Jobs and inequalities: is there a trade-off?

1. Jobs and inequalities: is there a trade-off? Philippe Defeyt SustainableDevelopmentInstitute (IDD, BE) Philippe Lamberts Co-president of the Greens/EFA Group

2. Purpose of this briefing • Is the obsession foreconomic growth grounded (on basis of past experience)? • Does it make sense to create jobs or tackle inequality? • What about the outlook then? • Economic growth forever ? (The trees don’t reach to heaven) 2

3. A bit of methodology • Timeframe under review: 2000-2015/6 • Population of 20-64-year-old adults • Geographical scope: DE, AT, BE, DK, SP, FL, FR, IT, NL, PL, UK, SW 3

4. Unemployment rate : big disparities between the Member States as to the level and the evolution • At first sight : some countries seem to perform better than other. But how true is that? 4

5. A proper assessment of these performances requires to take into account demographical changes • NB. While the German population has shrunk by 1 million, the French population has risen by 3 millions! 5

6. All in all, despite the crisis, massive jobs creation with few not meaningless exceptions • Surprisingly, France appears to have created more jobs than Germany whose record on this indicator is close to the average. Yet, this is not already the whole story. 6

7. Expressed in full time equivalent, the picture is more nuanced 7

8. (Alternative overview of the gap) 8

9. Using FTE rather than the official statistics modifies the ranking of performances (2015) 9

10. Yet, the shadow price paid by some apparently good performers is socially high... 10

11. 11

12. Underutilization of labour = 2x unemployment rate (ECB, May 2017) 12

13. Growing inequality undermines our democracies 13

14. Is it wise to bet on growth to create (decent) jobs again? NO ! GROWTH WON’T SUFFICE! 14

15. Furthermore, let’s face it, there are some insuperable constraints on growth. The increasing digitalization of the economy will not help. • According to the OECD (Policy Challenges for the Next 50 Years, 2014), the GDP growth should drop gradually to 0.5 %/y on average by 2060. 15

16. Yet, the OECD gloomy forecast takes into account the ageing population and shrinking workforce, the structural changes of the economy, the exhaustion of the education premium, etc. • But it ignores some basic facts such as: • Part of the economic growth and technological progress is explained by ICT and the underpinning miniaturization of transistors (/ processing capacity). • Yet, physical limit to miniaturization (current size of a transistor is 7 nanometers while 1 atom of silicium is 0,22 and 1 transistor requires at least 32 of such atom ; not feasible to reduce much further the size of the transistor and thus to increase the processing capacity) 16

17. At the global level, total energyconsumption by ICT infrastructures = 100 nuclearreactors (Lannoo et al. 2013) • Yearlygrowth of energyconsumption := +6,6% / year • ICT = 4 % of CO2 emissions (pm. Aviation = 2 %) • Trend expected to bepursued (Cloud, Internet of Things...) => not sustainable, not in line with Paris Agreement • The energy return on (energy) investmentisdeclining : steadily more energy to extract and produce the sameamount of energy 17

18. Source: Charles A. S. Hall and John W. Day Jr./American Scientist 18

19. Political conclusions Taxation Working Time Social Protection (Basic income) 19

20. The more prosperous the country is,the less is the working time 20