Global Employment Trends:

scarred youth, the bulge of the ageing, and our well-being

Duncan CampbellDirector, Megatrends Team

Research DepartmentILO

Even Roubini gets it wrong

What ought to be said, but what i won’t say about 2025

• Are we serious about a green economy?• Do we need to think about the Snowden

effect on labour markets?• Is there anyone here who can tell us about

technology and the labour market in 2025?• Is there any reason to fear … or instead should

we not cheer the rise of the global middle class?

The middle class ($4-$13 ppp) per day is growing in the developing world

What i will say

• The recovery from the Great Recession has been modest. Recovery in the labour market has been more modest still

• Why we should worry about unemployed youth

• What does aging imply for us?• Money matters, but it isn’t everything: some

results from behavioral economics

So, point 1

Growth is there, but still disappointing, and forecasts

remain unrosy

2.0

2.5

3.0

3.5

4.0Ap

r-11

Jun-

11Au

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Oct-1

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3

2013, IMF

2013, UN

2013, WB

2014, IMF

2014, UN

2014, WB

Absorbing new entrants to the labour market remains the

challenge

2'550

2'600

2'650

2'700

2'750

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3'000

3'050

3'100

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Empl

oym

ent (

mill

ions

)

Pre-crisis trend

Estimated/Forecasted

Upper and Lower bound of the confidene interval around the

baseline forecast

62 mio.

81 mio.

Regional economic and labour market prospects 11

Regional economic and labour market prospectsLatin America and the Caribean

• Labour productivity remains below the world average...• ...and projected growth does not indicate potential for catch up

Regional economic and labour market prospects 12

Regional economic and labour market prospectsEast Asia

• ...as the economies in the region become more mature• Sharp increase in unemployment expected in the region from earlier low levels...

Global unemployment well over 200 million – but consider this as

the tip of the iceberg

4.8

5.0

5.2

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6.0

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6.4

6.6

140

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Unemployment rate (per cent)Un

emplo

ymen

t (milli

ons)

Total unemployment Unemployment rate

For one thing, duration of unemployment becomes an issue

as it converts cyclical unemployment into a structural

unemployment problem as measured by Beveridge curves, i.e.

a problem more immune to macroeconomic fixes

3

4

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9

10

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Spain

Greece

United Kingdom

Canada

United States

Japan

Turkey

Brazil

South Africa

There is a NEET problem that is festering – i.e. young people not in

employment, nor education, nor training

0 5 10 15 20 25 30 35 40 45

NetherlandsLuxembourg

IcelandNorwaySweden

SwitzerlandAustria

SloveniaDenmarkGermanyAustralia

FinlandMalta

Czech RepublicCanada

BelgiumLithuania

New ZealandFrance

EstoniaPortugal

United KingdomPoland

United StatesLatvia

CyprusHungary

CroatiaKorea, Republic of

RomaniaBrazil

IrelandGreece

ItalySpain

BulgariaMexico

IsraelMacedonia, The former Yugoslav Republic of

Turkey

2007

Most recent year

Policy recommendations 19

Policy recommendationsAddress inactivity and skills mismatch through active labour market policies

+0.8%+3.9mil jobs

• Focus on active labour market policies to address structural issues...• ...could help add 3.9 million jobs in OECD countries by 2016

The tip of the iceberg is one thing, the rest of the iceberg another – we are still looking at a world in

which our work is largely unregulated and unprotected:

take «informality» as a measure. It certainly won’t be a solved

problem by 2025 … even in Europe

0

10

20

30

40

50

60

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80

Africa Asia and the Pacific

Central and South-Eastern

Europe

Middle East Latin America and the

Caribbean

Mean

Maximum

Minimum

For informal work, there are few barriers to entry and minimal capital

needs.

But for many countries, education does not solve the problem of

attaining productive employment. The economy might not be able to absorb an educated workforce – in Europe as

well

010

2030

4050

Inci

denc

e in

per

cen

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otal

em

ploy

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Jordan Egypt Peru Macedonia, FYRArmenia Turkey

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Incidence of undereducation Incidence of overeducationAggregate skills mismatch

Most of the behavioural economics literature shows that «scarring»

from exclusion from labour markets is a long-term and,

possibly permanent outcome

Point 2 -- aging

Population 60+ as (%) of total population

Source: UN population projections

Population 60+ as (%) of total population

Source: UN population projections

Old-age pension beneficiaries as a percentage of the population above retirement age, latest available year

Sources: ILO World Social Security Report, 2011

POLICY responses:AN INTEGRATED LIFE CYCLE AND INTERGENERATIONAL PERSPECTIVE

Promotion of employment and decent work key to meet ageing challenge and to mitigate the effects of ageing on social protection schemes

Replacement migration ILO approach underscores importance of a lifecycle and intergenerational

perspective Extending working lives and increasing participation rates of older workers is an

important policy response. However, a prolongation of working life may not be appropriate for everybody Attitudes towards old age, lifelong learning, working conditions, health and safety

at work and adequate working time and work organization during life cycle play major role.

•

POLICY responses

COMBATTING PREJUDICE AND AGE DISCRIMINATIONCOMBATTING PREJUDICE AND AGE DISCRIMINATION

Attitudes and prejudice major obstacle to opening up employment opportunities for older workersEU Eurobarameter Survey (2012): workplace age discrimination most

widespread form of discrimination Interventions at enterprise level major role to play

Importance of proactive approach: Age diversity and age managementConcrete actions have included awareness campaigns development

of tool kits, promotion of good practices and consultation with social partners.Austrian Industry Federation: www.arbeitundalter.atFrance: Sanction for firms not adopting some action to promote employment

of older workers

Older workers in EU lowest participation in training compared to other age groups

Research shows a mix of factorsEmployers less inclined to pay for training: Research on Netherlands found

positive effects of age specific subsidies (Picchio & van Ours, 2011)Workers who participated in firm specific training in their early careers retire

earlier than workers with general training background (Montizaan et al, 2008) Participation in training linked to prior education: In Germany it is not age per

se that explains participation in training but rather previous levels of qualifications (Bosch and Schief, 2007)

POLICY responses

FOSTERING EMPLOYABILITYFOSTERING EMPLOYABILITY

Point 3: what conclusions to draw from the foregoing?

What if we took productive employment more seriously as a

macroeconomic variable?

Why, first, would we do so?

Answer: It is fundamental to well-being

We don’t like others’ unemployment

Nor do we like inequality. It makes us feel as if we’re always trying to

catch up… (Hedonic Treadmill)

Unequal societies, in fact, create all sorts of pathologies

Here is the non-income related correlation

I predict that self-reported well-being will rise in significance as a

macroeconomic policy variable by 2025

Thank you

campbell@ilo.org