Changing Trends Call for Policy Mix on Jobs, Growth

Quest for jobs, inclusive growth is universal challenge for policymakers

Many countries also face changing trends in technology, demographics

IMF expanding analysis, advice on jobs, growth, inclusion

But changing trends— including technological advances, globalization, and shifting demographics—now require a broader range of national policies as governments strive to boost employment and raise output.

The report, Jobs and Growth: Analytical and Operational Considerations for the Fund, discusses how the IMF can help governments devise strategies to improve job prospects and raise output levels. Its main finding is that while there is no single “silver bullet” strategy for any country, nor any “one size fits all” approach for all countries, macroeconomic stability is key.

With over 200 million people out of work and global output subdued, job creation and growth that is widely shared are imperatives that resonate today in every country. While world growth remains well below levels experienced before the Great Recession, global employment is at its lowest in two decades, with young people and the long-term unemployed particularly hard hit.

Macroeconomic stability not only supports job creation, but also encourages investment and growth and helps tackle inequality, the study says. But the report also finds that while some advanced countries face the need to support aggregate demand with limited fiscal space following the global recession, many countries have to generate growth and create jobs in the face of broader trends.

Global ‘megatrends’

These “megatrends” include technological change, globalization, and shifting demographics. Over the last twenty years, the world’s labor force has doubled and emerging markets have become increasingly integrated into the global economy, raising incomes in these countries and reducing global inequality. In some advanced economies and emerging markets, however, demand for lower-skilled workers has fallen, particularly in manufacturing. This has increased inequality within countries.

While countries with younger populations stand to benefit from the “demographic dividend” in the form of robust growth, other countries are faced with the fiscal and social implications of aging populations. In many countries, low female labor force participation represents a significant missed opportunity to strengthen economic development and growth. Adding to the complexity of these challenges, the global recession has...