Wednesday, November 28, 2012

Jomo On Jobs

I’m sorry to say I never took Jomo’s class when I was doing my masters. I regret that even more deeply now (excerpt):

Stronger recovery, more jobs for all
Comment by Jomo Kwame Sundaram

GREATER international cooperation and coordination is urgently needed for a more robust and sustained recovery, with benefits far more widely shared. The United Nations (UN) has long argued that only a sustained commitment to prioritising economic recovery can overcome the short termism dictated by financial markets.

Recovery priorities should emphasise job creation as well as enhancing national productive capacities through public investment in infrastructure, for example, which induces complementary private investments and creates the conditions for sustained growth over the longer term. This necessarily requires ensuring greater coherence of macroeconomic policies with structural transformation goals than seen thus far.

Globally, a staggering 200 million people almost half of them youth are officially deemed unemployed. The number of jobless has increased by at least 27 million since the start of the crisis…

…More than 400 million additional jobs will be needed over the next decade to avoid a further increase in unemployment. With a backlog of 200 million jobless, the world must create 600 million productive jobs over the next decade to reach full employment…

…The slowdown is a global challenge which calls for a global solution with governments, businesses and workers all contributing, and benefitting. The currently favoured approach characterised by an obsessive focus on financial system stability, fiscal “discipline” and deteriorating working conditions in the name of labour market flexibility has only made things worse.

These policies all presume that investment, growth, and job creation will inevitably follow. The problem is that this approach gets the causal chain backwards: restoring investment, growth and employment is necessary for financial institutions, fiscal accounts, and markets to heal…

...The UN has been calling for a more pro-active role for the public sector aimed at sustaining aggregate demand through investment in social and physical infrastructure…

…UN analysis of the likely impact of such policies finds that a globally coordinated economic recovery agenda is likely to result in global output growing at an average of 4% and the jobs deficit closing by 2016 a very significant improvement over the business as usual scenario (see charts). Over the medium term, higher output and employment growth will also stabilise public debt-to-GDP ratios, which will start to fall from 2016…

…But the larger point is that national efforts, while crucial, need to be complemented by international action. Inclusive multilateral organisations, led by the UN, especially the International Monetary Fund and the International Labour Organisation, must lead, underscoring the gains for all from international cooperation, and offering needed technical support.

Jomo Kwame Sundaram is UN assistant director-general, Economic and Social Development Department, Food and Agriculture Organisation of the United Nations headquartered in Rome.

I do find it somewhat ironic that Jomo is pushing here for multilateral leadership – once upon a time, he was a pretty strident critic, especially of the IMF. But the article’s a good read, and worth your time.