OECD Forum 2010: Matching skills to jobs

One impression you could get at this year’s Forum is that participants have trouble sticking to the subject. Looked at another way, it’s the fact that issues can’t be tackled in isolation, and that each session is closely connected to the others.

For instance, at this morning’s media briefing from TUAC, the Trade Union Advisory Committee to the OECD, Richard Trumka president of the AFL-CIO argued that, apart from the financial market aspects, the underlying reason for the crisis was a drop in aggregate demand. This would be a familiar position for at least one of the participants in the earlier discussion on the future of capitalism, Robert Skidelsky, “Keynes’s great biographer” to quote a book review by Joseph Stiglitz.   

TUAC also talked about growing inequality, as documented in the OECD’s Growing Unequal study, and the fact that workers at the lower end of the income distribution had to borrow excessively to pay for homes and immediate consumption. As a result, they paid for the crisis four times over, losing their homes, losing their jobs, losing the value of their pensions, and then having to pay higher taxes to pay for the stimulus packages and the ensuing sovereign debt.

The unions warned that a “stampede” towards fiscal consolidation would only make matters worse by reducing aggregate demand even further, whereas what is needed is an income-led recovery. But how should governments go about creating the conditions for this?

 TUAC’s answer was also proposed in the session on matching skills and jobs: invest in innovation, R&D. A downturn is the time for upskilling, a time to redefine jobs and retrain workers to take advantage of them.

As Barbara Ischinger, head of the OECD’s Education Directorate pointed out, education and training systems need to prepare learners not only for rapid change, but for jobs that haven’t even been created yet, using technologies that are still to be invented, to solve problems that cannot be foreseen.

Useful links

The educationtoday blog has guest posts from participants in this session.

Barbara Ischinger discusses New thinking, working and tools for the 21st century

Bob Harris, of Education International and Chair of TUAC’s Working Group on Education, Training & Employment analyses the impact of Exit strategies on public services and democracy

John Hope Bryant, Vice Chairman of the U.S. President’s Advisory Council on Financial Literacy until January 2010 Chairman and CEO of Operation HOPE proposes Education and financial literacy as a business case

OECD Forum 2010:A new phase of economic history? The future of capitalism…

In the wake of the Great Recesssion, does capitalism have a future? Speakers at this morning’s opening session on Day 2 of the OECD Forum seem to think it does, however it might be “capitalism, but not as we know it”.

Both Anatole Kaletsky, an economics commentator at The Times newspaper, and Lord Robert Skidelsky, the British economic historian, have been arguing that we may now be entering a new phase of economic history – what Mr. Kaletsky calls Capitalism 4.0.

They argue that, in broad terms, Capitalism 1.0 began with Adam Smith and the rise of laisser-faire economics, when governments gave way to the power of markets. That began to reverse in the late 19th or early 20th centuries – depending on your point of view – with the rise of social democracy and greater power for governments.

In turn, that yielded to the era of what some have called free-market fundamentalism, characterised by the reforms led by the likes of Ronald Reagan and Margaret Thatcher. Now, once again, the market’s power is in doubt, but what comes next?

Mr. Kaletsky believes we’re entering a new period of pragmatism, when ideology will give way to a more “common sense” approach. He also says cash-strapped governments now face the challenge of having to do more but with fewer resources, which he believes will fuel some creative approaches.

Lord Skidelsky believes the new era may see less of an emphasis on wealth creation for the sake of it: He’s told the session that’s planning a new book on just this issue entitled, How Much Is Enough: The Economics Of A Good Life. “Wealth is a means to an end, not an end in itself,” according to Lord Skidelsky. “Beyond that, the quest for more and more becomes irrational.”

Indeed, the theme of the limits of current models of capitalism to satisfy human needs has cropped up repeatedly. Sharan Burrow, President of the International Trade Union Confederation, has argued that there needs to be a rebalancing, with more of the economic rewards going to regular workers. Avivah Wittenberg-Cox, CEO of 20-first, says we need a shift in values, with a bigger role for women in the economy and overall governance. “If Lehman Brothers had been Lehman Sisters would we be in this mess?” she has asked.

Governance is also on the mind of Adrian Blundell-Wignall, Deputy Director of the Financial and Enterprise Affairs section of the OECD. He’s worried that, even after the crisis we’ve been through, we’re still not doing enough to create banks with high internal walls between regular banking and more risky activities.

How big a crisis will it take, he wonders, before we get the changes in governance that we need? One other big theme worth noting is the view that capitalism may now be morphing into a number of regional varieties – American, Chinese and European were the most frequently cited. Anatole Kaletsky has warned that it’s essential that American capitalism keeps up with the other forms and doesn’t slip behind. In particular, he’s concerned about the implications for democracy if the mode of capitalism as practiced in more authoritarian states becomes dominant. Overall, a fascinating session.

Always spend wisely ….

This post comes to us from Mark Hannam, honorary Research Fellow at the Institute of Philosophy at the University of London.

European governments face a problem.  They have borrowed to finance fiscal deficits during the recession and now they must repay their debts.  Taxes will rise and public spending will fall.  None of this is popular with voters, but it must be done.

In this era of austerity there is much talk about “doing  more with less”.  This is a worthy goal: who would be in favour of doing less with more?  But the rhetoric of public spending cuts disguises an important distinction between the level of spending and the quality of spending.

For economists “savings” are the excess of income over consumption, or deferred consumption.  We save now so we can consume later.  The balance between current consumption and future consumption depends upon our circumstances: in times of plenty it is prudent to save, in times of shortage in makes sense to consume.  It was ever so.

The idea that we should try to “get more for our money” is somewhat different; it suggests that we spend wisely, ensuring that we do not overpay for products and services.  It is hard to argue against the idea that we should optimise the value we secure for each pound, euro or dollar spent.

So, two rather different ideas: one proposes that we consider the balance between present consumption versus future consumption, the other proposes that we should always spend wisely, making the best of the resources we have.

Governments should always spend wisely, but today they have much less to spend.  As we enter several lean years of public spending we can be sure the politicians will tell us that they are doing more with less.  Very good.  But when the fat years come back, we should continue to insist that we get good value for our money.

Health care rationing? NOT NICE

Photo courtesy of Jacques Bron

This week the Insights blog will be focusing on health care issues.

Today’s post comes from guest author Jonathan Wolff, Professor of philosophy and director of the Centre for Philosophy, Justice and Health, University College London.

It is amazing how a single word can distort a debate. Take the word ‘rationing’. What does that mean to you? To me, it conjures up a world of little cardboard booklets, which record whether or not you have been allocated your personal portion of eggs, butter, or flour. A world in which it makes sense to ask whether or not someone has had his or her ration.

In the US debate on health care reform, conservatives warned US citizens that, aside from the horrors of state control, universal health-care would inevitably lead to UK style health rationing. The debate about rationing largely focused on the question of whether it is a lesser evil than a system which, despite pouring much more money into health care per person than any other in the world, still left perhaps as many as 50 million people without health insurance.

I was completely bemused by this debate, and couldn’t understand why ‘progressives’ were prepared to let it be structured this way. For consider. Do we have rationing in the UK or elsewhere in Europe? Where do you keep your ration card? Has your NHS doctor ever refused to see you because you had used up your allocation of appointments? Has a hospital told you that you had already spent your share of nights on the ward?

What we have in England and Wales is the National Institute of Health and Clinical Excellence (NICE) with the job of deciding whether or not a new treatment or intervention is cost-effective. Sometimes, to the fury of patient groups and pharmaceutical companies, it decides that a drug is not worth the price asked for it, and recommends that it is not ‘refunded’ by the National Health Service.

Now, this is bound to cause dispute, and makes excellent news stories. It is easy to find someone who believes that their condition would be massively improved if an excluded drug was made available, and that NICE heartlessly puts a price on life. And indeed, we can argue that NICE may have erred in particular cases, or, more generally goes about its decision-making the wrong way. But it is hard to argue that considerations of cost are never relevant. If a drug cost ten thousand pounds and extended a life by an hour, it would be a difficult to argue that it should be made available at public expense. Sometimes we must put ‘a price on life’, somehow or other. (more…)

In search of the ‘lost generation’

Economies may be recovering, but one problem looks set to linger – unemployment . The situation is especially severe for young people (15-to-24-year-olds). Currently, there are nearly 15 million unemployed young people in OECD countries, about four million more than at the end of 2007. (Explore the numbers at the OECD Factblog.)

As the recovery gathers pace, unemployment should begin to ease. But there’s a real concern that this recession will still create a “lost generation” of young people who, as a result of being unemployed in their teens and early twenties, face a lifetime of diminished job prospects.

What’s to be done? A paper just released by the OECD explores some possible solutions. These could include providing young people with a wider range of training and education opportunities, both academic and vocational, as well as offering those who leave school early with a “second chance” to get some skills. It could also mean making changes to employment protection rules that can trap young people in short-term, dead-end jobs.

Useful links

OECD Insights: From Crisis to Recovery – Employment and the Crisis

OECD work on employment

OECD Employment Outlook

Again the phantom city burns

This post contributed by John Mutter, Professor of Earth and Environmental Sciences/Professor of International and Public Affairs and Director of PhD in Sustainable Development, Columbia University, NY and Elisabeth King, a political scientist researching conflict, peacebuilding and development in Sub-Saharan Africa and postdoctoral fellow at Columbia University’s Earth Institute.

How much do the tent cities forming around Port-au-Prince remind us of the camps set up to shelter those who have fled the violence of civil war?  How much do the ruins in the streets of that city remind us of the destruction of violence?  The scope of the casualties, perhaps more than 200,000 (we’ll never know the true figure), certainly echoes numbers we hear from war zones. To the Haitian President René Préval the similarities are stark.  A few days after the earthquake he said “The damage I have seen here can be compared to the damage you would see if the country was bombed for 15 days. It is like in a war.”   Such similarities between disasters and violent conflict are often noted superficially, especially by the news media in the immediate aftermath, and this has certainly been the case in reports about Haiti’s earthquake.

Perhaps we might expect remarks of this sort in reference to places like Haiti that have a history of conflict but such analogies are common, even in places that do not have a history of violent conflict.  In the aftermath of Hurricane Katrina, many reporters commented on how that scene appeared like a war zone.  When the National Guard arrived in New Orleans, the disaster relief operation transformed into the military operation of restoring and maintaining order and images of soldiers in armored vehicles with weapons at the “ready” position were indistinguishable from those we commonly associate with peacekeeping in conflict situations.

The analogy ought not to be taken too far and certainly, there are very important differences between disasters and violent conflicts.  Natural disasters are generally portrayed as the result of a capricious act of nature, perhaps made worse by human agency, while conflicts are usually thought of as acts of one group of people against another.  Nature is rarely invoked as a cause of conflict despite a growing recognition that environmentally driven scarcity could enhance social stresses and raise tensions.  With the exception perhaps of extended periods of drought, most natural disasters are shorter duration events than conflicts and none match the extended civil conflicts in Sudan or Colombia.   There are no obvious analogies to war crimes or war crime trials and no equivalents to truth and reconciliation efforts though there is little doubt that there is opportunistic criminal behavior during disasters and legal actions sometimes follow.  Nor is there an equivalent to a negotiated ceasefire or victory by one party over another.

Yet there is more at work here than the somewhat gratuitous media comparisons between disasters and conflicts might suggest.   (more…)

Employment and the crisis

We are publishing From Crisis to Recovery, a new book from the OECD Insights series here on the blog, chapter-by-chapter.  This book traces the roots and the course of the crisis, how it has affected jobs, pensions and trade, while charting the prospects for recovery.

These chapters are “works in progress” and their content will evolve.  Reader comments are encouraged and will be used in shaping the book.

By way of introduction…

Being forced out of a job is an unpleasant experience. Employers often prefer to use euphemisms such as “I’ll have to let you go” that imply it’s somehow liberating or what the worker wanted. Thomas Carlyle, the man who coined the expression “the dismal science” to describe economics, was much nearer the mark. Writing in 1840, he claimed that “A man willing to work, and unable to find work, is perhaps the saddest sight that fortune’s inequality exhibits under this sun.”

Modern research supports Carlyle’s view. For instance, finding yourself unemployed has a more detrimental effect on mental health than other life changes, including losing a partner or being involved in an accident. A long spell of joblessness has social costs too, whether at the level of individuals and families or whole communities.

Tackling unemployment and its consequences has to be a major part of governments’ response to the crisis.

This chapter looks at the workers and sectors most affected by the crisis and how policies can help workers weather the storm.