A bright future for the world of work

A revolution in global work patterns confronts the world with complex challenges, but the threat of upheaval can be turned into an opportunity with the right policy responses, according to a new study from the European Bank for Reconstruction and Development (EBRD).

The EBRD’s Transition Report 2018-19: Work in Transition argues that despite the risks from demographic change, fast-moving technological development and migration, the transformations now underway will be for the good.

“While the transformation of work will pose major challenges for policymakers, our overall message is optimistic,” says EBRD Chief Economist Sergei Guriev in his foreword to the Transition Report. “Changing work patterns”, Professor Guriev adds, “can all result in tangible aggregate benefits. Moreover, a fair distribution of those benefits is eminently feasible. The future of work will itself entail plenty of work, but that future can and should be a bright one.”

The new study analyses the upheaval in global work patterns and their effect on the countries where the EBRD works to promote efficient and sustainable market economies.

Major demographic shifts are affecting the supply of labor, leaving many countries in the EBRD regions dealing either with aging or very young populations. Technological advances doing away with medium-skilled work are polarising the job market into high- and low-skilled sectors, a challenge in regions that have experienced deindustrialisation and that face relatively high levels of emigration by skilled workers. More broadly, rising levels of migration accompany geographical shifts in the location of jobs and workers, both internationally and inside individual countries.

In its assessment of how the world of work is changing, the Transition Report identifies ways to mitigate the impact of demographic shifts, skills changes and migration trends.

On demographic change, the report identifies priorities both for “young” economies [such as Azerbaijan, Turkey, and the economies of the southern and eastern Mediterranean region and Central Asia] and for the economies of emerging Europe, where the population is aging.

For “young” economies, these include “boosting the amount of physical capital per worker, improving human capital and raising labor force participation among women. Improvements to the business climate and stronger macroeconomic policy frameworks can help these economies to leverage the pool of global savings in order to fund investment in machinery, equipment, and education,” says the report.

For economies with aging populations, it recommends pension reforms raising the statutory retirement age and encouraging longer participation in the workforce, as well as improvements in healthcare, working conditions and lifelong learning opportunities.

As automation is affecting an increasing number of jobs globally, the report identifies outdated education systems as an obstacle to workers upskilling.

Emigration of workers is a concern for many countries where the EBRD invests. The report finds that improving the business environment and the quality of public services may significantly reduce people’s desire to emigrate.

“Improving the quality of public goods can have a large impact on intentions to emigrate, comparable to the effect of raising wages by more than US$ 500 a month in a country such as Albania.”

However, it also notes positive aspects of emigration. While in the short term emigration reduces the productivity of firms in the country of origin, in the long term it has boosted the transfer of knowledge to the EBRD regions and supported innovation. Partly as a result of this, new EU member states are narrowing the gap with advanced economies in the quality and numbers of patents.

Read and download EBRD’s Transition Report 2018-19: Work in Transition

Original source: NZAID
Published on 9 November 2018