Can we create employment without fast growth?

The economic scenario in Spain and throughout most of Europe at the moment is characterised by a depressing mix of low demand, restricted public and private investment, high and rising unemployment, and a general feeling of instability. What is most significant amidst all of this, however, is that we are being challenged in terms of our expectations from socioeconomic development. We are used to being part of economies that grow steadily, positioned within a fairly stable world economic order, and to not worrying too much about the environmental constraints of our activities. This has changed, raising new challenges and requiring a fundamental shift in attitudes and expectations.

A specific and urgent issue is how to generate and maintain good quality employment opportunities in this new context. If we are unable to meet this challenge quickly then we risk a ‘lost generation’ who don’t know the world of work, something with deep ramifications for economy and society. In Spain, where youth unemployment is already above 50% in some regions, a serious debate is needed around how to create employment opportunities in an economy that is unlikely to grow in the sense that we are accustomed in the coming years. There are many potential ideas to contribute to this debate, and here I want to highlight two that I have been reflecting on recently.

Firstly, I wonder if there is a need to re-think how we organise employment if we want to create jobs in a scenario of low growth. According to Eurostat’s Labour Force Survey, Spain is one of the European countries with the longest official working hours (and there are widespread tales of large unofficial hours). Perhaps individually we are working too much, and there is a case for redistributing work (and reward for work) to some extent. This would require a radically more open and flexible approach to the employment contract, alongside addressing inequalities at the top and bottom of wage structures. However the benefits could be enormous. The UK’s New Economics Foundation recently published a report suggesting that a normal 21 hour working week would address a range of urgent, interlinked problems including unemployment, over-consumption, high carbon emissions, entrenched inequalities and lack of time to live sustainably, to care for each other, and simply to enjoy life.

The second idea relates to the reality we face today in terms of more binding environmental constraints on our activities. While this requires a deep-rooted change of attitudes and expectations in our day-to-day lives, it also opens significant opportunities to generate employment from the re-direction of economic activity and the upgrading of our societies to be more sustainable. The International Labour Organisation has identified 8 key sectors - agriculture, forestry, fishing, energy, resource-intensive manufacturing, recycling, buildings, and transport - that will undergo major transformations as we move to a greener economy. These transformations can form the basis for significant employment opportunities.

In terms of a green transformation of society, employment opportunities fall broadly into two categories. Firstly there are opportunities locally as we solve environmental problems and ensure that all of our socioeconomic activities are sustainable. For example, a shift from private transport to efficient, coordinated and inclusive public transport systems has the potential to bring large gains in employment. Secondly there are opportunities globally from developing green technologies and innovative solutions to common problems that can be sold around the world, generating export-led employment. A clear example from the Basque Country region is a company like Gamesa, which has become a global leader in wind turbine manufacture. A key finding of the ILO report, however, is that outcomes from greening the economy in terms of employment will be largely determined by the policy instruments used and the institutions that implement them. Green upgrading neither creates nor destroys jobs per se; it all depends on how it is done.

In research institutions such as Orkestra one of our key challenges is to understand which approaches, institutions and policy instruments are likely to have the best impacts on competitiveness, employment and socioeconomic development in our own specific contexts. A first step in the Spanish context is to widen and deepen this debate around how we can rise to the challenge of creating employment without fast growth.