[GS-05] - Group 1 (GS25)

Globalization
and employment
Deepak Nayyar, 2015

“Think Global,
Group 1 (GS25) Act Sustainable”
 Table of task allocation

NO. NAME TASK EVALUATION

1 Cong Thuy Khanh Trang Case Summary 100%

2 Bui Tran Phuong Thao Analysis 100%

3 Vien Ngoc Bao Tram Analysis 100%

4 Vu Khanh Linh Solutions 100%

5 Bui Truc An Recommendations 100%

 CASE SUMMARY
POLICIES CHANGE RESULTING IN GREATER OPENNESS SINCE 1980, GLOBALIZATION HAS NEGATIVELY IMPACTED ON EMPLOYMENT IN
TO TRADE, INVESTMENT, AND FINANCE FLOWS. DEVELOPING COUNTRIES AND INDUSTRIALIZED ECONOMIES
Economic growth has slowed down.
Unemployment levels have been higher.
JOBLESS GROWTH slower.
Job creation has been slower.

Worsening income distribution

GROWTH AND EMPLOYMENT
dampened output and consumption growth.
1951-1980, GDP growth in developing
WHAT IS TO BE DONE? GLOBALIZATION
AND EMPLOYMENT
countries
> industrialized nations, while per
capita was lower.
Industrialized
Industrializedcountri
countries: outpace both
1981-2008, it continued to outpace
+ Wage-led growth: stimulating consumption demand. growths.
+ Profit-led growth: encourage investment demand. Asia emerged as a notable performer, while
Latin and Africa faced economic challenges.
Developing countries:
Developing countri wage-led growth relies on
The financial
financial crisis began in the U.S. in late 2008, a result of
employment creation to boost domestic consumption.
economic globalization, impactingreal
realeconomic
economicsectors
s and
sharp declines in output
output and employment
employment.
Importance ofcdufudhvbhfb.
Employment: of utmost importance at
every stage of development.
(Nayyar, 2015) SOLUTIONS AND RECOMMENDATIONS
 The period 951–1980
The period 1981–2008 01
Developing regions (Asia, Africa, Latin America) outperformed

Growth and industrialized countries.

Economic growth was matched by employment creation, though
GDP per capita growth was lower due to high population growth.

employment Impact of the 2008 Financial

Crisis 02

The global financial crisis led to significant contractions in

output and employment, particularly in industrialized nations
Globalization Theory: The shifts in economic paradigms
where unemployment surged to double digits.
are reflective of globalization theories that argue for
both the benefits and drawbacks of increased market
integration (Rodrik, 2011).
The quality of employment 03
Many jobs in developing countries are precarious, underpaying, and
lacking security. In industrialized nations, permanent jobs are
increasingly replaced with casual or contract positions, leading to
diminished job security and social benefits.
 Growth and
employment
Employment Trends
Post-1980: Higher unemployment rates, especially after
the Great Recession.
Unemployment surged in industrialized countries
Declining employment elasticity: More economic growth
is required to create the same number of jobs.
Deteriorating job quality

The transition from a growth-oriented to a market-driven global economy has led to

slower growth, higher unemployment, and deteriorating job quality.
 Labor Productivity vs.
Employment Growth: 01

Technological advancements allow a smaller, skilled workforce to

produce more, leading to higher profits. However, this benefits

Jobless only a select few, leaving many workers sidelined.

02
Growth
Impact of Globalization

The integration into global markets has shifted focus from domestic
consumption to export-led growth.

Jobless growth refers to a phenomenon where

Policy Changes 03
economies experience increased output and
productivity without a corresponding increase in Countries have aimed for price competitiveness through wage
restraint and labor market flexibility, often resulting in decreased
employment.
domestic consumption and further exacerbating joblessness.

Impact of Globalization 04
Demand is weakly profit-led (driven by business investment), failing
to translate productivity gains into significant employment growth
 Rethinking macroeconomic policies

Reasons for rethinking macroeconomic policies Negative impact:

Transition from Keynesianism to Monetarism
Limited the ability to use exchange rates
Focused more on price stability over employment and interest rate for employment and
and economic growth growth
Belief: Price stability would automatically lead to growth

Objectives: Control inflation and eliminate macroeconomic

Obsessive inflation concerns constrained
imbalances
expansionary policies due to fear of
Globalization forced focus on strong exchange rates & high capital flight
interest rates for investor confidence
WHAT IS TO BE DONE?
In industrialized countries: Revive wage-led growth and strengthen profit-led growth.
Wage-led growth: Some redistribution of income from profits to wages → boost consumption demand
Profit-led growth: Some redistribution of profits from the financial sector to the real sector → stimulate
investment demand.

In developing countries
Crucial to drive domestic consumption even if full employment is not an attainable objective.
There are complementarities between public investment in infrastructure and private investment in
manufacturing that could be exploited.
It is necessary to proceed carefully with the implementation of financial deregulation and liberalization

The importance of employment

Underutilised resource: though labour is an abundant resource in developing countries
Mobilization and creation of resources: shift existing labour and also creates new resources through
Virtuous circle: there are strong complementarities between employment creation and economic growth,
reducing inequality or preventing it from rising as much as it otherwise would.

(Nayyar, 2015)
Recommendation
For both countries
Skill development (World Bank, 2019): Invest in continuous
professional development programs to ensure that individuals
have access to lifelong learning opportunities.
→ Stay updated with the latest industry trends, reduce skills
gaps but also enhance employability.

For developing countries

Labour rights and social protection (ILO, 2023): Enforce laws and
implement social protection to safeguard workers' rights and
prevent a "race to the bottom" in working conditions.
→ Ensure human dignity and rights at work, improve
productivity and sustain economic development.

For industrialized countries

Social dialogue (ILO,2013): Help workers, employers, and
governments to address concerns that affect the workplace or
interests of workers and employers.
→ Advance social justice, improved wages and working
conditions, promote constructive workplace relations.
 REFERENCES
ANTHUVAN, M. V. L. (2005). Jobless Growth and Unemployment: A Global Phenomenon. World Affairs: The Journal of International
Issues, 9(1), 57–68. https://www.jstor.org/stable/48504775

Leaving no one behind Building inclusive labor protection in an evolving world of work. International Labour Organization. (2023, May
12). https://www.ilo.org/resource/conference-paper/ilc/111/leaving-no-one-behind-building-inclusive-labour-protection-evolving-world

Nayyar, D. (2015). Globalization and employment. Indian Journal of Labour Economics, 58(1), 87–97. doi:10.1007/s41027-015-0012-1

Rodrik, D. (2011). THE GLOBALIZATION PARADOX, by Dani Rodrik.

https://edisciplinas.usp.br/pluginfile.php/4126392/mod_resource/content/0/RODRIK%20The%20Globalization%20Paradox.pdf

Skills development. World Bank. (2019). https://www.worldbank.org/en/topic/skillsdevelopment

Social dialogue. International Labour Organization. (2013). https://www.ilo.org/resource/conference-paper/ilc/102/social-dialogue-0

 Group 1

Thank You !