Structural Unemployment on the G20 Agenda

Hannah Mallin

At this year’s G20 Leaders’ Summit the Russian Presidency prioritized three policy areas. One of the priority commitments was “growth through quality jobs and investment,” with the aim of starting “a new cycle of economic growth” (Russia G20 2012). An aspect of this commitment included “tackling structural unemployment.” This Report focuses on how the G20 has tackled structural unemployment.

The Russian Presidency has introduced various bodies and mechanisms where strategies can be created and coordinated to tackle structural unemployment. The Russians identified that rates of unemployment and under-employment, which is employment that is inadequate for the worker (either financially or due to over-qualification, for example), are still rising. Thus, the Presidency has prioritized the facilitation of “job creation” — this is the attempt to counteract structural unemployment. Structural unemployment occurs because the labor available exceeds the amount required. It is considered by economists as “harder to fix” than cyclical unemployment and requires long-term solutions such as “education” and “encouraging innovation” (The Economist 2012). Hence, there is the issue of whether the G20 Leaders’ Summit can and will contribute any viable long-term policies to the existing efforts being made to tackle structural unemployment.

 

Structural Unemployment and the G20

Structural unemployment is a new addition to the G20 agenda. The previous Presidency, held by Mexico in 2012, did address the issue of unemployment resulting from the 2008 Global Financial Crisis and its economic aftermath. It also estimated that a further 400 million jobs must be created within the next decade in order to align employment with the growing global population (G20 Mexico 2012). However, the Mexican Presidency focused primarily on youth unemployment and improving social security in order to boost economic growth and create jobs. Job creation was viewed as a consequence of economic growth and not seen as a mechanism for stimulating growth. The OECD and the ILO claimed, in a 2011 report that “the large increase in long-term unemployment [in advanced economies] is of particular concern because of the increased risk that many workers will become structurally unemployed” (ILO and The OECD 2011). Yet structural unemployment remains.

Although the Leaders are expected to implement G20 commitments as national policy, the solutions so far proposed for tackling structural unemployment have come from the Task Force on Employment (ETF) and working groups. In the attempt to tackle structural unemployment, Alexei Vovchenko in the first ETF meeting described their agenda as focused on “job creation, labor activation and monitoring of labor market development and progress made by countries in implementing the G20 employment agenda” (Russia G20 2013e). In addition, the ministers of labor and finance in July for the purpose of addressing structural unemployment issues.

Structural policies require time in order to be implemented and, thus, it is unlikely that significant improvements will occur in the aftermath of this year’s G20 Leaders’ Summit. Structural unemployment can only be abetted through long-term strategies, which attempt to combat the structural roots of unemployment within a nation-state. Furthermore, both the suitable policies and practical implementation of such policies varies between states. Hence, it may be hard to find a consensus among the G20 Leaders on a proper course of action to tackle structural unemployment, or even to maintain an equal interest between state leaders in tackling this issue. As John Evans, General Secretary of the OECD Trade Union Advisory Committee commented, “our goal is to maintain the Leaders’ focus… it takes political will to bring employment at the center of discussion” (Russia G20 2013a).

 

Initiatives of the Russian Presidency

In an attempt to combat structural unemployment the Presidency has assigned the ETF to tackle this issue. The ETF is the body appointed to focus on the execution of the Leaders’ commitments to growth through employment, with specific attention to job creation “through sound monetary and fiscal policies”, “structural policies to foster innovation and promotion of smaller enterprises” and “monitoring of labor market development” (Russia G20 2012). It is composed of government representatives from the G20 states and experts within the field and is currently chaired by both Russia, as the present holder of the G20 Presidency, and Australia the next.

In order to achieve the goals specified by the G20, two ETF meetings have already taken place. The first meeting was held in February 2013. During the February meeting, the focus was on implementing the Leaders’ policy of growth through increased employment opportunities. Another new practice was monitoring the implementation of employment commitments within the G20 states that had been established in previous years. Also, the preparation began for a joint meeting between Labor and Finance Ministers, a first for the G20. The second ETF meeting occurred in June 2013 and included the Labor 20 and Business 20, who discussed their recommendations with the Task Force.

 

Conclusions of the 2013 G20 Leaders’ Summit

During the Russian Summit, Alexei Vovchenko outlined Russia’s G20 focus, which included job creation, the integration of labor policies with financial policy and improving social protection (Russia G20 2013a). These are meant to be the overarching strategies designed to tackle structural unemployment within the G20 and to inspire growth through the creation of quality jobs. In an effort to achieve these goals, the Business 20 emphasized that the private sector is the primary source of new employment opportunities and claimed that “conditions on labor markets should promote job creation in the private sector” (Russia G20 2013c). The Secretary-General of the International Organization of Employers, Brent Wilson, commented on the future of the effort to tackle structural unemployment by claiming that the Australian Presidency should continue to focus on employment and stressed the significance of encouraging the growth of small and medium sized enterprises as “the main source of new jobs”. However, he also emphasized the need to promote social protection systems that “activate the labor market… without creating dependency” and the necessity and significance of legal reforms; a shift in focus from Russia (Russia G20 2013a).

The Russian Presidency should be somewhat commended for placing structural unemployment on the G20 agenda and for attempting to address the issue through the creation of collaborative working groups. In acknowledging structural unemployment, and for beginning a dialogue regarding such, they have initiated the first step toward tackling the issue.

In President Putin’s speech at the first working session of this year’s G20 Leaders’ Summit, he claimed that the “main goal” of the Russian Presidency is to create the “conditions for global economic recovery” and, as such “stimulating economic growth and creating jobs are crucial” (Russia G20 2013b). The Saint Petersburg Action Plan has also been drafted, and approved by all the leaders, in order to achieve these goals with the main component being “budgetary strategies and individual countries’ commitments to implementing structural reforms” (Russia G20 2013b).

The Russian Finance Minister, Anton Siluanov, in response to this Presidential approval claimed that the focus must now shift to implementation (Russia G20 2013d). Questions remain, however, over the future of this G20 initiative, given the long time frame for implementation.

 

References

The Economist, ‘Jobs for the long run’ (2012) http://www.economist.com/blogs/freeexchange/2012/05/structural-unemployment (accessed September 4 2013).

‘G20 Mexico, Addressing Unemployment’, (2012) ref: http://g20mexico.org/images/stories/docs/g20/fichastec/04.pdf (accessed 5 September 2013).

ILO and The OECD, ‘Short-term employment and labour market outlook and key challenges in G20 countries: A statistical update for the G20 Meeting of Labour and Employment Ministers’ (2011) http://www.oecd.org/els/emp/48740986.pdf (accessed 5 September 2013).

OECD, ‘OECD, ILO call on G20 labour ministers to reinforce cooperation’, (2013) http://www.oecd.org/employment/oecd-ilo-call-on-g20-labour-ministers-to-… (accessed 5 September 2013).

Russia G20, ‘Fighting unemployment and creating jobs – a universal goal for the G20 countries’ (2013a) http://en.g20russia.ru/news/20130905/782546992.html (accessed 5 September 2013).

Russia G20, ‘First working meeting of G20 heads of state delegations’, (2013b) http://en.g20russia.ru/news/20130905/782438830.html (accessed 5 September 2013).

Russia G20, ‘Joint G20 Finance and Labour Ministers Meeting’, (2013c) http://www.g20.org/events_financial_track/20130719/781044060.html (accessed 5 September 2013).

Russia G20, ‘Russian Finance Minister reviews results of G20 Leaders’ first session’, (2013d) http://en.g20russia.ru/news/20130905/782555210.html (accessed 6 September 2013).

Russia G20, ‘The Task Force on Employment Meeting opened in Moscow’, (2013e) http://www.g20.org/news/20130221/781227461-print.html (accessed 5 September 2013).

Russia G20, ‘The Russian presidency of the G20: Outline’, (2012) http://www.g20russia.ru/docs/g20_russia/outline.html (accessed 4 September 2013).

 
 

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