A better balance: More feast, less famine
WORK TODAY IS about far more than economics. More even than when Theodore Roosevelt extolled its virtues, people over the world over want work not just to put food on the table and money in the bank, but as a means of gaining personal satisfaction. The changes now under way stand to make the world as a whole significantly better off and allow many more people to win the prize of being able to work hard at something worth doing. Yet, as this report has explained, there are many people who are not winning the prize and for whom the outlook is grim, even in rich countries where getting a decent job had been taken for granted.

Globalisation and other pro-market reforms were sold as a package deal. Opening up a country’s markets, the argument went, would increase overall wealth in every country, and policies for internal redistribution would help the inevitable losers—or else their personal misery could have serious social consequences for everyone else. That is why jobs are rightly at the top of the political agenda the world over.

Where unemployment is currently higher than usual, there is enormous pressure on politicians to spend money they have not got on quick fixes that almost certainly would not work. But almost everywhere, what is needed from government are the sort of fundamental reforms that can make a big difference in the long run, beyond the next electoral cycle.

The mismatch between the skills demanded by employers and those available in the market is a reflection both of bad choices by students, who have not thought hard enough about what will help them find a good job, and of education systems that are too often indifferent to the needs of the labour market and too slow to change even if they try. It is not just Egypt where the universities provide training for public-sector jobs that are no longer abundant yet fail to equip students with what they need to thrive in a market economy. Out of necessity, India is emerging as a model for tackling these problems, both because its companies have become expert in turning useless graduates into useful ones and because it has allowed industry to take the lead in creating a huge new programme to tackle skills shortages.

A second challenge is for governments to create the right conditions for businesses to create more jobs. That means running sustainable macroeconomic policies, so that firms need not fear that their investments will be undermined by another economic crisis; sensible regulation; and a tax system that is both competitive, with low marginal rates, and does not distort business decisions in arbitrary ways. Given the importance of job creation, it would make sense to shift some of the burden of taxation permanently away from employment towards consumption or carbon emissions. And since entrepreneurship plays a big part in creating jobs, especially in the phase when young businesses expand rapidly, government should do all it can to encourage more of it—though in view of its poor track record in this area, that should be mainly a matter of supporting (rather than obstructing) private-sector-led initiatives.

The goal of creating flexible labour markets should not be abandoned, but in future the ways in which inflexible labour markets are loosened up should be given more thought. The countries with the biggest youth-unemployment problems tend to be those where either there is no flexibility (as in much of the Middle East) or where flexibility applies only to newcomers to the jobs market, whereas older incumbents have continued to enjoy the protection that made the labour market inflexible in the first place (as in Spain). The political attractions of leaving the incumbents’ privileges untouched are obvious, but so, by now, are the social consequences of making the young bear most of the costs of flexibility.

Long-term unemployment often turns into permanent unemployment, so governments should aim to keep people in work, even if that sometimes means continuing to pay them benefits as they work. Health care and pension systems should be (re-)designed to allow workers as much flexibility as possible, not least in deciding when to retire. In the rich world these welfare systems were built on the assumption that men with lifetime nine-to-five jobs were the main breadwinners. In emerging markets that are introducing social protection for those unable to earn a living, the systems should be designed in ways that do not discourage work.

There is no excuse for delay in starting to put in place these long-term solutions. Jeff Immelt of GE may well be right to think that in America “ultimately we will get it sorted,” but he is also right that political dysfunction in Washington, DC, has “an opportunity cost. It is not like the rest of the world has stopped while we are going through this.” The same is true in many other countries where reform. has stalled or is not even on the agenda yet.

And while individuals wait for their governments to get their acts together, there is plenty that they can do to give themselves the best chance of surviving and thriving in the new world of work. They need to clean up their image on the internet, get in touch with their entrepreneurial DNA and brush up on their serial mastery. And form. their very own posse.