Governments need to overhaul their approach to employment and jobs to reduce further social and economic tensions, according to a new report from the OECD. Without rapid action, many people, particularly the low skilled, will be left behind in the fast-changing world of work.
The OECD Employment Outlook 2019 is part of the OECD’s Future of Work initiative and the “I am the Future of Work” campaign, which aims to make the future of work better for all, helping to transform learning and social protection systems and reduce inequalities between people and across regions.
“The OECD Employment Outlook does not envisage a jobless future. But it does foresee major challenges for the future of work,” said OECD Secretary-General Angel Gurría, launching the report in Berlin with Hubertus Heil, Germany’s Federal Minister of Labour and Social Affairs. “With the right policies, we can manage these challenges. We face significant transformation, but we have the opportunity and the determination to use this moment and build a future of work that benefits everyone.”
While the OECD area has fully recovered the jobs lost during the crisis and today the employment rate is 2 percentage points higher than before the crisis, the projected slowdown in the global economy casts a shadow over short-term job prospects, and the job market has continued to polarise. To help workers, firms, and countries adapt to the changing world of work, the OECD proposes in this Outlook a Transition Agenda for a Future that Works for All.
The employment rate improvement in most OECD countries has been driven by a substantial rise in the share of women in work and older workers staying longer in employment. Moreover, much of the increase in employment reflects the growing number of high-skilled jobs, the share of which has risen by 25% in OECD countries over the past two decades.
However, among young people with less than tertiary education in many countries, a rising share are out of work or, if in work, under-employed or low-paid. Men have seen an increase in joblessness and under-employment in some countries, although labour market outcomes for women remain worse on average.
The digital transformation, globalisation and demographic changes have already been reshaping the world of work. Looking ahead, 14% of existing jobs could disappear as a result of automation in the next 15-20 years, with another 32% set to change radically.
While full-time, permanent employment is likely to still account for many, if not most, jobs in the future, the past few years have seen a further rise in non-standard work in some countries, such as self-employment and temporary contracts. Part-time employment has risen in virtually every OECD country over the past few decades. The share of people who work part-time but would prefer to work full-time has also risen in two thirds of OECD countries for which data are available.
The Agenda recommends that countries focus on four key areas: labour protection, social protection, learning and social dialogue.
It underlines the importance of ensuring adequate labour law protection for workers, regardless of their employment status. Governments should tackle false self-employment, which employers sometimes use to avoid taxes and regulations, minimise the “grey zone” between salaried work and self-employment, and extend rights to workers left in that zone.
Adapting and extending social protection is essential to ensure better coverage for workers in non-standard forms of employment, according to the report. Non-standard workers are, in some countries, 40-50% less likely to receive any form of income support while out of work than standard employees. Benefit entitlements should be made portable across jobs and targeted social protection measures complemented with more universal and unconditional support.
In all OECD countries, training participation is lowest among those who need it most, including the low-skilled, older adults and non-standard workers. A major overhaul of adult learning programmes to increase their coverage and promote quality is needed to harness the benefits of the changing world of work. Measures should include removing time and financial constraints to participation in training, making training rights portable, and providing quality information and counselling.
Union membership has steadily declined over the last three decades in OECD countries, falling from 30% in 1985 to 16% in 2016, says the Outlook. This has weakened workers’ bargaining power and contributed to the decline in the share of national income going to workers. Membership is even lower among non-standard workers, who are 50% less likely than standard workers to be unionised. Access to collective bargaining and social dialogue should be extended beyond standard employment.
Amidst Strong Economic Rebound in Russia, Risks Stemming from COVID-19 and Inflation
Following a strong economic rebound in 2021, with 4.3 percent growth, Russia’s growth is expected to slow in 2022 and 2023, with a forecast of 2.4 percent and 1.8 percent growth, respectively, according to the World Bank’s latest Regular Economic Report for Russia (#46 in the series).
The Russian economy has now recovered to above its pre-pandemic peak, with growth driven by a strong rebound in consumer demand. In 2022, growth will be supported by continued strength in commodity markets, but will likely also be hampered by COVID-19 control measures and tighter interest rates.
Household consumption in the second quarter increased to more than 9 percent on the previous quarter (seasonally adjusted), showing the fastest rate of growth in a decade. Labor markets also saw a substantial upswing, with unemployment falling to a four-year low and real wages growing.
Russia’s current account surplus has also been exceptionally strong, on the back of high commodity prices and low levels of outbound tourism. The federal budget has been consolidated, led by a strong growth in revenue, and is on track to meet the authorities’ target of meeting the fiscal rule next year.
“This surge in spending resulted from the release of pent-up demand created by pandemic restrictions,” said David Knight, Lead Economist and Program Leader, World Bank. “It was aided by increased credit, Russian tourists staying at home for the holidays this year, and resource inflows via the energy sector.”
The report assesses the short-term risks weighing on Russia’s growth and finds that low vaccination rates are necessitating stricter COVID-19 control measures that may reduce economic activity, while more persistent inflation will likely call for tighter interest rates for a longer period, limiting the growth outlook.
The report also analyzes how Russia could be impacted by global economic growth under three different green transition scenarios, and suggests that domestic climate action can help mitigate some of the possible impacts of a global green transition and create new opportunities for Russia.
The country’s new low-carbon development strategy, which aims for a 70 percent reduction in net emissions by 2050 and net carbon neutrality by 2060, will become an important first step for Russia. A focus on enabling the transition to a more diversified and faster growing economy will call for strengthening of a broad range of assets including human capital, knowledge, and world-class market institutions.
“Environmental sustainability is becoming central to the global economic agenda. Increased commitments by countries and firms to carbon neutrality signal that wholesale changes to policy frameworks will be needed in the coming years,” said Renaud Seligmann, World Bank Country Director for Russia. “With Russia’s pledge to become carbon neutral by 2060, the country now needs to take concrete actions of moving towards decarbonization.”
To accomplish these goals, the report recommends the implementation of carbon pricing and the consolidation of energy subsidies for consumers in Russia. At the same time, measures should be taken to ensure people are protected from the costs and any adverse impacts of the transition.
The report estimates that consumer energy subsidies on electricity, gas and petroleum in Russia amounted to 1.4 percent of the country’s GDP in 2019. By redeploying these resources, the authorities could increase GDP and ensure that no consumers are left worse off. At the same time, this would help reduce greenhouse gas emissions and move Russia closer to its goal of a green and sustainable economy.
World trade reaches all-time high, but 2022 outlook ‘uncertain’
Global trade is expected to be worth about $28 trillion this year – an increase of 23 per cent compared with 2020 – but the outlook for 2022 remains very uncertain, UN economists said on Tuesday.
This strong growth in demand – for goods, as opposed to services – is largely the result of pandemic restrictions easing, but also from economic stimulus packages and sharp increases in the price of raw materials.
According to UN trade and development body UNCTAD, although worldwide commerce stabilized during the second half of 2021, trade in goods went on to reach record levels between July and September.
Services still sluggish
In line with this overall increase, the services sector picked up too, but it has remained below 2019 levels.
From a regional perspective, trade growth remained uneven for the first half of the year, but it had a “broader” reach in the three months that followed, UNCTAD’s Global Trade update said.
Trade flows continued to increase more strongly for developing countries in comparison to developed economies overall in the third quarter of the year, moreover.
The report valued the global goods trade at $5.6 trillion in the third quarter of this year, which is a new all-time record, while services stood at about $1.5 trillion.
For the remainder of this year, UNCTAD has forecast slower growth for the trade in goods but “a more positive trend for services”, albeit from a lower starting point.
Among the factors contributing to uncertainty about next year, UNCTAD cited China’s “below expectations” growth in the third quarter of 2021.
“Lower-than-expected economic growth rates are generally reflected in more downcast global trade trends,” UNCTAD noted, while also pointing to inflationary pressures” that may also negatively impact national economies and international trade flows.
The UN body’s global trade outlook also noted that “many economies, including those in the European Union”, continue to face COVID-19-related disruption which may affect consumer demand in 2022.
Semiconductor stress test
In addition to the “large and unpredictable swings in demand” that have characterized 2021, high fuel prices have also caused shipping costs to spiral and contributed to supply shortages.
This has contributed to backlogs across major supply chains that could continue into next year and could even “reshape trade flows across the world”, UNCTAD cautioned.
Geopolitical factors may also play a role in this change, as regional trade within Africa and within the Asia-Pacific area increases on the one hand, “diverting trade away from other routes”.
Similarly, efforts towards a more socially and environmentally sustainable economy may also affect international trade, by disincentivizing high carbon products.
The need to protect countries’ own strategic interests and weaknesses in specific sectors could also influence trade in 2022, UNCTAD noted, amid a shortage of microprocessors called semiconductors that “has already disrupted many industries, notably the automotive sector”.
“Since the onset of the COVID-19 pandemic, the semiconductor industry has been facing headwind due to unanticipated surges in demand and persisting supply constraints…If persistent, this shortage could continue to negatively affect production and trade in many manufacturing sectors.”
Small Businesses Adapting to Rapidly Changing Economic Landscape
The World Economic Forum has long been at the forefront of recognizing the strategic importance of sustainable value creation objectives for business. While interest has mostly focused on how large corporations contribute to the global economy and sustainable development objectives, small and mid-sized enterprises (SMEs) are often overlooked as major drivers of economic activity, as well as social and environmental progress around the world.
A new report released today finds factors that previously disadvantaged SMEs can lead them to new opportunities. Nine case studies from multiple industries and regions highlight what SMEs can do to increase their future readiness.
Developed in collaboration with the National University of Singapore Business School, the University of Cambridge Judge Business School and Entrepreneurs’ Organization, the report also finds that SMEs are lagging behind in terms of societal impact. Although there is a clear need to operate in line with sustainability goals, many SMEs have yet to include explicit strategies and performance measurement centred on societal impact.
The top challenges cited by SME executives include talent acquisition and retention (for 52.5% respondents), survival and expansion (43.8%), funding and access to capital (35.7%), non-supportive policy environment (21%), the difficulty of maintaining a strong culture and clear company purpose and value (20%).
SMEs can leverage their size, networks, people and the strengths of technology to support their goals of sustainable growth, positive societal impact and robust adaptive capacity. While it is essential for SMEs and the wider economy to increase their future readiness, they can thrive only insofar as the necessary supporting infrastructure and regulatory frameworks exist.
“We hope this will inspire and encourage SMEs and mid-sized companies to harness their potential in becoming a major driver of sustainable and inclusive economic growth and innovation by focusing on several core dimensions of future readiness,” said Børge Brende, President, World Economic Forum.
“Through this report, the Forum aims to highlight the significant role SMEs can play not just locally but also globally. The New Champions Community is a step towards bringing these smaller companies into the forefront of global discourse around socioeconomic development and engaging them in a community of forward-thinking companies from across the world,” said Stephan Mergenthaler, Head of Strategic Intelligence and Member of the Executive Committee, World Economic Forum.
The report aims to develop a deeper understanding of organizational capabilities and orientations needed for SMEs to successfully generate lasting financial growth, affect society and the environment positively, and develop high levels of resilience and agility.
It relies on robust research methods and combines rigorous primary and secondary research. The takeaways and conclusions presented in the research have been derived from an analysis of over 200 peer-reviewed articles and engagement of more than 300 CEOs and founders of SMEs through surveys and in-depth interviews.
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