Global Employment Trends: scarred youth, the bulge of the ageing, and our well-being

1. Global Employment Trends:scarred youth, the bulge of the ageing, and our well-being Duncan Campbell Director, Megatrends Team Research Department ILO

2. Even Roubini gets it wrong

3. Whatought to besaid, but what i won’tsay 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?

4. The middle class ($4-$13 ppp) per dayisgrowing in the developing world

5. 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

6. So, point 1

7. Growth is there, but still disappointing, and forecasts remain unrosy

9. Absorbing new entrants to the labour market remains the challenge

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... Regional economic and labour market prospects

13. Global unemployment well over 200 million – but consider this as the tip of the iceberg

15. 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

17. There is a NEET problem that is festering – i.e. young people not in employment, nor education, nor training

19. Policy recommendationsAddress inactivity and skills mismatch through active labour market policies • Focus on active labour market policies to address structural issues... • ...could help add 3.9 million jobs in OECD countries by 2016 +0.8% +3.9mil jobs Policy recommendations

20. 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

22. For informalwork, there are few barriers to entry and minimal capital needs. But for many countries, educationdoes not solve the problem of attaining productive employment. The economymight not be able to absorb an educatedworkforce – in Europe as well

24. Most of the behavioural economics literature shows that «scarring» from exclusion from labour markets is a long-term and, possibly permanent outcome

25. Point 2 -- aging

26. Population 60+ as (%) of total population Source: UN population projections

27. Population 60+ as (%) of total population Source: UN population projections

28. Old-age pension beneficiaries as a percentage of the population above retirement age, latest available year Sources: ILO World Social Security Report, 2011

29. 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 appropriatefor 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.

30. POLICY responsesCOMBATTING PREJUDICE AND AGE DISCRIMINATION • Attitudes and prejudice major obstacle to opening up employment opportunities for older workers • EU 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 management • Concrete actions have included awareness campaigns development of tool kits, promotion of good practices and consultation with social partners. • Austrian Industry Federation: www.arbeitundalter.at • France: Sanction for firms not adoptingsome action to promoteemployment of olderworkers

31. POLICY responsesFOSTERING EMPLOYABILITY • Older workers in EU lowest participation in training compared to other age groups • Research shows a mix of factors • Employers 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)

32. Point 3: what conclusions to drawfrom the foregoing?

33. 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

34. We don’t like others’ unemployment

36. Nor do we like inequality. It makes us feel as if we’re always trying to catch up… (Hedonic Treadmill)

38. Unequal societies, in fact, create all sorts of pathologies

41. Here is the non-income related correlation

42. I predict that self-reported well-being will rise in significance as a macroeconomic policy variable by 2025

43. Thank youcampbell@ilo.org