Michael Shank and Sabina Dewan
This piece was originally published by U.S. News and World Report.
One of the biggest drivers of inequality is a lack of jobs. But not just any jobs, just jobs, ones that come with appropriate wages, rights, protections such as healthcare and pensions and opportunities for economic mobility. As Washington weighs the pros and cons of the proposed Trans-Pacific Partnership and the U.S.-EU Transatlantic Trade and Investment Partnership, this must be at the fore of the conversation.
But the “jobs” conversation in Washington and around the world often forgets to factor these in, the consequences of which are concerning. The International Labor Organization’s 2013 Global Wage Report found that, since 1995, inequality between the highest and lowest wages has increased in nearly three quarters of the countries for which there are data.
The United States is one of the advanced countries in which the gap between the highest and the lowest wages is largest. While we’ve heard this before, the gap is getting worse.
This is not merely a blow to our American dream but a blow to our economy. The destabilizing effects of high levels of unemployment and poor working conditions inhibit the creation of socio-economically just societies, vibrant economies and strong governments necessary to foster sustainable and inclusive economic growth.
The ILO study found that, in addition to the rising inequality among wage earners, average labor productivity in developing countries from 1999 to 2011 increased twice as fast as average wages.
This means that labor’s share of the Gross Domestic Product – the broadest measure of economic output – has shrunk considerably. Even in China, where wages increased substantially, they did not grow quickly enough to increase workers’ share of national income.
These trends do not bode well for the millions of workers across the globe, but they also adversely affect governments and businesses worldwide. A lack of good jobs and poor working conditions, and the resulting inequality, fosters social unrest, political instability and insecurity that can destabilize governments and create an uncertain business environment.
Worker-based protests from Cairo, Egypt, to Foxconn in China and garment factories in Bangladesh easily prove that point. Why companies aren’t quick to fix this is confounding. The purchasing power of global consumers is being reduced at a time when the world’s economy needs it most.
This means, for example, that U.S. products and services will find fewer buyers abroad, and foreign goods and services will find fewer buyers in America.
So how do we fix this problem? In New Delhi, India, this year, a “Just Jobs Index” was launched to identify and rank the countries that are providing the best employment opportunities, income and employment security, safety at work and healthy work conditions and equality of treatment and opportunity.
The top five performers in 2009, the latest year where the data were most available: Iceland, Netherlands, Norway, Australia and Denmark. These countries are prioritizing a sustainable work environment and a quality workforce. Other countries must follow suit.
Countries need to make quality employment the cornerstone of their economic growth strategies. Globalization, and especially trade, must be in service of creating more and better jobs and providing workers with commensurate wages, benefits, rights and protections. Freedom of association and collective bargaining, furthermore, can help empower civil society to keep businesses and governments accountable in creating more equitable outcomes.
Too often we are eager to promote global integration, especially international trade, while failing to protect a safe and sustainable future for workers. The ILO report shows how poorly we’re performing at fostering better living standards for workers. We can, and must, do better.