UN Expert Group on the Challenge of Building Employment for a - - PowerPoint PPT Presentation

UN Expert Group on the Challenge

• f Building Employment for a

Sustainable Recovery Geneva 23‐24 June 2011

A Macroeconomic Framework for Employment Creation by Dr Linda Low

Statement of the problem

• Frame for economics gone awry or missing in action
• No policy operates in standalone silos
• Checks‐&‐balances by Karl Polanyi’s (1957) double

movement of state‐social relations follow great transformation (1944)

• Is greed fundamental ill of market capitalism

complicated by globalisation?

• Emiprical‐based 800 years of financial crises
• Asian financial crisis (AFC) 1997/98
• Arab Spring in First Quarter 2011
• Economism, HRD, attitude‐skills‐knowledge (ASK)

World Bank study 2011

• Post‐global financial crisis (GFC), World Bank study of

different types of workers in 17 middle‐income countries: – variations by country – only weakly related to severity of GFC shock

• Policy lessons for macroeconomic framework for jobs

– Jobs easily decimated in crises beyond any state’s control – Prevention in boom is better than cure, hone comfort zone by crisis‐mentality keeps reforms going, reforms in crisis add to chaos, more so when leadership is compromised – Those economically prepared fare better to recover post‐ GFC, national idiosyncracies & crisis management matter

Macroeconomic framework: Non‐definitive

eclectic toolkit

1. Phillips curve 2. Population‐demography‐labour symbiosis 3. Economics of welfare state

• Triple‐play framing broad issues in job creation
• Synergy in value‐added & tradeoffs

– Cyclical, structural – Youth or elderly employment – Market laissez‐faire or dirigiste induced – Sustainable jobs with continuous education training

Phillips curve

• Phillips curve shows

inverse relationship between rates of inflation & joblessness as a potential policy tradeoff

• Non‐accelerating inflation

rate of unemployment (NAIRU)

• Mobilise Keynesian idle

resources till full employment as frictional + structural unemployment

Inflation % Unemployment % Stagflation ? Phillips curve shifts out? Both higher inflation & structural joblessness?

Phillips curve relevant in China

Export‐led pre‐GFC

• Global factory
• Most aggressive globaliser
• Joined WTO, leveraged

rules

• Tapping DFI, TNCs, MNCs
• Leapfrog more ways than
• vertake Japan in GDP
• Knowledge & technology

transfer

• Induces, digests & imposes

local content requirements to upgrade transfers

• Surplus labour vs mobilising
• Domestic‐led post‐GFC
• Global marketplace
• Post‐GFC, triad US, EU,

Japan vs BRICS

• Chronic global imbalances

in balance of payments

• Rising wages & inflation
• Rising middle‐income class
• Social unrest, jobs & income

distribution

• 6.3 m university graduates

Phillips curve in MENA?

Inflation 2007‐2008

• Domestic, demand‐pull, housing

shortage, rent control as help?

• Parallel imports for basic

foodstuff vs UAE sole agency law

• Imported inflation, fixed $‐

pegged exchange rate

• Monetary policy mimics recession

US vs GCC boom, diametrically

• pposite conditions
• No fiscal policy, no taxation,

government spending crowds out private sector, adds inflationary pressure

Unemployment

• Locals, double‐digit rate

– Quotas – Public sector – Private sector – Low FLFRP

• Foreign labour, no visa

within 1 month

– Humanitarian‐based – Skilled vs manual – Sponsorship

Population is destiny

• China’s one‐child policy to two‐child?
• India same falling birth rates, female

infanticide

• Malthusian trap vs S&T, green revolution
• ASEAN, Malaysia & Singapore
• East Asia, Japan & Korea
• Passive vs proactive, long‐term, procrastinate
• MENA population‐immigration policy

Rights turn wrong, state‐PAYG

• Cradle‐to‐grave chain letter effect
• Upside‐down demographics
• Old age dependency
• Fully‐funded defined‐benefit (DB)
• Fully‐funded contribution‐based (CB)
• Post‐GFC austerity measures coinciding with

population time‐bombs in OECD

• Asian & MENA family‐based welfare
• Pension systems in MENA
• Health insurance: adverse selection, moral

hazard

Population pyramids & lntergenerational PAYG

GCC, MENA economic landscape

• IMF latest 2011 regional outlook
• GCC growth 7.8%.
• Remittances growth 14% to $74.9 billion in 2011
• Current account surplus $304 billion in 2011
• Two‐fold rise in FDI from to $42.7 billion in 2011
• 1% point in GCC real GDP growth raises GDP growth of

migrant workers’ countries of origin by 1.3% point

• GCC imports 18% growth $578.3 billion 2011
• Overseas development assistance (ODA) mainly by Kuwait,

Saudi Arabia and UAE averaging 1.5% of combined gross national income for 1973‐2008

• MENA plus Pakistan (MENAP) absorbed 10‐70% of total ODA

from others in the region

Caveats in GCC job creation

• Productivity growth concept (value added/input)
• Profit‐motivated private sector
• Public sector, government bureaucracy for policy‐

making and regulation

• No clear line defining private and public sector
• Autonomous off‐budget entities, state‐owned

enterprises (SOEs), government‐related enterprises (GREs)

• SOEs

&GREs dual mandates for diversification as KBE, presumably globally competitive plus some national service for economy and society

GCC economic integration for jobs

• Deeper, widening EU‐inspired itself mired in deepening & widening
• GCC customs union in 2003 after FTA 1983
• Single market 2008, monetary union by 2010 in abeyance without

UAE, Oman

• Morocco and Jordan starting negotiation procedures in 2011
• GCC cross‐roads vs ASEAN
• Two‐track ASEAN free trade area (AFTA), no customs union, etc
• ASEAN community
• ASEAN free trade agreements (FTAs) with Australia‐New Zealand,

Japan, Korea, China and India

• Individual bilateral FTAs, open, globally competitive
• GCC nationals same rights as locals in Schengen‐like scheme for

equal market access & national treatment to register, open business, seek employment

This time is no different

• China, Beijing consensus
• Japan Inc, lost decade

to soft‐power, manga comics, anime animation and cosplay

• Singapore desperate case for desperate measures, weighing tradeoffs

– Twin casinos Malaysia’s Genting &Las Vegas Sands integrated resorts – Imported Malaysian water, rain water, desalinated sea water and recycled NeWater – Sky‐high +subterranean rock caverns for hydrocarbon storage as in Norway under Jurong island

• Malaysia boleh (can do) has Western Educity in Johor, Nusajaya
• Indonesia pioneer post‐AFC, street‐based democracy before Facebook‐

mediated Arab Spring

• Thailand conscious choice red versus yellow shirts, Bangkok tourism crisis

Future work

• Livelihood or social status
• ICT‐mediated workplaces & opportunities
• SMEs &self‐employment
• Women entrepreneurs
• Grameen microfinance
• Abu Dhabi‐based Khalifa Fund for Enterprise

Development

• Dubai’s Sheikh Maktoum Foundation for SMEs
• Macroeconomic framework congruent to Vision

2030

Final reality check for economism

• Europe &US rethink immigration policies
• Macroeconomic framework needs social touch,

human face

• Crisis conditions & double movement
• Creative innovative foreign talents for bigger pie
• Perceived demise of business cycles
• Greater productivity by ICT & globalisation
• NAIRU

Singapore financial jobs

• A Monster Employment Index tracking for

positions in finance and accounting advertised

• nline, Singapore leads world in creating financial

jobs next 12 months, overtaking even London

• Poll of 297 bankers and hedge‐fund staff in

London by Astbury Marsden, a recruitment firm

• Not surprising as anecdotally, technocrats in

Monetary Authority of Singapore read all gargantuan Dodd‐Frank financial‐regulation act, as they mulls opportunities to be created

Dubai more than real estate play

• Real estate bubble pricked, blessing in disguise
• Price correction offer affordable premises in 30 free zones +

world‐class infrastructure to entrepreneurs, talents

• Create jobs, revive, competitive again
• Emaar Properties as part of outreach build housing quickly,

cheaply Angola in exchange for mining concession

• Angola’s northwest has diamonds, iron ore and rare minerals
• Create Angolan jobs
• Business back to 30 free zones , supply chain
• Rentier by fees and user charges in most entrepreneurial way