Jobs, Jobs, Jobs

• Author: Prakash Loungani
• Position: an Advisor in the IMF’s Research Department and heads the IMF’s Jobs and Growth project.

Over 200 million people across the globe are unemployed today.

Tackling this high unemployment, particularly among the young, is a pressing challenge, as discussed by me in “Seven Lean Years” and by Angana Banerji in “Jobless in Europe” both in this issue of F&D. But the challenge extends beyond the near term. Over the coming decade, an estimated 600 million jobs will be needed in advanced and emerging market economies for those currently unemployed and those expected to enter the global labor force.

The fear that there will not be enough jobs to go around is perennial. Take for example this prediction from the U.S. magazine The Atlantic on the threat to the United States from cheap foreign labor:

. . . the time is not distant when everything that machinery and cheap labor can produce will crowd every market. The millions of China, with the millions of India, will offer the cup of cheap machine labor, filled to the brim, to our lips, and force us to drink it to the dregs, if we do not learn wisdom.

The article appeared in 1879, which shows that even though the terms offshoring and outsourcing may be new, the anxiety that underlies them—the fear of trade—is old. Despite the threat from cheap labor in the 1870s—and in every decade since—the average income in the United States has grown steadily and is now about $50,000 a year, a huge multiple of what the average Chinese or Indian makes.

Along with fear of cheap foreign labor, the concern that technology is a job killer is not new. Today’s headlines proclaim that within a decade “one in three jobs will be replaced by software or robots.” “Toil and Technology,” by Jim Bessen in this issue, tackles this worry head on. He concludes that “despite fears of widespread technological unemployment,” the evidence shows that “workers are being displaced to jobs requiring new skills rather than being replaced entirely.” The new skills in demand are people skills and those that complement the new technology, which as of now cannot be easily programmed into robots.

The benefits of increased globalization of labor markets and technological change have not accrued equally within advanced economies over the past two decades. There is a striking hollowing out of medium-skill and middle-income jobs, many of which were lost from the manufacturing sector. These trends, and the resulting increase in inequality, are documented in the article by Ekkehard Ernst in this issue (âThe...