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  • Top 10 Trends of 2015
    • 1. Deepening income inequality
    • 2. Persistent jobless growth
    • 3. Lack of leadership
    • 4. Rising geostrategic competition
    • 5. Weakening of representative democracy
    • 6. Rising pollution in the developing world
    • 7. Increasing occurrence of severe weather events
    • 8. Intensifying nationalism
    • 9. Increasing water stress
    • 10. Growing importance of health in the economy
    • Immigration in focus: an overlooked trend?
  • Regional Challenges
    • Regional Challenges: Middle-East & North Africa
    • Regional Challenges: Europe
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    • Regional Challenges: Latin America
    • Tension points: Assessing the state of geopolitics
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    • A call to lead: the essential qualities for stronger leadership
    • Global Leadership Index
    • New governance architecture: strategies to change the way we lead
    • LGBT: moving towards equality
  • Future Agenda
    • Synthetic biology: Designing our existence?
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    • The evolution of monetary policy: A new era for central banks?
    • Mapping the future: The future of education
    • Mapping the future: The future of work
    • Mapping the future: The future of the internet
  • About this report
    • Welcome
    • Introduction
    • Making the Outlook on the Global Agenda 2015
    • Acknowledgements
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  • Top 10 Infographics
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Outlook on the Global Agenda 2015   2. Persistent jobless growth
Home
Outlook on the Global Agenda 2015   2. Persistent jobless growth
Home
Outlook on the Global Agenda 2015 Home
  • Report Home
  • Top 10 Trends of 2015
    • 1. Deepening income inequality
    • 2. Persistent jobless growth
    • 3. Lack of leadership
    • 4. Rising geostrategic competition
    • 5. Weakening of representative democracy
    • 6. Rising pollution in the developing world
    • 7. Increasing occurrence of severe weather events
    • 8. Intensifying nationalism
    • 9. Increasing water stress
    • 10. Growing importance of health in the economy
    • Immigration in focus: an overlooked trend?
  • Regional Challenges
    • Regional Challenges: Middle-East & North Africa
    • Regional Challenges: Europe
    • Regional Challenges: Asia
    • Regional Challenges: North America
    • Regional Challenges: Sub-Saharan Africa
    • Regional Challenges: Latin America
    • Tension points: Assessing the state of geopolitics
  • Global leadership and governance
    • A call to lead: the essential qualities for stronger leadership
    • Global Leadership Index
    • New governance architecture: strategies to change the way we lead
    • LGBT: moving towards equality
  • Future Agenda
    • Synthetic biology: Designing our existence?
    • Brain-computer interaction: Transforming our networked future?
    • Deep sea mining: The new resource frontier?
    • Emerging nuclear powers: A safe path to energy security?
    • The evolution of monetary policy: A new era for central banks?
    • Mapping the future: The future of education
    • Mapping the future: The future of work
    • Mapping the future: The future of the internet
  • About this report
    • Welcome
    • Introduction
    • Making the Outlook on the Global Agenda 2015
    • Acknowledgements
  • Browse by Topic
    • Africa
    • Asia-Pacific
    • Brain Research
    • Climate Change
    • Corruption
    • Decarbonizing Energy
    • Economics and Finance
    • Economies
    • Education
    • Emerging Technologies
    • Employment, Skills and Human Capital
    • Environment and Sustainability
    • Europe and Eurasia
    • Future of Government
    • Global Economic Imbalances
    • Global Financial System
    • Global Governance
    • Global Health and Healthcare
    • Global Issues
    • Human Rights
    • Industries
    • Internet Governance
    • Latin America
    • Middle East and North Africa
    • Migration
    • North America
    • Nuclear Security
    • Oceans
    • Science and Technology
    • Security and Governance
    • Society and Human Development
    • Water
  • Top 10 Infographics
  • Download as PDF
  • Download Chinese language version as PDF
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 Introduction | Trend 1 | Trend 2 | Trend 3 | Trend 4 | Trend 5 | Trend 6 | Trend 7 | Trend 8 | Trend 9 | Trend 10 | Immigration in focus

Employees at work inside a milk factory in Beijing, China © REUTERS

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  • Economics and Finance
  • Global Issues
  • Employment, Skills and Human Capital

Author

 

Larry Summers
Charles W. Eliot University Professor, Harvard University. Harvard University is a member of the Global University Leaders Forum

Author

 

Larry Summers
Charles W. Eliot University Professor, Harvard University. Harvard University is a member of the Global University Leaders Forum


The term ‘persistent jobless growth’ refers to the phenomenon in which economies exiting recessions demonstrate economic growth while merely maintaining – or, in some cases, decreasing – their level of employment. The scale and significance of this problem is evident in the high placing of this trend, an increase even over last year’s report, when persistent structural employment was ranked as the third most concerning trend.

The transformations and job displacements associated with technological progress are happening faster, and may even be more dramatic in their impact than anything we’ve experienced before, and the task of providing a meaningful, substantial role for everyone is going to be hugely important. But I believe that this presents us with a huge opportunity to take advantage of current low costs of borrowing and under-utilized labour resources, and embark on large-scale projects to build and repair essential infrastructure in our developed and emerging economies.

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There is a huge opportunity to use this period to remedy infrastructure deficiencies.

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The task of providing a meaningful, substantial role for everyone is going to be hugely important

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The task of providing a meaningful, substantial role for everyone is going to be hugely important

If we look at the data on workers aged 25 to 54 – the group we think of as a backbone of the workforce – the percentage of those who are not working has risen by a factor of more than three over the course of my lifetime, and that trend seems inexorably upward. If current trends continue, it could well be that a generation from now a quarter of the middle-aged demographic will be out of work at any given moment. Even China, which has enjoyed unprecedented growth in competitiveness and exports, has seen manufacturing employment decline over the last 20 years, thanks to its rapid industrialization and use technology and automation. This is a long-term trend and we are likely to observe these phenomena across the world, even among emerging economies as they travel the well-trodden path of industrialization. The robotics and 3D printing revolutions could accelerate this trend still further, as the comparatively low entry cost for these disruptive technologies makes them widely accessible to everyone, including developing economies. 

How great a problem does a lack of employment opportunities pose in your country?


Source: Pew Research Center Global Attitudes Project, 2014

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Schools, colleges and universities must place a premium on doing the tasks that machines cannot do

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Schools, colleges and universities must place a premium on doing the tasks that machines cannot do
Automation is certainly the biggest single contributing factor. Technology can, of course, help with the creation of jobs – but I don’t think there is anything automatic about the process. In United States history, the two Roosevelts and Wilson recognised the challenges and brought about a transformation in the role of the federal government in addressing the needs of average and less-than-average income workers. Influential factors ranged from the creation of the Tennessee Valley Authority to the pervasiveness of electricity, from the building of interstate highway system to fibre optic networks. They all contributed to making progress possible.

If we consider the totality of it, we are much better off thanks to technological progress. But if we do not act, we run the risk of enjoying fewer improvements in the standard of living and more people will be left behind. There could be a greater sense of loss of legitimacy and confidence in government, greater recourse by political leaders to nationalism and surlier and angrier populations, who are more likely to turn on minorities within, and perceived enemies without. This is likely to be one of the reasons we see many of these interconnected issues appearing in the remaining global trends.

What are the top solutions to persistent jobless growth?


Source: Survey on the Global Agenda 2014

I don’t think any of us fully know what kind of policy our governments should be undertaking – I’m not sure that this era has yet seen its Bismarck or its Gladstone, someone who will rise to this challenge and transform government policy to meet the needs of this age. Among the key areas that will have to change is education, so that our schools, colleges and universities place a premium on doing the tasks that machines cannot do: collaboration, creation and leading. And at the same time, they must place less emphasis on the tasks that machines can do: the monitoring, calculation and execution.

Global unemployment trends and projections 2003-2018


Source: ILO, Trends Econometric Models, October 2013

The upside of this trend is that those losing jobs due to increased productivity will be freed up to do things in other sectors. There is, for example, a huge opportunity here to use this period to remedy infrastructure deficiencies. On the one hand we have decaying infrastructures across the West – airports, rail systems, pipelines and systems of telecommunications. And on the other hand, we have record low interest costs of borrowing, near record high levels of construction unemployment and unused resources. 

Ultimately I’m an optimist, but I’m a believer in optimism through raising the alarm. I don’t take a position that is automatically optimistic, because I believe history teaches us that complacency is a self-denying prophecy.

How do you expect the economic situation in your country to change over the next 12 months?


Source: Pew Research Center Global Attitudes Project, 2014

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