Global pressure on wages from COVID-19 will not stop with the arrival of a vaccine, the head of the International Labour Organization (ILO) warned on Wednesday, coinciding with a major report showing how the pandemic had slowed or reversed a trend of rising wages across the world, hitting women workers and the low-paid hardest.
“It’s going to be a long road back and I think it’s going to be turbulent and it’s going to be hard”, said ILO Director-General Guy Ryder, as he announced the findings of the ILO’s flagship Global Wage Report, which is published every two years.
Except for China, which was bouncing back remarkably quickly, most of the world would take a considerable period of time to get back to where it was before the pandemic, which had dealt an “extraordinary blow” to the world of work almost overnight.
“The aftermath is going to be long-lasting and there is a great deal, I think, of turbulence and uncertainty,” Mr. Ryder said. “We have to face up to the reality, at least a strong likelihood that… as wage subsidies and government interventions are reduced, as they will be over time, that we are likely to face continued downward pressure on wages.”
But he added that it was unlikely and in many ways undesirable that the world should simply try to return to how it was before the coronavirus struck.
“This pandemic has revealed in a very cruel way, I have to say, a lot of the structural vulnerabilities, precariousness, that is baked into the current world of work. And we need to take the opportunity – it’s almost indecent isn’t it, to speak of opportunity arising out of this mega global tragedy of the pandemic? – but we do have to extract from it, the types of opportunities that allow us to think about some of the fundamentals of the global economy and how we can, in the bounce back process, make it function better.”
The Global Wage Report showed how the pandemic has put pressure on wages, widening the gap between top earners and low-wage workers, with women and the low-paid bearing the brunt.
After four years when wages grew on average, by 0.4-0.9 per cent annually in advanced G20 economies and 3.5-4.5 per cent in emerging G20 economies, wage growth slowed or reversed in two-thirds of countries for which recent data was available.
Low-wage job disaster in the US
But the figures only reflect wages for those who have jobs, and in some countries, such as the United States, so many low-paid workers had lost their jobs that average wages appeared to have risen, a misleading picture.
The damage could have been worse if governments and central banks had not stepped in to dissuade companies from laying off workers during the pandemic lockdowns, the ILO report said. It said such measures had allowed millions of wage earners to retain all or part of their incomes, in contrast to the impact of the global financial crisis a decade ago.
‘Constructive social dialogue’
But for economies to start returning towards sustained and balanced growth, incomes and aggregate demand would need to be supported and enterprises would have to remain successful and sustainable.
“Constructive social dialogue will be key to success in achieving this goal”, the ILO report said.
Key Trends Shaping the Global Economy in 2021
Accelerating inequality, remote work and greater tech market dominance are among the pandemic’s emerging trends that are likely here to stay for some years. Beyond managing the pandemic and vaccine rollout, these trends could shape a new era of fiscal, monetary and competition policy, as well as bigger government. Deglobalization is seen as the least likely of current trends to continue in the longer term; particularly as international coordination is key to resolving global challenges such as vaccine manufacturing and distribution. These are some of the findings of the World Economic Forum’s Chief Economists Outlook, published today.
The latest edition of the Forum’s Chief Economists Outlook is the outcome of consultations with leading chief economists from the public and private sectors. The report outlines the global economic outlook and lays out the priorities for policy-makers and business leaders to chart a post-pandemic recovery agenda that is fair, inclusive and sustainable.
Chief economists are impressed at the speed and scale of fiscal policy measures taken in the wake of the pandemic. However, as the global vaccination campaign picks up pace, they see the second half of 2021 as the optimal time to begin transitioning from general emergency spending to more targeted spending on future growth sectors. A majority suggest that taking action to pay down the significant national debts accumulated in the past year can wait until 2024 or beyond.
With central bank financing of public debt through quantitative easing now at the core of monetary policy in response to the crisis, chief economists believe this could lead to less central bank independence over time. Many also suggested that central banks should be pursuing environmental objectives directly through their asset purchases, which would represent a significant departure from past practice.
Most chief economists expect a brighter outlook as the vaccine helps accelerate the recovery, and as a new US administration contributes to tackling short-and long-term challenges, both domestically and globally, through revived multilateral institutions. However, most of those surveyed see virus mutations as the biggest risk for 2021, slowing efforts to contain the pandemic and leading to new lockdowns. Another concern relates to poorly calibrated policy responses that risk failing to differentiate between the deep structural impact of the pandemic on some sectors and the temporary halting of activity in other sectors.
“This report makes clear that precisely calibrated and coordinated fiscal, monetary and competition policy hold the key to global economic recovery and transformation. As the roll-out of vaccines picks up pace, there won’t be a better time for governments to work together and invest in a fair transition to a greener, more inclusive economy,” says Saadia Zahidi, Manging Director at the World Economic Forum.
Investment in Upskilling Could Boost Global GDP by $6.5 trillion by 2030
Accelerated investment in upskilling and reskilling of workers could add at least $6.5 trillion to global GDP, create 5.3 million (net) new jobs by 2030 and help develop more inclusive and sustainable economies worldwide. These are the key findings of a World Economic Forum report published today.
The report, Upskilling for Shared Prosperity, authored in collaboration with PwC, finds that accelerated skills enhancement would ensure that people have the experience and skills needed for the jobs created by the Fourth Industrial Revolution – boosting global productivity by 3%, on average, by 2030. The newly created jobs will be those that are complemented and augmented – rather than replaced – by technology.
“Even before COVID-19, the rise of automation and digitization was transforming global job markets, resulting in the very urgent need for large-scale upskilling and reskilling. Now, this need has become even more important. And – as we highlight in our new insight report with the Forum – upskilling is key to stimulating the economic recovery from COVID-19 and creating more inclusive and sustainable economies. To make this happen, greater public-private collaboration will be key. We’re delighted to be part of the Reskilling Revolution platform, which will help foster greater action, collaboration, accountability and progress on this important topic,” said Bob Moritz, Global Chairman, PwC.
One year of impact through the Reskilling Revolution
The research on upskilling supports the work of the Reskilling Revolution platform. Launched at the World Economic Forum Annual Meeting in Davos-Klosters in January 2020, the Reskilling Revolution set out to provide better education, skills and work to one billion people by 2030. In its first year, despite the pandemic and economic downturn, the platform’s initiatives are estimated to have benefitted more than 50 million people globally through rapid reskilling, upskilling and redeployment.
“Millions of jobs have been lost through the pandemic, while accelerating automation and digitization mean that many are unlikely to return. We need new investments in the jobs of tomorrow, the skills people need for moving into these new roles and education systems that prepare young people for the new economy and society. Initiatives like the Reskilling Revolution hold the key to converting ideas into action and creating the necessary coordination between the public and the private sectors. There is no time to waste,” said Saadia Zahidi, Managing Director, World Economic Forum.
After focusing in 2020 on setting up systems for rapid reskilling and upskilling – particularly vital in the midst of the pandemic – the initiative will continue to scale up its skilling work in its second year, while expanding its work in education, job creating investments and work standards.
“Investment in job creation, particularly climate-friendly jobs, is key to ensuring a Reskilling Revolution, and concerted action by governments and by business is needed urgently,” said Sharan Burrow, General-Secretary, International Trade Union Confederation (ITUC).
Developing a common language for skills
The absence of a shared language for skills poses a significant obstacle for the reskilling and upskilling agenda. An additional report by the World Economic Forum, also launched today, provides a common taxonomy for skills to help employers, government and learning providers more efficiently match talent to jobs and learning opportunities.
The Global Skills Taxonomy: A Common Language to Unlock the Reskilling Revolution includes specific definitions and categorizations of skills, creating a common taxonomy for the labour market to adopt, from online training providers and universities to hiring managers in companies and education ministries. It consists of an interactive taxonomy with definitions as well as recommendations for adoption to inform hiring, reskilling and redeployment practices in the workplaces of the future.
More about the Reskilling Revolution
The Reskilling Revolution works through three action tracks: Forum-led initiatives that engage the public and the private sectors in joint initiatives; public-sector and multistakeholder initiatives; and company-led initiatives.
The Closing the Skills Gap country accelerators are developing and implementing national strategies for reskilling and upskilling. Accelerators are active in 10 countries with Georgia, Greece and Turkey having recently established accelerators, and a further six accelerators under discussion. Commitments made by established and planned accelerator countries and their member companies to reskill and upskill their employees are expected to reach up to 47 million individuals.
Comprised of major online learning providers, including Udacity and Coursera, and reaching 200 million learners worldwide, the Forum-led Skills Consortium aims to elevate online learning as an accepted route to employment to provide more opportunities for reskilling, upskilling and redeployment. Building on this success, the Chief Learning Officer Community brings together industry leaders in learning and development to transform workplace learning for 2.9 million employees.
In the year ahead, the Consortium, the community of Chief Human Resources Officers and Chief Learning Officers of the Reskilling Revolution platform will work on the adoption of the skills taxonomy to help make skills the key currency of the labour market and create greater efficiencies in the labour market.
The Preparing for the Future of Work industry accelerators are estimated to have reached nearly 8 million employees to prepare them with future-oriented skills. In addition, the Chief Human Resource Officer Community brings together companies’ HR leaders to share best practices and mobilize action to provide better jobs and skills to a further 4 million employees.
Multistakeholder coalitions that joined the Reskilling Revolution, led by UNICEF and the ILO among others, have been focused on delivering better education and skills, through equalizing access to digital learning (mass teacher reskilling, or identifying, supporting and amplifying new approaches.
Company-led initiatives are helping future-proof their workforces, even in an economically constrained environment. Reskilling Revolution companies are leading new approaches to support their workforces, and their supply chains and communities through access to education, skills and better jobs. In addition to founding members of the platform, such as Adecco Group, LinkedIn and ManpowerGroup, the initiative recently welcomed new partner commitments from Royal Bank of Canada, Unilever and Verizon.
Private markets forecast to grow to $4.9tn globally by 2025 and make up 10% of global AuM
Assets under management (AuM) in private markets to expand by between $4.2 trillion and $5.5 trillion in the years up to 2025 in worst/best case scenarios for economic recovery, according to new analysis from PwC.
The report, Prime time for private markets: The new value creation playbook, examines prospects for four primarily illiquid asset classes of private equity (including venture capital), infrastructure, real estate and private credit across a range of scenarios for 2019-2025.
The report projects significant growth for the value of private markets of $5.5tn (best case), $4.9tn (base case) and $4.2tn (worst case) depending on how global economic conditions respond to the disruption caused by Covid-19.
Will Jackson-Moore, global leader for private equity, real assets and sovereign funds at PwC says,‘The report highlights the continued emergence of private markets as a fast growing and highly impactful portion of global capital markets. Investors continue to look to the sector to deliver the yields that lower risk and more liquid asset classes struggle to match.
‘Yet this is also an opportunity for private markets to take a lead on ESG and net zero commitments and demonstrate the impact they can make in public perception beyond public markets.’
Opportunities across asset classes
Even in the worst case scenario of a prolonged recession, the projections look ahead to growth of almost 50% up to 2025.
While private equity is very much “the asset class of the moment” there is evidence that there are significant opportunities for growth and returns in areas such as real estate, infrastructure and private credit.
Will Jackson-Moore says,‘While opportunities for growth are out there, it is important to emphasise that returns will be harder to find and be more aggressively fought for. Managers will need to be innovative in their approach to value creation and respond swiftly to changing investors and governmental expectations as economies recover from the effects of the crisis.’
ESG and going beyond financial return
Will Jackson-Moore says,‘Our research highlights the extent to which financial return is no longer the sole driver of private markets growth. ESG and Net Zero commitments now represent a significant source of value preservation and creation.
‘Private market managers need to respond by looking at how to apply an ESG lens to investment strategy and product development. Whether it is in impact turnaround initiatives in which ‘dirty’ production facilities are turned green, or building strong commitment to diversity and inclusion at your organisation, these matters are no longer an overlay.’
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