High unemployment is here to stay. Adapting to it will require changing how and when we learn.
Societies, managers, and politicians used to consider certain levels of unemployment in the economy as a whole as “natural,” but unemployment itself as a necessarily short phase in the life of a “proper” economic actor. To many commentators, long periods of unemployment are associated with lack of adequate motivation or training in the person seeking a job.
But all of these models, explicit or implicit, assume economies much better shielded from external and internal shocks than ours are. All developed and most developing countries are connected to the global economy in a way that transfers, and sometimes augments, local shocks into global ones. A recent, still ongoing example, is the way in which the relatively sudden accession to the world market of a massive Chinese and Indian workforce has drastically revamped the world labor market for many activities.
All national economies, and all sectors, are equally open to technological, financial, and even demographic shocks far greater than the gradual shifts in supply and demand in the simplest economic models. In practical terms, this means that massive, prolonged, and sometimes irreversible drops in labor demand are always a very real possibility for most areas of an economy. Far from being an aberration, this kind of industry-specific structural unemployment is a natural consequence of a world where economic structures can shift very fast, and we need to address it as such.
Part of the necessary adjustment must be focused on education. “Retraining” is often mentioned as a response to unemployment, but the choice of word betrays a deep underestimation of the sophistication of the contemporary economy. Economically valuable abilities are no longer mostly physical skills that people can be “trained” in, but rather conceptually complex cognitive (and sometimes psychological) abilities. They cannot be acquired in the simple, quick, and massive way in which older economies used to train and retrain the first industrial workers.
For people to re-enter the active workforce after a sudden labor demand shift, they have to have access, then, to much deeper and long-term educational opportunities that occupational retraining. But our educational systems are entirely unsuited to this. By and large, they offer either very expensive and very time-consuming “serious” educational commitments (e.g., graduate or postgraduate degrees), or cheaper but “light” courses that only improve marginally the student’s productivity and employability. The former are out of reach for most employed and most unemployed people (due to scarcity of either time or money), and the latter do very little to help them recover their earning capability.
What’s needed is a much more dynamic system that is flexible enough for a worker to be engaged with it during his or her entire life — before their first job, while working, when unemployed, and perhaps even after their last job —, affordable enough to make it accessible to unemployed people, and sophisticated enough to impart the increasingly complex networks of knowledge and skills that are a requirement to be competitive in the contemporary economy.
The political case to encourage such a system or competing market of systems is strong. Nothing else is likely to make it possible for workers to recover from the structural unemployment caused by sudden economic shifts. And without this, economies lack the flexibility to respond to changes, and will see the productivity of their labor force decrease with every new development in the world economy.
But the business case to develop these systems is even stronger. As much as we have come to understand that constant learning is an economic necessity, that necessity is still being very poorly satisfied, or even not at all. Whoever gets to do it — and given the huge investments already made on information technology know-how and equipment, much of the groundwork has already been laid — will become a key piece in the very fabric of the economy’s constant reinvention.
Marcelo Rinesi is the Assistant Director of the IEET. Mr. Rinesi is Data Intelligence Analyst at Vostu.