MS. TUCK: Hello. This is the Washington Press Briefing on the World Development Report. I am on the line live at a press briefing. Can people hear me?
[Responses in affirmative.]
MS. TUCK: I would ask media colleagues who are on the line to please "mute" your devices because we are about to begin this briefing. It is starting a little late. We have had some technological snafus, but we are going to get this briefing started.
This is Merrell Tuck. I am the Senior Communications Officer, Development Economics.
This is an embargoed briefing for the World Development Report 2013 on Jobs, and this Report is embargoed until 7 p.m. tonight Eastern Daylight Time, which is 11 p.m. GMT.
I am very pleased today to introduce Mr. Kaushik Basu and Mr. Martin Rama.
Mr. Basu is on his first day as Chief Economist of the World Bank and Senior Vice President for Development Economics. He has a distinguished background and came from being the Economic Advisor to the Government of India, and he is on leave from being a Professor of Economics and the C. Marx Professor of International Studies at Cornell.
Mr. Rama, who is next to him, is Director of the WDR and has a long background in economics in Asia as well as an expertise in labor economics, social protection, and other topics.
I am also pleased to note that there are several co-authors of the World Development Report, members of the World Development Report team, who have worked on various chapters, and I am sure that during the question and answer session, they may want to chime in with some specific answers if you have detailed questions.
The full report is on our online Media Briefing Center, and some of our handouts are just outside the door.
I know we have a number of reporters, hopefully, on the line at this point, and I'm sorry for the delay in getting everyone connected, but without further ado, given that our time is now a little squeezed, let me open it up first to Mr. Basu, who is going to give us a bit of the tour de raison and describe the origins of the Report and why we chose the subject, and then over to Mr. Rama, who can give you some of the main messages and some key findings from the Report, after which we'll have a question and answer session.
Thank you very much.
MR. BASU: Thank you very much, Merrell.
Friends, welcome to the launch of the World Development Report 2013: Jobs.
I feel very happy that the release is the first major World Bank event that I am engaged in. This is a topic which is very close to my heart.
For those who do not know, I joined the Bank a couple of hours ago, so if you are looking for someone with short tenure, you can do much better than me for this.
As Merrell mentioned, this is a pre--embargo launch. They sound like contradictory terms, but nevertheless, do remember that until the evening, there is an embargo on this.
As you will hear from the Director of this World Development Report, Martin Rama, a friend from a long time ago and a topnotch economist, so the Report was in very good hands, the jobs challenging facing the world is urgent and multifaceted. It ranges from improving aspects of the work people do to supporting the relocation of people to better jobs and to creating more jobs.
Youth bulges in some countries are bringing millions of new jobseekers into the marketplace--into the labor market. For example, South Asia's labor force grows by one million people every month.
As we know from history, the demographic dividend can be a great opportunity, but it is also a challenge--and I should know this, because I was still two months ago the Chief Economic Advisor in India, so I was handling some of this problem which was coming, rushing, onto the marketplace every month, as was just mentioned.
While we talk of the demographic dividend in some nations, in parts of Eastern Europe, shrinking populations and an aging work force present starkly contrasting challenges. The world is a varied place, and if making economic policy for a nation is hard, it is even more challenging from 1818 H Street--I know we are in the adjacent building right now--where the aim is to keep track of the whole world; the focus is really on the world, especially the entire developing and emerging world.
This Report makes a compelling case for moving jobs center--stage. It delves into longstanding debates about whether growth alone is sufficient to raise living standards and put people out of poverty. It finds that growth generally leads to better jobs, but jobs themselves are a driver of development. As women access paid work, their place in the household and in society changes. New technical and managerial knowledge is acquired through jobs connected to world markets and global value chains. And jobs can give people a stake in society, fostering trust and civic engagement and reducing the risk of conflict.
This Jobs WDR has a champion in the World Bank's President Jim Kim, who spoke eloquently last Sunday at the Clinton Global Initiative about the importance of joint public--private strategies to foster investment, job creation, and growth.
My predecessor, Justin Lin, was instrumental in choosing jobs as this year's topic. He may have had a premonition that I would be taking on front him, given my interest, so I thank Justin for this choice. He rightly viewed jobs as inextricably linked to structural transformation.
Justin was clear that it was time for the Bank to take a fresh look at jobs since the global landscape is changing so rapidly. For example, agriculture's share in global employment is falling steadily at the global level as the services sector grows and as more and more countries urbanize. Yet country contexts vary widely, and small farms and small firms matter for the poorest people in the world, and the private sector and micro enterprises are immensely important for expanding prosperity and reducing poverty; and governments play a very major role in facilitating this process.
This Report illustrates how jobs serve as the linchpin connecting living standards, productivity, and social cohesion, all vital ingredients for achieving inclusive growth.
Because countries differ in the job creation possibilities available to them at any particular point in time, jobs agendas have a certain element of country specificity. Martin can--and I hope Martin will--tell you about this just now as he speaks.
The Report draws on over 800 surveys and censuses to delve into the role of jobs in driving development. And really, as a researcher, until recently--a research outside--the information that came from the data of these WDRs was always a major attraction to the WDR. I am hoping that this will spur research, spur greater data collection, and especially in labor and employment, we really need this. And I hope it will prompt Ministers at the next Annual Meetings in Tokyo to put the jobs challenge center--stage.
Let me now hand over the microphone to Martin to tell you about the Report's main findings.
Martin?
MR. RAMA: Thank you, Kaushik, and thanks for the kind words.
Let me try to summarize a few of the points that this Report tries to make, but let me start by saying that this is only the second time in the 34 years of the World Development Report series that it deals with jobs, and there is a good reason for it to be dealing with jobs.
When Justin Lin, our previous Chief Economist, and former President Zoellick decided to go in the direction of a Report on Jobs, it was very clear that jobs were the main preoccupation of policymakers everywhere. There was the global crisis. There was the Arab Spring. So there were several developments that were giving a centrality of jobs.
The first way to think of that centrality of jobs is in terms of numbers. The numbers are staggering--200 million people unemployed; 621 million, by our estimate, young people leaving school and not working. And if you look at the demographics and what is coming ahead, over 15 years, a total of 600 million additional jobs will have to be created.
So the numbers are staggering; the number of jobs is the first thing that strikes. But numbers is only part of the story. In many developing countries, social safety nets are too modest for people to be out of work for too long, and in reality, most of the poor work. They work long hours. They work multiple jobs sometimes. It is just that do not manage to make ends meet. So it is not just number of jobs; it is also what people do.
All this is in a context of enormous opportunity. Technology, globalization, outsourcing, and overall the migration of jobs are creating enormous opportunities, but those opportunities may or may not be exploited.
As Kaushik pointed out, most people in developing countries work in very small units--in micro enterprises and on farms--and the success of these very small units matters not just for livelihood. It matters for productivity. When the dynamics of small firms are good, as they are in many industrial countries, you have many successes in terms of productivity and innovation coming out of these very small units--if you think of big success stories coming out of a garage [unclear 00:26:05]--I will not try to say names, so it doesn't sound like trying to advertise for anyone--that happens. And it has happened in developing countries.
But one of the challenges of developing countries is that there is a lot of churning, and a lot of the large enterprises are born large, thanks to connections and thanks to state support. So the success of these small units is a challenge that goes beyond living standards and goes beyond productivity; it is part of what kind of society is being built.
As we worked on this support with our team, as we held consultations in two dozen countries with businesspeople, policymakers, trade union leaders, it became increasingly clear that jobs are not just the outcome of growth, they were not a byproduct of growth, that development happened through jobs, and there are very important dimensions of jobs beyond the earnings or the monetary income they can provide.
So that is how--as you look at the Overview that has been distributed, you will see that we organized the contributions of jobs along three lines--what jobs do for living standards, what jobs do for productivity, and what jobs do for social cohesion--so three dimensions of jobs.
What we found was that many of the things we were caring about in development were in fact happening through jobs on closer inspection--poverty reduction, of course--most people who get out of poverty in developing countries get out of poverty through their work, the scope for great distribution is limited; gender equality--paying jobs can be transformational in terms of the role of women in society; urbanization--urbanization is about people working in cities in a way where knowledge spillovers happen, and people learn from each other, and people make each other more productive; global integration is learning from the rest of the world through working connected to markets; and even conflict--to a large extent, one can see associations between having a sense of opportunity, having ways for advancement, for peaceful advancement, as one of the big deterrents of conflict.
But as Kaushik said, which of these jobs have the greatest payoff for development depends very much on the circumstances. And what the Report does is to consider a typology of jobs challenges--one that combines the level of development--that is the easiest thing--but also the resource endowments--countries that are resource--rich, countries that are isolated--the demographics--and we have the entire range, from countries with youth bulges to aging societies--and institutions--countries have different levels of strengthened institutions.
Based on that, we built a typology of eight jobs challenges that draw from agrarian economies all the way to aging societies going through urbanizing countries, resource--rich countries, and so on and so forth, and tried to identify clearly what are the jobs that are more transformational in those countries.
The leads us to a series of recommendations in terms of policies for jobs. And again, it is not just policies for the number of jobs; it is policies for the types of jobs that have these payoffs--jobs in cities, jobs for women, jobs for young people, depending on the context.
This approach to policies is a three--layered approach. There is of course a level which is the fundamentals. There are things that are needed everywhere, regardless of the jobs challenge. They are necessary conditions. They may not be sufficient conditions--macroeconomic stability; an enabling business environment; human capita; and the rule of law. And by the rule of law, we want to be clear--it is not just the property rights; it is also the rights that go with work. So this is the fundamental layer.
Then there is a layer that is labor policies. And of course, labor policies matter, but one of the conclusions of the Report is that they probably matter less than what the heated debates around labor policies around the world may suggest.
What we found is that there are two extremes to be avoided. One extreme is of course the absolutely lack of interventions that leaves people without voice and without basic access to social protection. At the other end are the interventions that clog, that prevent the growth of employment in cities and in jobs connected to world markets. And in between there is a range where policy has to be. But that range varies a lot depending on the country, so one of the conclusions of the report is that there is not a single recipe or a single mode of labor interventions that matters--and when I say "labor interventions," that is the regulation, that is also the way that bargaining or representation is organized, it is insurance, and it is active labor policies like public works and training.
Finally, perhaps the most interesting part in terms of policy is at the tip of this pyramid that has the fundamentals and then the middle layer of the labor policies, and that is to be able to set priorities so that there is job creation but there is also creation of those jobs with very high development payoff depending on the circumstances. And those may be very different in an agrarian economy or in an economy with high youth unemployment or in a formalizing country.
Then, throughout the Report--and I will finish with this--throughout the Report, chapter after chapter, we end up by what we call a difficult question. So we use this framework to challenge somewhat the conventional wisdom on jobs. Just to give you a flavor of the questions, they are of the sort: Growth strategies or job strategies? Or "Skills or jobs; which comes first?" Or "Competing for jobs?" Or "Protecting workers or protecting jobs?"
On each of them, there is conventional wisdom, and we find that there are very good reasons for the conventional wisdom, but there are also [unclear 00:32:18.] There are also circumstances in which we find that a nonconventional response may be warranted. So we hope these questions will be a teaser for readers, and when the embargo is lifted at 7 p.m., they are very easily accessible as self-standing pieces, four-page pieces.
Let me stop there as an introduction to the Report.
Thank you.
MS. TUCK: Thank you very much, Martin.
Now what I'd like to do is collect questions in batches. We might start here in the room and see if there are two or three questions here, and then we'll make a round in the next series of questions to see if people down the line want to ask something.
I would also ask that when you ask your question, please signal to whom you would like to pose the question and your news outlet.
Thanks, and we'll get started.
Yes? Anyone else?
QUESTION: Should I take the mike?
MS. TUCK: Yes. I'm sorry. Yes, indeed, take the mike from its stand in the middle of the room, or you can just go to the middle of the room.
So, one, two, and I guess Diana Gregg after that.
QUESTION: I'll start. Sudeep Reddy with The Wall Street Journal.
A question for Martin.
You mentioned the skills issue. Do you have any sense of how much of the global jobs gap can be filled simply by higher aggregate demand and how much, on a relative basis, needs to be other changes such as improving skills and education and underlying infrastructure?
MS. TUCK: Okay.
Yes, sir, over here.
QUESTION: Robert Schroeder, International Investor.
I'd like to sneak two in here. One is--
MS. TUCK: I'm sorry. One question. We have at least 20 journalists on the line.
QUESTION: Okay. As you project forward 15 years or more, are you taking into account, and can you give us any guidance in terms of how you see technology, robotics, also displacing workers? We see some great growth in some countries.
Thank you.
MS. TUCK: Thank you.
Diana?
QUESTION: Hi. I am Diana Gregg with BNA.
For Mr. Rama.
When you were talking about jobs that are transformational, and some are more than others in different settings, since I haven't had much time to look at the Report, I was wondering if you could just give a couple of examples of what you are talking about there.
MS. TUCK: Okay, thanks.
Why don't we start with these three questions, and then I'll open up the lines to see if folks who are remotely participating have questions.
Martin, I think these were mostly for you.
MR. RAMA: Thank you. Thank you very much.
First, on the question of the role of skills and education, you also mentioned aggregate demand and infrastructure as examples. Let me start with the part on aggregate demand. We discussed some of it under macro policy, but keep in mind that this is a report about development, so it is more mid-term and long-term, and we don't go into much detail on the level of, say, budget deficits or monetary accommodation that is needed.
But we do find on this difficult question on skills or jobs that, in general, we tend to have a reaction that what is needed when there is a problem of unemployment or mismatches is skills. And it is true that skills matter, and they matter especially in two circumstances. The basic level of skills without even getting started on jobs is very difficult. We see that, for instance, in the case of agrarian economies, where there has been a lot of progress in terms of the coverage of education but not in the educational attainment, and that gets in the way of really getting started.
Skills are also very important further down the line when countries need to really move up the ladder. We see that in urbanizing countries that have been good at integrating themselves in the world economy but remain very dependent on one type of export--say, Bangladesh and garments, and how you move from 80 percent of exports in garments to doing something else. There, skills matter.
But in the range in between, we find that jobs can be a driver of skills. They pull skills in the sense that the availability of employment opportunities encourages people to acquire more skills. They provide skills. There is quite a lot that is learned on the job. Experience counts on average for one--third year of education per year of experience.
There are basic behaviors and norms, quality and reliability, that are learned through the job.
So we tend to be a bit skeptical about the responses to major problems such as unemployment being just in training. Countries can sometimes have massive training programs. And the other issues you mentioned, like infrastructure and creating the conditions for employment generation, may be more important.
On robotics and productivity, that is clearly something we address, and we look at what has happened with manufacturing in particular, where the demand for manufactured goods has been growing steadily, but the productivity in manufacturing has been growing so fast that, overall, over more than a decade, the number of jobs in manufacturing worldwide is stable, is basically stable.
Of course, this is not to say that because of high productivity, there will be no jobs. People will be doing other things. But it raises the question of where those jobs will be. Especially when you have jobs that have high payoff beyond their own jobs because they have the kinds of spillovers in terms of productivity that matter, there is a potential in those cases to have situations of global competition for jobs--where will the jobs in manufacturing go? And that matters not only in thinking about industrial countries and developing countries. What we have seen in manufacturing is jobs migrating to East Asia. It will also happen now, in the next stage; as China's costs go up, by some estimates, some 85 million jobs in manufacturing may migrate out of China. And where will they go? Will they go to Sub-Saharan Africa? Will they go to South Asia?
This combination of very rapid productivity gains, even with high demand and even with a growing global economy, may create these situations where people may be competing for some of these jobs.
Examples of jobs that are transformational--let me just give three, one along each dimension: living standards, productivity, and social coherence.
On living standards, there is quite a lot of microeconomic evidence, micro data--so, rich studies using individual data that we review--on which we base these assertions. But there is quite a lot of evidence of how, when women bring a higher share of household income, decisions at the household level change; investments in education and health in children change. So jobs are transformational in that respect. It is not just how much money comes to the household; it is how it enters the household.
On the productivity dimension, there is quite a lot of evidence on how firms operating in the vicinity of foreign companies, which tend to have better technology and management skills, become more productive. So there are spillovers that come from jobs that have different levels of productivity to the local partners who learn from this, or sometimes learn just because workers learn on the job and then move to other companies.
On the social cohesion side, there are interesting studies, for instance, one in Indonesia looking at people who had jobs or did not have jobs in 2000 and then again in 2007. And you see that people who were out of a job and gained a job become more engaged in their societies and more often members of associations, tend to trust more other people, while the opposite is true for people who lose their jobs.
So, in each of these cases--and these are examples, and the Report covers nine ways in which jobs can be transformational and for which we have some good evidence--jobs can go beyond what they do for the person who holds the job and have a broader impact on society.
MS. TUCK: Thank you, Martin.
Now I'd like to invite some questions for people on the call.
Does anybody have any questions, and if so, please identify yourself by your name and your news organization and to whom you want to ask a question.
So let me open it up.
QUESTION: Good morning, and good afternoon here in Paris.
My name is Jean-Pierre Buris [ph.], and I am a journalist with Radio France International.
My question is for Martin.
I have not heard you talk about Sub-Saharan Africa, where the problem of growth without creation of jobs is a crucial one. What would you say, for instance, a government such as the Government of Mozambique, where the growth is around 8 or 9 percent a year but without creation of jobs? What do they have to do?
MS. TUCK: Okay; good question.
Let's see if there is another one from someone down the line.
[Pause.]
MS. TUCK: Anyone with a question on the line?
[Pause.]
MS. TUCK: Okay. If not, let's see if anybody in the room has another question.
Yes, sir; if you could come to the mike.
QUESTION: Hi. Howard Schneider with The Washington Post.
My question is whether, in looking at this, you see any lessons or any conclusions to draw about some of the programs that have been pursued in the developed economies that use the sort of classic, government--funded stimulus programs. Are they really good for job creation in the long run?
And secondly, vis-à-vis Europe, where you have already urbanized, already fairly productive developed economies seeming to be heading toward a situation of sustained high unemployment, what do they need to do to transform the job outlook?
MS. TUCK: And Howard, who is your question for?
QUESTION: Martin, I suppose, unless Basu--
MS. TUCK: Okay. Maybe they can both try to tackle this.
And Dani, yes.
QUESTION: Dani with Xinhua News Agency.
Thanks for doing this.
My question is for both of the experts.
What causes are behind the high unemployment rate situation in many countries? To what extent can government fiscal and monetary policies help to reduce them? Are some employment structural ones difficult to tackle?
Thank you.
MS. TUCK: Okay, thanks.
Maybe we can start with you, Kaushik, if that's okay, and then Martin will elaborate.
Thanks.
MR. BASU: Sure. Let me take on the question from Howard at The Washington Post.
Government stimulus is, I think, extremely important right now, and it really relates to the question that Dani also asked. So, fiscal policy, monetary policy, to create greater demand is something unavoidable.
At the same time--and I am actually just pulling in the two sets of questions--I believe that part of this problem that you are seeing is structural, but part of this is episodic to do with a crisis currently, a sovereign debt crisis in Europe, which is feeding to this.
For the episodic part of it, yes, you cannot with monetary and fiscal policies, but as far as the structural part goes, I think we have to think in terms of longer-run movement of labor from one sector to another. Part of this happens on its own; there are mechanisms through which incentives get created, and workers move from one sector to another, but it may also need at the level of government incentives and skill development so that people can move on.
And just to clarify what I am referring to, as this is a tricky and difficult point politically, as the world is coming together, the global labor market is really tending to be a common pool, which means that workers are coming under competition from segments of the labor force that earlier, they did not have to think about because it was just too difficult for what was located far away to work in the same pool, whereas now it is not difficult. And this may require industrialized country workers to develop kinds of skills which are at the higher end, where they move on to the space where there is greater challenge from the world, and they take that on better.
So, yes, it has to be--I am just treating both of these questions together--you have to take on both fiscal and monetary policy on the one hand and structural changes to tackle this problem.
MR. RAMA: Thanks, and let me add--start with the question from Fi [ph] on Sub-Saharan Africa and Mozambique.
In fact, Mozambique is one of our case studies. For Egypt--cases in the typology of--just challenges, we chose one country in which we had local experts, we went into much more depth as to what was going on, and we used Mozambique as the example of an agrarian economy.
I would want to start by clarifying the job creation issue, and these are countries where people work. So, it's not open unemployment, it's generally not the main issue. And when people talk about jobless growth, what they mean is that there is not enough creation of jobs that look like modern jobs, the kind of urban jobs, wage employment jobs. So, in that respect, there is a tension between--very clear in the case of Mozambique, between market growth, in general people working, most people are farmers and they are working, but not enough of the [unclear 0:45:03] will absorb--will create this dynamic that goes from people moving from rural areas to urban areas and the whole economy becoming more dynamic.
In this kind of decision, what we see is a double challenge: One, because most people still live and work in agriculture is to increase agricultural productivity. There are issues related to land in agrarian and, in fact, it can be agreed that there are no examples of sustained poverty reduction that did not start with an increase in agricultural productivity.
And of course, because the kind of modern agriculture is highly productive, but it takes some time to get there. So, in the short-term, one of the challenges is how to make smallholder farming more productive, which some countries have struggled with.
If you take a success in terms of agrarian economy, it was Vietnam in the 1990s. Vietnam managed to accomplish phenomenal increase in agricultural productivity on smallholder farming. So, that's one part of the equation, but it's only one part of the equation.
The other part is that you need to get dynamic cities going. You need to have cities connected to the world so that they can be places where people go because there is hope and not just because they despair and they don't know what to do. So, we see that as the policy responds in cases like many in Sub-Saharan Africa.
The questions on lessons for developed economies, the report has in several places a framework which we believe is relevant for all countries even if the report itself focuses mainly on developing countries. And I want to give just two examples of--give you questions that are, we believe, valid.
One is the question on the growth strategy or job strategy. There, what we use as an example to illustrate this is what Korea did in 2010.
Korea had a situation that was arguably similar in many ways to what Spain was confronting, the sense of having a labor market that was extremely dual, with some people having jobs for life and some people being in short--term context. And with the global crisis coming, it became clear that the impact could be devastating.
And so, Korea, which had abandoned jobs-related planning during the initial period after the East Asia crisis, adopted as its main strategic document towards 2020 a jobs strategy, and a jobs strategy involving policies across all ministries and across all sectors.
So, this tension of when you go for growth and when you go for jobs and how you organize policies is something that is relevant everywhere.
The other--give you a question which we see relevant is the one on protecting workers or protecting jobs. And there, the conventional wisdom and our normal response is that protecting workers is better, meaning, by "protecting workers" having safety nets, but allowing the reallocation of people because that's better for creative destruction and for growth.
But there are times or circumstances when that conventional wisdom does not necessarily apply to those kinds of massive decoupling between job creation and job destruction, as has happened in this recession. Or there are times when viable jobs, due to a shock, are at stake and these are jobs that have an impact on other jobs, so the situations where you can have depressed regions or ghost towns because of the disappearance of jobs that are otherwise available.
In both cases, we found good examples, and let me just use the first one, what Germany did in terms of--[unclear 0:48:40] policy in terms of providing support for firms to retain their workers on lower pay and lower hours was one way to address the tensions there. While the report is not on industrial countries, we think that it has some types of--can be useful.
As for the question form Xinhua news, high unemployment rate may have many different sources, and who the unemployed are can also be very different. You have countries with the same unemployment rate but, for instance, with a composition of long-term unemployment that is very different.
In developing countries, we have some countries with very unemployment rate, and in one way, what--the situation we have seen in many of their countries have been helping in countries with growth was remarkably successful and still unemployment rates we will have.
The kind of policy response is very different depending on the type of unemployment one is having and the causes of unemployment.
In countries with high youth unemployment, in our topology, we used Tunisia as our case study. But in general what we find is that it is not so much a problem of skills, it's not so much a problem of education, it's not so much a problem of mismatch. It's a problem of lack dynamism in the sectors that could absorb these young people, young people where there have been limited competition in areas related to the Internet and new technologies.
And so, the response in those cases is very much related to having competition in public markets so the sectors that have the dynamism can absorb young people.
One successful example of that was Slovenia. Slovenia had a very high youth unemployment rate, and through integration in the European Union and competition in public markets they accomplished that, but the answer will be very different if your problem is long--term unemployed who are at the older end of the workforce and cannot easily be re-equipped or retrained. So, there is no, I think--no easy fix for this type of unemployment.
MS. TUCK: Thank you, Martin.
And for those of you who access that report online, that Germany example is on Page 280. There is a box on Kurzarbeit. I'm not sure I pronounced it right.
MR. RAMA: I'm not sure how to pronounce it, yet.
MS. TUCK: Okay. Let's see if there are any other questions on the line, and then we'll invite maybe one or two more questions here in the room.
Any other questions on the line?
[Pause.]
MS. TUCK: Doesn't seem to be.
Okay, in the room here. Yes, sir, here in the...
QUESTION: Hello. My name is Patrick Byrd [ph] with German newspaper Frankfurt Algemeine Zeitung.
I have two short questions, if I may.
One, if you're talking about international collaboration which might be deployed for bringing for the jobs worldwide, and I'm really wondering what should that because, until now, I would have thought that labor market policies and job creation is much more a national task instead of an international task.
And the second question I have is, if you look at this tension between labor market standards in developing countries and these claims coming out of [unclear 0:52:00] in industrial countries that people are--yeah, if you look at the cheap product that people--that they have produced that will need lower wages and the bad labor market standards, do you see any need for industrialized or developed countries to put pressure on these developing countries to raise these standards, or is that detrimental to the economic development and to the labor market prospects in these developing countries.
MS. TUCK: And who is your question for? Okay.
Let's see. Any other questions?
Okay. Sure.
QUESTION: [Unclear], again, International Investor. When I add up the numbers that you first gave us, I come up with almost 1.5 billion people that are either unemployed, not looking, or are just without jobs and prospects for them.
By our estimate, that means that robotics and technology could displace a couple hundred million more in addition.
My point is, we're going to see an awful lot of people in a slow-growth global environment, still in this state 15 years from now. Are we going to see--there is one other difference: We see a world where travel--it's much easier for people to migrate to the jobs. You've already discussed this.
So, the question is, are we going to see more anti-immigration legislation or cases spring up in an effort to protect labor within these nations? Are we going to see any more efforts to talk about population controls of some sort?
MS. TUCK: Okay, thanks. Both very good questions.
So, why don't I turn to you two and try and handle those. Thanks.
MR. BASU: Thank you very much.
You know, the scope for a global collaboration today is there in virtually every economic field. The need is there. The world is a very, very open place.
In the context of labor, labor standards, one has to be careful that there are two aspects to labor standards. One is, by virtue of a country being poor, labor is going to be cheaper over there, because everyone is getting a lower income. About that, there is nothing much to be done. You don't want to place a minimum wage level which is so high for these countries that no one gets employed.
On the other hand, there are practices which are acceptable practices by any global standards, those you do need global pressures and collective work to keep a certain level of standards.
You know, one of the things that has been talked about and there is small literature--instead of thinking of a single standard for anything in pertaining to labor, a single standard will be meaningless because to a rich country like Germany, what will apply to Zimbabwe will be totally different. So, people have talked in terms of ratcheted labor standards. So, you have labor standards but it is ratcheted to the per capita income level of the country.
So, there are innovative ways of thinking of that and, indeed, collaboration is something we should think about. And just touching on that, this is not just collaboration in terms of labor market policies, but even macroeconomic policies which were being talked about earlier. In today's world, one country creates money,that country, yes, stimulates that country somewhat, but it also stimulates other countries, because the borders are porous and money flows around. So, we need to collaborate on a range of policies, more widespread than I think most people realize, and that tends to globalization, I'll use that expression.
MR. RAMA: And, in fact, I wanted to pick up exactly where Kaushik left off. We see three areas in the report for collaboration especially important, and the first one is exactly what Kaushik was referring to is, on rights--there has been a range of different attempts to improve compliance with rights. And by that, meaning not the level of income but the egregious violations of human rights. But some have been less effective than was hoped for. There is only so much that one can achieve through pressure on countries and their compliance related to work, like, for instance, linking trade with labor agreements work in some circumstances, but they also have run the risk of threatening the creation of jobs in these countries, and jobs are precisely what is transformational.
So, there is a limit to what can be accomplished through job pressure.
On the other hand, there are very good experiences of how partnerships that also increase productivity can succeed in improving compliance. There is one program and, in general, we have refrained from referring to any Bank Group programs in the report or to any specific initiative internationally, but let me refer to this one because it is not just World Bank, it is the IFC/ILO Better Work Program, which is a program where it's not just setting standards and putting monitoring mechanisms, it is also helping firms learn how to reach the managerial level that make it work for them. So, that's one area where there can be collaboration.
Second area for collaboration is cross--border investments, and I'm not referring to portfolio investments but to productive investments.
There has been quite a lot of liberalization on investments in manufacturing, but services is an area where there is a lot of potential to see progress in terms allocation--global reallocation that is, if well-managed, could be beneficial to everyone.
But there is much more that could be attempted in the liberalization of the investment of services than has been tried in terms of investments in manufacturing. And there are good reasons for that, since services are complex sectors that also require regulations, opening up in finance brings the issues of supervision, opening up in services trade opens up issues, including those related to social impacts, as well as in terms of the effect on small shops.
So, we see there an area where there is a prospect for working and having better regulations so that liberalization is indeed beneficial for all the parties and not just liberalization alone.
And then, the third area is migration, and that also relates to your question.
Migration has the impacts on both sending and receiving countries, and has the impact, again, if we think of living standards, productivity, social cohesion, has impacts across all three fronts. And there, one should not take for granted that they are all positive, they can be positive, but they can also be negative.
But these impacts happened on both sending and recipient countries, and having migration policies just being decided on one side tends to be inefficient because the enforcement of the provisions for migration is more limited. So, there is scope--an area where we see scope for collaboration is in bilateral migration agreements where both parties have an interest in enforcing the terms of return migration, movement of one level of migration to the next, and so stakeholders on both sides can help with the enforcement.
Will there be a backlash against migration? Well, to remember that, for now, migrants are 3 percent of the world population. So, we are not talking about large numbers. There are 200 million migrants, of which 90 million are migrant workers. It can be very large in some countries but overall is not such a big number when you compare it to the 620 million young people who are neither working nor selling, indeed, that work is--it's a relatively small number.
But again, this is an area where global agreements are more difficult and a few conventions on migration and very few ratifications of those conventions, but perhaps bilateral agreements, Canada and Mexico have one, New Zealand has a Recognized Seasonal Employer agreement with the Pacific Islands, which are working in the sense that migration works for both sides. People go overseas, then send remittances, then in turn they go back to the countries with new business ideas and the flow of migration is enforced by both sides when one is in the interest of both sides.
Thanks.
MS. TUCK: Okay. Thank you.
I don't know if there is maybe one final question. We're right at 11:30. Any other final question?
We have organized a transcript for the briefing. We're supposed to get that by this afternoon and I would remind folks about the embargo, 7:00 p.m. tonight. And again, the full report is available on our website and we should have more copies of it by the end of this month, and also it's a treasure trove, I would say, of data. There's some interesting new labor statistics at the back of the report, and please let me know if you have any questions. The team working on the press materials would be happy to help you.
So, without further ado, I'll close this embargoed meeting.
