Over the past three decades, hundreds of millions of new workers have entered the global economy. They arrived with various levels of education and skill, and over time have generally gained in terms of “human capital” – and in terms of value added and income. This has brought a tremendous, and ongoing, growth in income levels, opportunities, and the size of the global economy. But these new workers have also brought more employment competition and significant shifts in relative wages and prices, which is having profound distributional effects.
These massive structural changes in the global economy present three great employment challenges worldwide, with different countries facing their own variants.
The first challenge is to generate enough jobs to accommodate the inflow of new entrants into the labor market. Clearly, a wide range of advanced and developing countries is failing to do so. Youth unemployment is high and rising. Even in fast-growth developing countries, surplus labor is awaiting inclusion in the modern economy, and the pressure is on to sustain job creation.
(photo credit: Steve Cadman)