Trust, Jobs and an Inclusive society. Reflections from OECD Forum in Paris

Posted on 20. May 2014

by Mihails Kozlovs

Mihails Kozlovs NEWIt was 8:30 in the morning when I had a coffee with Vice-president of Turkish confederation of Employers associations – Erol Kiresepion, who is a usual suspect for the annual OECD Forum. He shared his worries about the youth unemployment in Turkey, which is still around 16% this year and not getting any better. In his opinion dramatic changes should be implemented in order to give the possibility for young people to work and gain experience. Special programs are already implemented for those who are starting their first real job experience, but even with the support of the state entrepreneurs more likely to employ those with experience.

Employers need young, motivated and highly experienced employees – this is a very contradictive, but the mainstream agenda of any labour market nowadays. And it is one of the reasons why in Spain or Greece youth unemployment is over 53%.

Secretary General of OECD Mr. Angel Gurria stated, that it is not possible to imagine an inclusive society if the youth unemployment rate stays on such high level. World GDP is continuously growing by 3% this year and 4% next year, but still 73  million worldwide  young people are without a job. That means that nowadays our society is becoming more and more exclusive – leaving more and more young people outside the market. Politicians should bear the responsibility for such worldwide agenda.

During the Forum it was quite often mentioned that young people need to be given the opportunity and that the new type of growth should be based on needs of people – inclusive growth. But practically only one program was implemented and it empowers young people – it is the ‘Giving youth a better start’ initiative (OECD and ILO report, 2011).

During this Forum huge emphasis was devoted to Asian countries and especially Japan, in celebration of 50 years since Japan joined the OECD. After the first day of the conference, the Japanese delegation prepared a special networking session in Japanese style – with Sake and national dishes. It was a rare opportunity to have a small talk with Mr. A. Gurria and he shared his deep belief that ‘nowadays the main driver for the economic performance should be inclusive growth, which is based on representative spread of jobs in between the society’. For example, in 2013 for every two unemployed people one would be unemployed for more than a year. In many cases this is down to the social security system, which is too loyal and potentially open to misuse.

Huge unemployment not only across Europe is the reason for the erosion of public trust, which is at a historically low level. National governing bodies- parliaments of  EU  member countries – lack trust in its governing bodies- in France only 32% people trust their government, in eastern Europe this characteristic is even lower- only 28% of the population of Latvia trust their government. It damages the economic growth and to change it long-term investments are needed.

The asian perspective on youth unemployment is quite similar, however in Japan it is at a record low level. Member of House of Representatives of Japan – Mr. Naokazu Takemoto – described Japanese economy with a proverb: ‘be not defeated by the rain. Be not defeated by the earthquake, cunami, nuclear or deflation.’ Deflation was a major problem of Japanese economy for last years, but this year it has finally overcome it. The Japanese economy is now reborn. There are at least 1.7 job offers for each person seeking for work and youth unemployment less than in Germany- around 8%.

Another interesting point raised by Mr Takemoto is that in Japan only 0,3% of enterprises are big and they are growing annually: 0.3%, but SMEs(small and medium enterprises) grow with huge pace: 9.7% annually. That also gives a perspective on future market developments and its impact to labor market. Smaller enterprises have better chances in providing young people with work and they are much faster adapting to market changes.

Youth unemployment is not only about lacking the experience, it is also about gaps and geographical mismatches. At the Idea-factory workshop, Director of Gaidar Institute Sergej Prikhodko stated that on the Russian market there is huge over-production of graduates in the field of economy and law. It is simply not possible to absorb/employ all the specialists that were produced by previous educational system.

It is the mismatch, which is actual now, but happened in many post-soviet countries, where the economy in the last 20 years has been changing constructively. Planning and production of more detailed educational policies is required for matching the economy with the educational system.

Steve Sargent, the President and CEO of B20 Human Capital Task, observed several dimensions of this unemployment issue. He believes that one solution can’t fill all the economies, especially nowadays when half of the employers cannot find the necessary workforce. It is a worldwide mismatch of professions in geo-space. That is why it is important to share the responsibility with the non-governmental sector for  the implementation of Non-formal education projects in support of the total labor market of young people. So here it is a question about the life-long-learning programs and their role in the educational process.

To create an inclusive society, we need to build new Jobs, but investment in the creation of new jobs is possible only with Trust from entrepreneurs and investors. So I believe there is no big difference from which side to start, but for a bright and prosperous future we need all three elements to be present: Trust, Jobs and  an inclusive society.