Oct 3, 2012

“Workers of the world…!”

From the self-immolation of Mohammed al-Bou’azizi in Tunisia in December 2010 to this week’s protests in Spain the common denominator has been jobs, or rather the lack of them. On the one hand, the university degree of Mr. al-Bou’azizi was not enough to find a job, he had to sell fruit to help his family, was denied the permit, the police harassed him, frustration grew in him and decided to set himself on fire. On the other hand, just across the Mediterranean, one of the most compelling traits of the current Spanish crisis is the large percentage of unemployed youth, which the press informs that last month reached a new peak of 53%.

In spite of the lack of jobs being a constant syndrome of the present problems, this economic crisis probably will not be solved by hiring every unemployed person in Europe, Northern Africa, the United States and elsewhere. Some questions arise. Who will hire them? Will the wages be suitable to cover daily expenses and to save? Will national competitiveness be saved at the expense of bad working conditions? Will the unemployed (mostly the educated unemployed) accept any job offered?

On Monday the World Bank published its 2013 edition of the Development Report: Jobs, where some of the above questions are addressed, other new ones are posed and some interesting information is presented. Due to its large extension and the variety of issues it covers, I just present some highlights. The website with the complete document is here: http://econ.worldbank.org/external/default/main?contentMDK=23044836&theSitePK=8258025&piPK=8258412&pagePK=8258258.

  •  Many countries tend to focus their labor policies in industrial and urban environments. In spite of their differences, agricultural and rural employments must be considered in labor-technology promotion, worker training, and insertion in global markets. Otherwise, divergences between urban and rural areas will deepen, slowing down development and leading to potential conflicts. This is even more alarming as data show that jobs are a key factor in the reduction of poverty, which is still high in rural areas.
  • The private sector has the lead in job creation, even in China. This has allowed for more people to be employed now than ever before and a reduction in poverty. However, as the 2008 financial crisis showed, these jobs are not guarantied and they can disappear in the midst of short-term crisis, requiring many years to recover pre-crisis levels of employment.
  • Many countries have promoted the creation of microenterprises and household business to promote employment. Data show that the poorer the country the more it relies on these kind of investments to produce jobs. However, the larger the firm the higher the wages and the associated benefits of employment. Governments must not only foster a regulatory environment that does not hinder microenterprises creation, but should also support their growth.
  • Working centers are an essential point for socialization, and with a constructive environment for coexistence and conflict resolution they can have a positive influence on the strengthening of democracy.
  • Not all jobs contribute to socioeconomic development similarly. Those for the poor, those that represent empowerment for previously marginalized groups, and those that do not serve as burden shifters to help to improve living standards of the society as a whole, mainly because a relatively small change in the condition of some groups represents many benefits for them. Jobs in cities, connected to global markets, and which are environmentally benign, increase productivity. Jobs that give a sense of fairness, that link into networks, and that shape social identity have a positive impact on social cohesion. Those three categories are not exclusive among themselves, and different social groups can have different appreciations of the best kind of job for them.
  • World distribution of employment is relatively even: 1.6 billion people work for wage or salary, whereas 1.5 billion people work in farming, self-employment, or the informal sector.
  • A three-layered policy approach is suggested: as the richer the country the more benefits from jobs, focus on macroeconomic stability, an enabling business environment, human capital accumulation and the rule of law permit; labor policies should facilitate job creation and enhance the development of payoffs from jobs; identify the jobs with the greatest development payoffs given a country’s context and remove obstacles for their creation.

Without being an expert of labor markets, a first impression is that even though some of the information included in this document is quite useful to understand a central aspect of the current economic crisis, none of its conclusions or observations are groundbreaking or unexpected. In any case, an implication of the insistence on not forgetting rural workers when designing labor policies is that the gap between the rural and the urban areas might be widening. Similarly, in poor nations the bulk of self-employed workers more often than not is loosely connected with large corporations or with broader markets. Paraphrasing Snowball, “all workers are equal, but some workers are more equal than others”. And we all know where that leads to.



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