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Global jobs reawakening poses risks, presents opportunities

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Global jobs reawakening poses risks, presents opportunities

4th February 2011

By: Terence Creamer
Creamer Media Editor

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While risking stating the obvious, it is true to say that there is today not merely a borderless war for talent, but also strong and growing international competition for jobs themselves.

US President Barack Obama felt it necessary to remind the 112th US Congress of this reality in his recent State of the Union address, when he stated baldly: “The competition for jobs is real” – competition that is as much from emerging markets, such as China and India, as it is from labour-saving technologies. “Steel mills that once needed 1 000 workers,” Obama highlighted, “can now do the same work with 100.”

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His proposed remedy? For the US to “out-innovate, out-educate, and out-build the rest of the world.”

But this jobs reawakening is not restricted to Washington DC, with the need to stimulate job-rich growth having also emerged as a central theme at last week’s World Economic Forum, in Davos, Switzerland.

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A report from the International Labour Organisation also highlighted the scale of the problem, showing that unemployment across the world had risen to above 200-million. It even emerged that Western trade unions were moving to work with business leaders on a ‘blueprint’ to boost employment growth and deal with the potentially devastating consequences of high youth unemployment.

Reports have also emerged suggesting that French President Nicolas Sarkozy will place employment at (or near) the top of the agenda as France begins its presidency of the G20. And International Monetary Fund MD Dominique Strauss-Kahn, a possible rival to Sarkozy for the French Presidency, has indicated that steps to boost employment will be the focus of the fund’s spring meeting in April.

For South Africa, whose unemployment remains stubbornly above 25%, this growing global realisation that jobs are as much a scarce good as resources poses risks and presents opportunities.

One threat lies in the potential that developed countries will take measures to protect jobs and incentivise investment in such a way that job-creating foreign direct investment is redeployed to projects in Europe and North America. It could also mean that labour-market liberalisation elsewhere, designed principally to boost jobs, could further undermine South Africa’s relative ability to compete, particularly given that the current focus of our lawmakers is on further labour-market tightening – unquestionably the reason that the debate about “decent jobs” is also becoming so heated.

But there could also be positive spillovers. If efforts given to finding innovations that are job intensive rather than labour saving yield fruit, South Africa, which is typically an early adopter of new technologies, could emerge as a beneficiary.

On balance, though, the risks look serious and our policymakers are going to need to show skill and dexterity, particularly as they put the final touches to the New Growth Path. What is now plain, though, is that growth-driven policies alone will simply not cut it.

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