Governments and the economy

Policy makers and politicians worldwide should take note – the coming of Work 2.0 is changing the economic and political landscape of their countries and the demands of the populations they serve. Population ageing and a new, independent strain of working are making many pension systems in the rich world obsolete and impossible to fund.

Government is usually the last to catch up with new technologies and trends, yet this transformation is simply one which can’t be missed. Whether it is providing lifelong education and training possibilities, adjusting taxation to modern ways of value creation or shaping countries more as competitive business and legal platforms, there are many challenges ahead for civil servants and elected officials.

A successful and popular government, be it supranational, national or local, has to be responsive to changing needs, flexible in providing a platform for doing business and conducive to promoting creativity and all kinds of innovation.

Nowhere is this skills mismatch more apparent than in the case of youth (un)employment, where in many developing and developed countries large proportions of the young population suffer from endemic joblessness, while in other countries there is an oversupply of skilled workers, which leads to employment below one’s educational and skill level – this is most often the case of workers who are currently under 24. This situation persists largely due to the low global mobility of labour. World Bank data show that only 3% of the world population now lives in a country where they were not born, while 30% of global output is sold in countries where it was not produced. And as young people are the most likely group to move to another country, the restrictions on free labour flows hit them the hardest and at times make them captive participants in national labour markets. These labour market failures on a global scale mean that, according to the calculations of “The Economist”, 290 million 15 to 24-year-olds, or a quarter of the youth on the planet, are neither working, studying or training for a job (NEETs).” S.Prokurat, “Work 2.0: Nowhere to hide“, 2013, p.74.

World Unemployment among 15-24 Year-Olds


source of the image: S.Prokurat, “Work 2.0: Nowhere to hide“, 2013, p.75.”

“U.S. Labor Force Participation Rate Lowest Since 1979” – that was the title the “Huffington Post” tried to scare us with on the 6th April 2013 (Wiseman and Washington, 2013). The labour force participation rate is the percentage of working-age people in an economy who are either employed or unemployed but looking for a job. Indeed the labour force participation rate is 2.5 percentage points lower than it was at the start of the recession. So for every 10,000 people age 16 and older (excluding members of the military) 250 fewer are working or looking for a job than in December 2007 (Figure 17). But you would be fooled to think that the crisis is the reason for this. True, it may have hastened certain processes going on in the economy. But the current high unemployment in most of the world may have little to do with the current economic slowdown or the dispute between economic authorities on more market or state in economic decisions. Yes, this discussion can nudge the media back and forth in their opinions, but there are much stronger forces at work here“. S.Prokurat, “Work 2.0: Nowhere to hide“, 2013, pp.102-103.

Labour Force Participation Rate in the US (in %)


source of the image: S.Prokurat, “Work 2.0: Nowhere to hide“, 2013, p.104.

“People have less money in their pockets. Working family members who make up an average household make less in real terms than they did in 2000 as shown by Figure 9. While the US economy has recovered modestly since the financial crisis, median household income is still below its pre-2007 level. For workers this means adhering to the idea of ‘more for less’! If we also factor in rising unemployment the conclusions are evident – the individual’s lot isn’t easy in the world of Work 2.0. This is a problem not only specific to the US but present all around the world. For example in England, real wages have fallen in 36 of the 37 months since May 2010, according to new data from June 2013”, S.Prokurat, “Work 2.0: Nowhere to hide“, 2013, p.70.

Median Household Income Index (Hill) and Unemployment Rate Month January 2000 to May 2013 in the US


source of the image: S.Prokurat, “Work 2.0: Nowhere to hide“, 2013, p.71.

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