What is the problem:

- 200 million people are unemployed in 2013- job growth is less than population growth- Half of the jobs that are created are precarious jobs – creating a class of working poor- Youth unemployment is 75 million, however, predictions are that the real amount is closer to 300 million- One quarter of the workers earn 2 dollars a day or less.

Fundamental theoretical assumptions underlying the neo-classical

economic are not valid anymore, if they ever were.

Starting with the most important one:

GDP growth automatically leads to more jobs. Like income, jobs are

supposed to ‘trickle down’. But increasing inequality shows that this

is not the case for income. And similarly with regard to

unemployment, we face ‘jobless growth’. GDP economic growth is

not enough to create more and better jobs.

But WHY? This is due to more assumptions:

• More free trade and international competition leads to more jobs. • Higher profits lead to more jobs.• Increasing labour productivity will lead to more employment• Better education and training to bridge the skills gap will lead to

more employment.• Technological innovation creates more jobs.

Policy recommendations on the long term:

- obsession of international competition with low production costs must be refocused away from the current fixation on lower labour costs. Instead, policy should stimulate ingenuity to reduce other production costs, for example those related to raw materials and energy costs.

- Trade and investment policies must allow government to stimulate and protect sectors that can become the job generating motor of the future. This should be so even if such measures lead to slightly lower GDP growth in the short term.

- Tax on labour needs to go down dramatically to compensate for low wages due to global competition and to make labour more compatible for automation. A lower tax should be compensated with higher tax revenues from non-wage related income – leading to a wage-led growth.

- Governments should anticipate now what will happen when the labour of a large number of working-age people (not only low-skilled labour) is rendered technologically redundant, or no longer commands an income adequate to provide a minimally-decent standard of living through work.

What is needed on the short term:

- higher minimum wages can keep a fully-employed worker and his or her

family out of poverty. Otherwise, tax credit and cash transfer schemes are

needed to help families who are losing out and face squeezed wages.

Such a mechanism for the redistribution of benefits of growth cannot be a

long-term solution and should not give governments a pretext to carry on as

usual, increasing employment problems, and using GDP growth to

compensate for shortcomings. However, while long-term and structural

solutions are being negotiated, such a policy can offer relief to workers and

their families who are losing out in the labour market in the short term.