What are ‘good jobs’ and where are they coming from?

What are ‘good jobs’ and where are they coming from?

All over the world today the central challenge to achieving comprehensive economic prosperity is to create enough “good jobs”. Without productive and reliable employment for most of a country’s workforce, economic growth either suffers or its benefits are concentrated in a small minority.
The lack of good jobs also undermines confidence in the political elite, and fuels reactionary, dictatorial tendencies that are evident in many countries today.
The definition of a good job clearly depends on the level of economic development of a country. It is generally in a stable formal sector that comes with basic labour protections such as safe working conditions, collective bargaining rights, and rules against arbitrary dismissal.
A good job enables a middle-class lifestyle that provides enough income for housing, food, transportation, education, and other family expenses, as well as some savings.
Companies that treat their employees well – by giving them good salaries, more autonomy and greater responsibility – often reap the benefits in the form of better employee motivation and higher productivity. As MIT’s Xenophon has argued, “good jobs” strategies can be as profitable for firms as they are for workers.
But the deeper problem is a structural problem that goes beyond what firms can do on their own. Today, both developed and developing countries are increasingly at odds between the productive structure and the workforce. Production is becoming more skilled, while the majority of the workforce is less skilled. There is a mismatch between the types of jobs that are created and the types of workers available.
Technology and globalisation have conspired to widen this gap, with manufacturing and services rapidly becoming more automated and digitised. Although new technologies could in principle benefit low-skilled workers, in practice technological advances have largely replaced labour. In addition, the flow of global trade and investment, and in particular global price chains, has integrated production techniques around the world, leaving poor countries without the expertise and investment required. It has become very difficult for them to compete in global markets.
The result is the world economy divided between an advanced class, generally globally integrated, employing a minority of the workforce, and a less productive class that absorbs most of the workforce, often at low wages and in poor conditions. The shares of the two classes may differ: obviously, the number of highly productive firms is higher in developed countries; but, according to merit, the picture looks exactly the same in rich and poor countries – and produces the same patterns of inequality, exclusion and political polarisation.
Logically, there are only three ways to reduce this disparity. The first strategy, and one that gets the most attention from policy, is investing in skills and training. If most of the workers acquire the required skills and abilities through modern technologies, the more the production will expand at the same production cost.
Such human capital policies are certainly important, but even when they are successful, their effects will be felt in the future. At the moment, they have little to do with the realities of the labour market. It is not possible to change the labour force overnight. In addition, there is always the real danger that technology will grow faster than society’s ability to train those entering the workforce.
The second strategy is to persuade successful companies to hire more unskilled workers. In countries where skills gaps are not large, governments can (or should) urge their successful firms to increase employment directly or through their local suppliers. Governments in developed countries also have a role to play in influencing the nature of technological innovation. Often, they subsidise capital-intensive technologies, rather than labour-intensive, and aim at replacing low-skilled workers rather than emphasising on innovation in more socially beneficial directions.
Such policies are unlikely to make much difference to developing countries. Even in labour-intensive countries like India or Ethiopia, global integrated production relies on relatively capital-intensive methods. This leaves a wide range of developing economies – from middle-income countries such as Mexico and South Africa to low-income countries such as Ethiopia – where improving educational institutions does not provide short-term benefits, while the most developed sectors of the economy are unable to absorb the additional supply of unskilled workers.
A third strategy may be needed to address this problem. Tourism and non-traditional agriculture are the biggest examples of low-skilled, labour-intensive sectors. Public employment (in construction and service delivery) has long been ridiculed by development experts, but is a sector that may need attention. Government efforts could go even further in supporting intermediate activities, especially non-commercial services provided by small and medium enterprises. These will not be highly productive, which is why they are rarely the focus of industrial or innovation policies, but they can still provide significantly better jobs in the informal sector than other alternatives.
Government policy in developed and developing countries often focuses on promoting the latest technology and promoting the most productive firms. But the failure to create good, middle-class jobs has huge social and political costs. Reducing these costs requires a different focus, especially on jobs that are linked to the existing economic skills.

[email protected]

Leave a Reply

Your email address will not be published.