Interview: The scarring effect of low-paid jobs

An interview with Stefano Scarpetta, Chair of the Global Agenda Council on Employment and a participant at the Summit on the Global Agenda, taking place in Abu Dhabi, United Arab Emirates, 18 – 20 November. 

The Summit on the Global Agenda in Abu Dhabi has been described as the World Economic Forum’s Hadron Collider of ideas. More than 1,100 leading thinkers from academia, business and civil society assemble to look at global problems through the lenses of as many disciplines as possible with the hope of identifying new connections and possible solutions.

The recently published Outlook on the Global Agenda 2014 helps illustrate what this interconnected thinking looks like with a visualization of how the 86 Global Agenda Councils work together to tackle the issues of values and unemployment.

“Employment is a key element between economic growth and social outcome. Economic growth has an impact on the creation of jobs and quality jobs. And quality jobs is a key factor to make growth inclusive,” says Stefano Scarpetta, the OECD’s director for employment, labour and social affairs and the Chair of the Global Agenda Council on Employment.

Persistent structural unemployment ranked third out of the ten biggest trends for the coming year, according to the recently published Outlook on the Global Agenda 2014, which drew on the insights of 1,500 experts in 112 countries.

Leaders have to look at not only the number of jobs being created, but also the quality of those jobs, Scarpetta says in an interview after a brainstorming session with his Council, whose members include labour economists, trade union officials, NGO leaders and tech start-up founders.

“There has recently been economic growth, but this has not translated into significant improvement in the quality of the jobs available, so many people have been trapped in low-productivity, low-quality, low-reward jobs,” Scarpetta says. “We have been arguing that there was a job crisis and despite the fact that many countries have been in a recovery phase of economic growth this was not enough to significantly tackle the problem of unemployment and underemployment.”

‘Scarring effect’

This persistent problem has had a “scarring effect” on people who are trapped in low-paid jobs, have been forced out of the workforce or youth who haven’t been able to enter the workforce at all.

“This leads to people leaving the labour market altogether because they have been discouraged due to the fact that people have been unemployed for a long period of time,” he says. “They’re losing their human capital, because they have not been able to use their skills … You undermine your labour supply – and you undermine your potential for growth later on.”

In addition to generating their own solutions, Scarpetta’s Global Agenda Council is trying to identify Councils from other disciplines that can help them learn more about how other issues are transforming the employment challenge. The network of interconnections is vast, Scarpetta says.

“There is of course a youth unemployment group, the links are extremely close. There is the education skills group, much of the work we are doing this year is on skills and the skills mismatch. There is the group on technological changes and so on. There are many groups. Employment is pivotal in the whole story so there are many links with just about everything else,” he says.

“Innovation is shaping demand and affecting jobs. Ageing, there is a group on ageing, and it is also shaping the labour supply and affecting the way the labour market is going to function, as well as affecting the demand for services.”

The Global Agenda Council on Employment will produce a report arguing that employment should take centre stage at the World Economic Forum Annual Meeting 2014.

“This piece will say what President Obama said: we are not going to be out of the crisis until we have resolved the job crisis. So we might be back to growth, we might be back to the GDP levels where we were before the crisis, but if we have a large stock of unemployed and underemployed we are not going to be out of the crisis,” Scarpetta says.

Everyone’s challenge

“Given what has been happening over the past year, I would argue even more it should be at the centre of Davos,” he says. “Again, it’s a challenge for everyone, not just government, but certainly for business and for the civil society as well.”

Meeting with counterparts on other Councils who are tackling other problems is crucial in making that case, he says. “We have to build a narrative that is as integrated as possible. I don’t think it’s going to be as effective if you have a story on unemployment, another on youth unemployment, a story on ageing and so on so forth. The challenge for this group as well as the others is to share our views and to some extent build a common narrative. This will be more effective for the leaders who will go meet in Davos.”

He is optimistic about the potential for World Economic Forum Members to articulate that narrative by following up with some concrete initiatives.

“There is an opportunity to make it more operational – that’s the value added by the World Economic Forum,” he says. “We have the different perspectives – it’s by definition academics, policy-makers, representatives from civil society, businesses. You’re not just talking about policy and what government should be doing, but you’re identifying what each group should be doing.”

Author: Stefano Scarpetta is Director for Employment, Labour and Social Affairs (DELSA) at the Organisation for Economic Co-operation and Development (OECD) and a member of the World Economic Forum’s Global Agenda Council on Employment.

Image: Job seekers wait in line in New York City REUTERS/Lucas Jackson.