From growth to prosperity and well-being: How did G20 leaders deal with labour market issues?

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G20 change in how to talk labour

G20 leaders in Hamburg met against the background of high levels of uncertainty and dissatisfaction in their countries’ populations. Growing levels of inequality, the unclear impact of digitalisation, high youth unemployment, bad conditions for workers in global supply chains. These major global challenges were also mirrored in the manifold peaceful demonstrations in which protestors demanded a change in thinking about growth and globalisation. Did the G20 leaders adequately address these worries or did they continue with business-as-usual? Did they address the important questions of the future? 

G20 leaders in Hamburg met against the background of high levels of uncertainty and dissatisfaction in their countries’ populations. Labour market outcomes are one particular reason for this uncertainty and dissatisfaction: high and growing levels of inequality along several dimensions such as gender, income or ethical background, the unclear impact of digitalisation with ongoing automation and new skill demands, high youth unemployment in many countries, bad conditions for workers in global supply chains. These major global challenges were also mirrored in the manifold peaceful demonstrations on the streets of Hamburg in which protestors demanded a change in thinking about growth and globalisation. All this makes the G20 Summit’s outcomes with regard to employment and labour market policies a central element for gauging the overall success (or failure) of the Summit. Did the G20 leaders adequately address these worries or did they continue with business-as-usual? Did they address the important questions of the future?

Studying the current and past G20 Leaders’ Communiqués, one notices a change in how labour market issues are addressed. In the past, the major focus of the G20 was economic growth; growth creates jobs so growth was central. Of course, the G20 leaders committed to quality jobs, inclusive labour force participation, with safe working conditions and decent wages, but growth remained the primary goal. In the Hamburg Communiqué, „strong, sustainable, balanced and inclusive growth“ remains the highest priority, but it is clearly stated in the preamble that growth, driven strongly by globalisation and technological progress, has created labour market inequalities. Remarkably, G20 leaders agreed that economic growth is no longer regarded as the single avenue to prosperity and well-being. Rather, inclusiveness and equality seem to be regarded as motors of growth themselves: „We will promote greater inclusiveness, fairness and equality in our pursuit of economic growth and job creation”; a notable change from the past.

A Progressive Labour and Employment Minsterial Meeting Declaration

The agenda of the G20 Employment Working Group and the resulting Labour and Employment Ministerial (LEMM) Declaration provided the groundwork for the Leaders’ Communiqué of Hamburg. The LEMM declaration also stresses right at the beginning the need to shape the processes of globalisation and technological change. I consider it to be a progressive declaration as it brings important new issues to the G20 table and provides an adequate response to older issues.

First, the LEMM declaration recognises important challenges arising from digitalisation, such as frequent occupational changes, employment polarization, labour market segmentation, gaps in social protection due to new, non-standard forms of work and the platform economy, and changing skill needs. The employment working group has long addressed the issue of quality apprenticeship and life-long learning as instruments to increase “employability“ in the face of structural change. The Beijing declaration of labour and employment ministers indirectly mentions the labour market’s challenges of digitalisation, but the 2017 declaration is the most comprehensive package yet to address these issues.

Second, the declaration addresses the need for labour market integration of migrants and refugees (and also notes that integration will aid growth). Notably, the language in which this issue is addressed is careful. For example, advantages of labour market access are „recognised“, and benefits of improved employability are „acknowledged“. Yet, it is the first time that the G20 delegations agreed on emphasising the situation of migrants and refugees.

Third, the declaration marks substantial progress in addressing the challenges arising from global value chains. While global value chains have occasionally been mentioned in past G20 Communiqués and declarations, the 2017 declaration explicitly recognises the importance of global value chains for prosperity. Moreover, it makes clear that the G20 (including the business sector) have a joint responsibility to shape global value chains in the spirit of fairness, inclusiveness and dignity. G20 members are requested to develop national action plans to achieve decent work and responsible business conduct, include fundamental principles in trade agreements, and involve stakeholders in initiatives around sustainable global supply chains. Yet, the text does not include commitments but rather intentions. Monitoring the developments during the Argentinian presidency will be essential.

What made it into the Leaders’ Communiqué? And where do we need to look closely?

The employment-creating potential of digitalization, and the challenges brought by it, are included in the Leaders’ Communiqué. It recognises the need for life-long education, promises continuous exchange on national experiences and practices about managing the transition of the labour market. The German dual system of vocational education seems to have made an impression on G20 leaders as its core elements (school- and work-based learning, cooperation between social partners) are explicitly acknowledged in the Communiqué. The G20 leaders are right in addressing digitalisation, as it is likely to have a huge influence on the way we work. As labour markets are likely to become more globalised due to digitalisation, I also expect that the G20 will increasingly have to play a policy-coordinating role, rather than being just a body for exchange of experiences.

Labour market integration of refugees has also made it into the Leaders’ Communiqué, even though no joint commitments have been made in this regard. The sovereignty of G20 nations with regard to their dealings with migrants and refugees is explicitly mentioned. A common understanding of how to treat the millions of migrants and refugees would have been a helpful step in a more coordinated response to this challenge and may have contributed to a better sharing of the burden. The Communiqué suggests that the G20 see this as the responsibility of the UN. While this is certainly right, the comparatively rich G20 nations could send very powerful messages; a missed opportunity.

Perhaps most importantly, the joint Communiqué recognises that „the benefits of international trade and investment have not been shared widely enough“. Consequently, it also contains a clear commitment to achieve sustainable and inclusive global supply chains by “fostering the implementation of labour, social and environmental standards and human rights in line with internationally recognised frameworks“. The leaders promise national action plans on business and human rights and underline the responsibility of businesses to exercise due diligence. Leaders also committed to take measures to eliminate child labour by 2025. Fair and decent wages and social dialogue are emphasised as key components of sustainable and inclusive global supply chains. These commitments will need to monitored closely since they are inherently difficult to implement, fuzzy in their measurement, and hence easy to defect on. Accountability of businesses for breach of these commitments would be an important element to make real progress in this area.

The G20 Hamburg Communiqué does indeed address the important challenges for our labour markets, including those of countries which were not present at the negotiation table. A closer look at the Communiqué shows that there were subtle changes towards a new thinking about economic growth and globalisation; they were regarded as a means to an end: serve societies and the people.

Image: Dennis Görlich

Dennis Görlich is Head of the Global Challenges Centre at the Kiel Institute for the World Economy (IfW) and Co-Chair of the T20 Task Force on the Digital Economy.

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