2019 IMF and World Bank Annual Meetings - Written Statement to the Development Committee
Written Statement to the Development Committee by Angel Gurría
19 October 2019 - Washington, D.C.
Global megatrends are changing the ways we live and work.
Digitalisation, globalisation and demographic change are reshaping our economies and societies. In recent decades, machines and artificial intelligence (AI) have made rapid and accelerating progress in their capacity to take on tasks that were previously performed by humans. Globalisation is continuing to facilitate the exchange of goods, services, capital, people and ideas across borders. And societies are ageing rapidly, with the number of people aged over 80 expected to triple by 2050. The significant transformations generated by these trends have profoundly affected all aspects of society, including the world of work.
A future of massive technological unemployment seems unlikely. Despite widespread anxiety that digitalisation and globalisation will lead to job losses, countries are unlikely to experience a sharp decline in overall employment. Despite the loss of some jobs to automation and globalisation, many more have been created. Between 2006 and 2016, four out of ten new jobs in OECD countries were created in highly digital-intensive sectors. Overall, total employment has increased by about 50 million in OECD countries since 2007. Nonetheless, substantial labour market adjustments are likely in the coming years, as new jobs replace obsolete ones in declining sectors and activities.
The OECD Employment Outlook 2019 estimates that 14% of jobs in OECD countries are at a high risk of automation over the coming 15-20 years, and a further 32% could change significantly. This means millions of workers will need to find new jobs or learn new skills to perform the tasks that their jobs require. For many, this will be difficult. This is particularly true in countries where unemployment rates and NEET rates for youth are still high. The challenge of retraining will be particularly acute for older workers.
The risk of automation varies by country. While the occupational and industrial composition of emerging and developing economies implies a higher risk of automation, the pace of automation in these economies may be constrained by lower wage costs, lower average workforce skills, and a higher share of small and medium sized firms not equipped to adopt new technologies. Automation may thus make it harder for developing countries to compete based on low-cost labour, consistent with China’s experience. Developing countries may remain competitive only in sectors where low-cost labour remains important, or must find new drivers of economic growth. One such case is production for domestic and regional markets that are not yet exposed to international competition.
New forms of work are emerging. Changes in preferences, innovations in business models and technological developments have led to the emergence of new forms of work, including the platform economy, where workers provide services via online platforms. In many countries, other non-standard forms of work have also expanded. At the same time, people are living and working longer while facing more frequent job changes and greater risks of skills obsolescence.
These transformations offer opportunities but also present challenges.
It is clear that deep and rapid structural changes are on the horizon. While these changes bring major new opportunities, they also create greater uncertainty and generate anxieties for those who are not well equipped to grasp them, as highlighted in the OECD’s “I Am the Future of Work” campaign. For example, many fear that AI will facilitate automated discrimination by codifying existing biases from the analogue world into the digital world, including those related to gender, race, and the justice system. The changes generated by digitalisation and globalisation thus risk exacerbating inequalities, a concern at the heart of the OECD’s flagship Inclusive Growth Initiative and the OECD Framework for Policy Action on Inclusive Growth.
In emerging economies, new forms of work in the platform economy may offer opportunities for formalisation by reducing costs and improving the monitoring of activities through the digitalisation of transactions. But platform work is not a panacea for the problem of informality. Curbing informality in emerging economies requires a comprehensive approach that not only aims to reduce the costs of formalisation, but also increases its perceived benefits and improves enforcement mechanisms.
With the right policies, countries can harness the opportunities and manage the challenges of digitalisation and globalisation. In this context, the OECD has developed a “Transition Agenda for a Future That Works for All”, which seeks to deliver an inclusive and rewarding future of work.
• First, countries must ensure adequate labour law protection for workers, regardless of their employment status.
Employment status is often essential to determining worker rights and protections. Countries should tackle false self-employment, minimise the “grey zone” between salaried work and self-employment, and extend rights to workers who are left in this zone.
• Second, social protection provisions should be reshaped to ensure better coverage of workers in non-standard forms of employment.
Adapting and extending social protection to all workers is critical. Policy options include: extending existing social protection to new forms of work, boosting the portability of entitlements, complementing targeted social protection measures with more universal and unconditional support, and making means-tests more responsive to people’s needs (e.g. by reviewing entitlement criteria). The scope of employment-oriented social programs and activation measures also need to be adapted to support evolving work patterns better.
• Third, training programs and adult learning systems must be future-proofed.
A rapidly transforming labour market, coupled with longer working lives, mean that many individuals will need to change their job or occupation during their career.
Formative education plays a key role in providing young people with the skills required for successful labour market entry. However, deep and rapid changes in technology make it difficult for formative education to equip young people with the knowledge, skills and capabilities they will need throughout their working lives. In line with the recommendations of the new OECD Jobs Strategy and OECD Skills Strategy, we must move away from a model of front-loaded education – whereby recognised skills are mainly developed in schools and universities and subsequently used at work – to a system in which skills are continuously updated to match changing skills needs.
Countries must thus implement an effective lifelong learning system; one that quickly responds to labour market needs and offers opportunities to the low-skilled whose jobs are at high risk from automation. Yet low-skilled workers – the very people most at risk of having their jobs affected by automation – are the least likely to participate in training. The OECD Skills Outlook 2019 finds that participation in training programs among low-skilled adults is 40 percentage points lower than that of high-skilled adults. Adults employed in jobs at a high risk of automation are 30 percentage points less likely to participate in adult learning, compared with workers in lower-risk jobs.
Countries will need to overhaul adult learning programmes to facilitate high quality and broader accessibility, especially for the workers who need it the most. Policy options revolve around building a learning culture among firms and individuals and removing constraints to participation; this includes increasing awareness about the benefits of training, offering financial incentives, making training rights portable between jobs, ensuring that training programs are flexible enough to fit in busy schedules, and recognising skills gained through experience.
• Fourth, countries should step up their engagement with social partners.
Greater focus must also be placed on collective bargaining and social dialogue, both of which can complement government efforts to make labour markets more adaptable, secure and inclusive. For example, in several OECD and developing countries – e.g. Italy and South Africa – social partners are involved in the management of training funds, associations which aim to finance workers’ training using resources collected through a levy imposed on employers. In this respect, the Global Deal is helping us to carry the message that social dialogue has a critical role to play in reducing inequalities and in shaping the Future of Work.
Global challenges require global solutions.
Global co-operation is critical to ensuring the challenges of the Future of Work are met and the opportunities embraced. OECD countries are increasingly reorienting their development co-operation programs to address the challenge of creating good quality jobs for all populations in developing countries, with a particular focus on youth in urban areas. This co operation takes many forms, from vocational education to attracting inward investment, strengthening global supply chains, addressing labour standards and creating an enabling environment for local private sector to flourish.
The OECD is working in close partnership with the G7, G20, UN and other global actors, to ensure that the opportunities offered by digitalisation, globalisation and longer lives can be seized, and the risks can be mitigated to promote stronger and more inclusive growth. For example, through its SDG Action Plan, the OECD is helping OECD and non-OECD countries to measure their progress towards the 2030 Agenda for Sustainable Development, including: SDG 8 (the promotion of sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all; SDG 4 (education); and SDG 12 (consumption and production patterns, which include aspects related to job creation).
The Future of Work is now.
With the right policies and institutions in place and with a whole-of-government approach – as highlighted by the OECD’s Going Digital project, the OECD Jobs Strategy and the OECD Skills Strategy – countries can shape a Future of Work that is inclusive and rewarding for all workers. The OECD stands ready to support all countries to achieve this important mission.