IMF to Strengthen Advice on Labor Market Policies

Challenges of growth, job creation, inclusion are closely linked

IMF to improve analysis, advice on jobs and growth

Raising female labor force participation can boost economic development

In an interview with IMF Survey, Zhu, referring to a recent IMF paper on Jobs and Growth: Analytical and Operational Considerations for the Fund, noted that, while a stable economic environment is essential for generating jobs and growth, there is no single strategy for any country, nor a one-size-fits-all solution.

In its discussion at the Spring Meetings in Washington, the IMF’s policy-steering committee, the International Monetary and Financial Committee, also focused on the need to boost growth and create jobs.

IMF Survey: Why is the IMF doing this work on jobs and growth?

Zhu: I would highlight two main factors. First, looking at the world around us, more than 200 million people do not have jobs. Long-term unemployment is high, as is youth unemployment. At the same time, we are experiencing only a moderate recovery compared with past crises. So low growth and high unemployment are key challenges.

Second, across the range of our membership, governments are increasingly seeking Fund advice on how to promote growth and support job creation. We have to be responsive to these demands.

The IMF is already doing a lot of work on these issues. However, it is good to take stock. This report serves that purpose. Through this report we see what more we can do. I would not say this report is the first step, but I would not say it is the last either.

IMF Survey: With global unemployment exceeding 200 million, as you said, what actions should governments take?

Zhu: The bulk of the increase in unemployment has taken place in advanced countries and reflects the weak state of demand. So a priority should be to support aggregate demand. Fiscal consolidation should proceed as gradually as fiscal space allows, and with protections in place for the poor.

Looking beyond the near term, challenges will remain. Countries are dealing with the impacts of global “megatrends.” There is increased trade and financial integration, there is technological innovation, and there is demographic change. All of these have an impact on jobs, growth, and inequality. Governments need to implement substantive structural reforms to meet these challenges.

IMF Survey: “Inclusive growth” is a key focus of the paper. What is it, why is it important, and how can the IMF address it?

...