Flexibility key to sustainable employment

Employment has always been a sensitive issue for policymakers and nations. While there is no doubt that it is an integral part of economic growth, it is also vital for governments to have a clear idea about labor market opportunities before they formulate policies to nurture and sustain jobs.

Last week I caught up with an old friend, Robert Tesits, an associate professor at the Institute of Geography and Earth Sciences of the University of Pecs in Hungary and an expert on the global employment market to get his insights on the subject. What Tesits told me was that he and his colleagues have developed a new methodology that presents a more nuanced picture of labor market prospects and opportunities across the world based on geographical and social aspects.

The new model, called the Sensitivity Index, is different from others in that it assesses how certain areas of a country’s labor market react to recent economic and social changes, and with it the extent to which people living in these areas can trust that there will be jobs for them.

Outlining the benefits of the index, Tesits said it would have great benefit in the future development of employment and social policy and also play a crucial role in creating crisis prevention plans.

“The global employment crisis is not over, especially in emerging economies. Vulnerable employment (like manual workers and the selfemployed) continue to have a large impact in many emerging and developing countries,” he said.

According to the International Labor Organization, there were 200 million unemployed people in the world last year, while the global unemployment rate stood at 5.8 percent.

The slow growth in emerging economies and the fall in the price of raw materials have also had a dramatic impact on global job opportunities, he said, adding that employment prospects have deteriorated in large, emerging and developing economies, such as Brazil and oil-producing countries. According to ILO forecasts, the number of unemployed is likely to increase by another 2.7 million this year with the growth in unemployment faster than job creation.

Tesits said that an uncertain economic environment, poorly functioning financial markets and the global demand gap are negatively affecting businesses and hindering investment and job creation. “Policymakers need to focus more on strengthening employment policies and addressing excessive inequalities,” he said.

According to Tesits, the new index promotes more accurate monitoring of Chinese labor market trends, thus enabling employment, vocational training and regional policy to react more proactively than before.

Though unemployment rates have more or less remained stable in China during the past few years, it does not mean that policymakers can be complacent, added Tesits.

But the real challenge for Chinese policymakers would be to ensure that the downturn in the country’s manufacturing sector is accompanied by a significant expansion of the tertiary sector, where productivity growth can be achieved by expanding human resources.

Listening to Tesits, I could not help but agree with him. After all, it is important to increase labor market flexibility as much as possible, including raising the level of job-seekers’ qualifications, if countries have to make sustainable progress on the labor front.