production of footwear.

As for the work of UNDP, he said that agency was promoting strategies in countries such as Sierra Leone to boost gross domestic product (GDP), create jobs and reduce poverty.  In Georgia, UNDP had provided policy guidance to help that country cope with job losses in the public sector.  The agency had designed a vocational education and training programme.  That initiative had been scaled up and was now being implemented throughout the country.

In the ensuing discussion, the representative of the European Union underlined the importance of the creation of a green economy in the generation of jobs, along with a healthy labour market and social protections.  Innovative approaches were needed.  To better place job creation front and centre in the development agenda, he called for a more central involvement of ILO in international forums.

In response to questions by Ireland’s representative, Ms. Crowley said that goals for decent work in rural areas would not replace those that addressed food security in post-2015 planning.  Mr. Hailu highlighted the Millennium Development Goals Achievement Fund as a successful example of inter-Agency cooperation on employment generation.

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For information media • not an official record