I am Ekkehard Ernst, Economist & Jobs Expert, of the International Labour Organization (ILO). AMA

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This is definitely true. In the current situation, employers have the upper hand and can and will demand flexible labour-market conditions such as temp or part-time work. This is even true in countries where labour markets are performing relatively better, such as in Germany, where part of the "labour market miracle" can be attributed to a rise in part-time employment. Again, it's essential to create better conditions for growth in order to absorb the large number of job seekers, before we see an improvement in working conditions.

In your opinion, is higher education a worthwhile investment, in the US and in other countries?

What should individuals with Bachelor of Arts in Business Administration pursue as far as careers are concerned?

Better educated people in most countries have better chances of finding jobs. Having said that, if you've studied a field that's not in high demand, you need to be flexible to look for jobs that are outside of your immediate competencies. In principle, the degree you've mentioned here looks pretty saleable.

Hi Ekkehard, three more questions. They are pretty political, so I understand if you can't answer them. Much obliged!

How do you view Robert Cox's argument that the ILO is mainly a political corporatist tool for insiders in the advanced economies. Non-unionised workers, landless movements, women's groups, agricultural workers, temporary workers, and so on and so forth are all left out of the system of Tripartism. Do these points still apply, if they ever did?

How do you view notions put up by other criticizers (such as Guy Standing) that the ILO with its Core Labour Standars only focuses on political rights, neglecting social rights such as a living wages, while promoting mainly those rights (such as FoA, Child Labour, and Discrimination), which are that much harder for emerging countries to improve on, than it is for advanced economies?

Finally, do you think the ILO is putting up a viable alternative to the regimes promoted by the Troika? In light of this, how do you see the recent attempts to cooperate with the Troika? What is the risk of the ILO being coopted?

Let me answer both the first and second questions with an example. Minimum wages typically only apply to formal employment, which in many countries is only a small share of total employment. Nevertheless, we know that introducing them or raising them where they exist helps to improve working conditions of those who don't immediately benefit from them, simply by raising the standard of comparison.

Even those who are not directly represented by ILO's tripartite system do, in many ways, benefit from actions taken as a result of ILO policy recommendations.

To your last question, the ILO has been involved in discussions in Bulgaria, for instance, to ensure that our recommendations are reflected in the policy advice given in those countries. This is certainly more helpful for workers in these countries than standing outside and hoping things improve by themselves.

Hi Ekkehard --- It seems like every year, politicians find a new way of talking about inequality. But the rich keep getting richer and the poor keep getting poorer--and Davos comes and Davos goes--and things just keep getting worse for working families. Do you honestly think that's ever going to change?

There have been situations in the past where inequality has declined substantially. These are normally periods when there's full employment and labour markets are generating enough jobs for all those who are looking for them. Hence, our recommendations target chiefly increasing employment which will go a long way to reduce inequality. But yes, if policy leaders in Davos and elsewhere will follow our recommendations, then we could be reasonably optimistic that the inequality will decline.

Do you think that our economic system will still be viable even-though most jobs are being replaced by mechanical labor ? jobs are not being created, they are being liquidated by mechanization and policies can't really do much about that because most decisions in business and government are based around whether it makes a profit or not.

This is nothing new. In the past, the increases in productivity that came with mechanization helped to boost income and create jobs in new areas. Currently, the problem isn't so much that people in industry are losing their jobs--the process of job destruction has largely levelled off. The problem is that no new jobs are being created in other areas to replace them.

Hi Ekkehard, So I'm currently learning from Breen Creighton, regarding comparative international labour law. Indeed, I'm in his course right now. Maybe you can shed some light on something, and hopefully this is not beyond your scope of study: My question: Do you think Brian Langille's criticism that the foundations of the ILO are incompatible with modern working conditions is fair, especially in light of the ILO's tripartite system? If this question is too broad, a further question is: Do you think its feasible or practical to treat all ILO member countries equally regarding the administration of ILO conventions. To qualify this question, I'm more concerned with the variation amongst developed countries, as everyone knows the predictable organizational issues in the third world. Thanks ahead of time for any insight or referrals to academic writings you can provide!

ILO recommendations and conventions provide a very broad framework for what countries should and could do to achieve higher employment outcomes and social justice. What is happening at the country level is done in collaboration with social partners and governments, and will depend on historical conditions. ILO has existed for over 90 years now and has helped many countries in that time to implement labour and market legislation that improve peoples lives. But there's certainlz no one-size-fits-all approach that will work in every situation.

What do you think about the millions of dollars doled out to CEOs of firms that lay off employees or want to cut back their benefits--often without warning?

This is a major issue of concern. In particular, we're not seeing much investment in jobs despite high and rising profits and this makes us worry. All of that money going right back into the financial sector and that isn't helping the situation. In my opinion, it would help to increase public spending in ways that create work, rather than just pumping more cash into the banking sector.

Hi, thanks for doing this. what caps should be placed in terms of minimum and maximum wages if any? and if the current trend continues what do you see as the outcome?

Good question. There's no general minimum wage that you can fix. It's very country specific issue. It depends on a lot of different things (level of development etc) that vary from one place to the next. In general, it's always good to have a minimum wage--several countries don't, even some advanced economies like Germany where discussions are currently going on and hopefully, will give way to minimum wage legislation very soon. In terms of maximum wages (salary caps etc.) the most important thing is that whatever income is generated for the top ten percent is shared equitably. That can best be achieved through progressive income tax rather than wage caps.

thanks for answering. and how do you see things panning out if the status quo is maintained?

Minimum wages give families the cash they need to consume. The risk is that if they're not making enough money to consume, then growth will continue to disappoint. So simply by introducing minimum wages in places where it doesn't exist will help boost the economy and create more jobs.

Hi. Given the disappointing job data from the US, do you think it's too early to begin tapering Quantitative Easing?

It's definitely too early to remove existing stimulus to the economy. That includes quantitative easing (i.e. supportive monetary policy measures that have pumped cash into the markets) but it also requires more stimulus from fiscal measures. So public spending on infrastracture, for example, building roads and bridges.

Thanks. I probably agree. But when do you think will be the right time. where do we have to get to before we can stop pumping cash?

For the moment the employment situation is still pretty dire in the US, despite falling unemployment rates. Employment levels are still down partly because many people have become discouraged and have stopped looking for jobs. Until we start seeing employment climb again, I wouldn't recommend halting monetary stimulus.

What's the deal with Europe? If even Germany can't create jobs, what hope is there for countries like Spain and Italy?

This just shows that the general problem with Europe is growth. Germany has been growing very slowly and didn't manage to bring its unemployment down much at all. What's needed is a coordinated strategy for all countries to beef up growth in the Euro area.

Do you agree with Christine Lagarde's warning that deflation could threaten to derail economic recovery?

It definitely adds to the overall picture of uncertainty. Clearly, an extended period of deflation would be bad, because it would make it harder for governments—as well as families and business—to sustain their debts and ultimately weigh down on spending. That’s why a jobs-centred approach is so important.

Hi, thanks for doing this. Considering high unemployment, rising youth unemployment and longer unemployment duration, what role do you see for labour market intermediaries such as private employment agencies?

Another good question. Both private and public employment agencies have an important role to play when it comes to providing jobseekers with the resources they need to get back into the workforce. I think that countries need to invest more effort into these types of services in order to address unemployment. If you look at Australia for example, where private employment services have been very successful at keeping unemployment low, to slightly above 5%, you can get some idea what I'm talking about.

Hi Ekkehard, I hope you don't mind a question on fiscal policy?

I live in the UK where the government has been proclaiming that improved growth rates are a vindication for its austerity policy. In particular, it is billed as a victory over the IMF, which had been calling for Britain to slow the cuts and invest. Elsewhere, Paul Krugman has argued that economies that dip sharply are going to bounce back more sharply as well, but this isn't proof of austerian economics. He has a couple of graphs showing Britain's performance has been worse than countries like France's since the crisis began (presumably because we cut harder and faster), and that a few quarters of growth don't change anything.

What's your take on all this, if you have one?

I agree with Krugman on this. Fiscal austerity has made things worse instead of better in many European countries. Eventually, any country will find its way out of the crisis. But at what cost? Take Greece for example. The economy is expected to start growing again at the end of the year. But that comes after SIX YEARS of contraction. Can you really call that a success?

Hi Ekkehard- Recent College graduate here... If you were a young American and had to pay for University tuition, would you?

The job market seems to be a dark gloomy place right now for young professionals. Making me question the validity of my choice to go to a University when it provides little to no direct opportunities. I am nearly $40,000 in debt and I now have this morbid feeling that my college degree isn't quite worth what they promised in the beginning. (Maybe I am the only one who feels this way?)

Thanks for taking the time to answer our questions!

Hi Jash. That is indeed a lot of money to be spending on a college education. But you have to ask yourself, what are your chances of finding a job without that education? Just having a bachelors degree increases your chances of finding employment--much more rapidly than if you didn't have a degree.

Do you think that a race-to-the-bottom exists, or do you think countries can keep relatively high minimum wages and unemployment benefits and still be successful in economic terms?

Ok, one more. Many Scandinavian countries manage to combine high social standards and successful economies. So yes, I do think it's possible.

Hi Dr. Ernst and thanks for doing the AMA. What do you think will be the biggest impact of the retirement of the baby boomers and the resulting demographic shift in the workforce?

If countries start growing again, faster, young people will be the biggest winners. If growing demand faces slowing supply, wages should grow significantly. We'd like to start seeing that within the next 5 years or so.

Hi Ekkehard, thank you for doing this AMA! Hope it gains some traction on reddit within the next hour. 2 questions: Would you like to give us your opinion on the viability of workers demands for higher wages in those countries who are showing only a mild recovery from the crisis?

In view of declining union rates, what alternate routes do you see for increasing the share of workers in corporate profits? How do you view collective agreement provisions that connect productivity gains to wage gains?

p.s. Would you agree that the BIT cafeteria food leaves much to be desired? It's so overcooked!

First, I usually bring a sack lunch to the office so can't comment on the cafeteria food, though my colleagues seem to like it! To your point about union rates, regular increases in minimum wages are one way of raising wages of low-earning workers even in places where union participation is low. This has been carried out successfully in several European countries, like France, where union rates are very low (below 10%, less even than the USA!)

As for the viability of workers demands in countries still in crisis, wage demands have to be in line with productivity growth. So even if you're only seeing a mild recovery, you should still be seeing some wage growth. That's clearly problematic in Europe given that even in countries which are doing fairly well, like Germany, haven't seen any wage increases. That makes it harder for its neighbors to export their products to Germany, because low-earning workers can't afford them.

Thank you for your answers! So I guess you would view the new MW in Germany as a good development (perhaps also in light of all those mini-jobs for non-unionised workers?) to tie GDP growth to wage growth? Or isn't that link between GDP growth and increases in MW so clear? Can it also be viewed as a risk of the MW becoming a ceiling on wages?

It all depends on how minimum wages are being set up in Germany. The most immediate risk is that a lot of workers are being exempted from minimum wage legislation that is currently being debated, so we have to insist that everyone will benefit.

Thanks for sharing these important data on the global labor trends for 2014. The analysis by region it’s really helpful in order to extract valuable information. In this sense I was wondering if there is any information concerning gender gap in Latin America labor market.

There sure is. All the data is broken down by gender and you'll see that in Latin America, the unemployment rate for women is about 50% higher than it is for men.

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There are simply not enough new jobs for younger people. The economy isn't growing, we've had 18 months of recession in Europe that has only recently turned around. So what we need now is faster growth, if anything. Replacing existing job holders with younger people will just trade one problem with another. There's no fixed amount of jobs--it fluctuates with the economy.

There is a perceived trend in labor markets that low skill jobs are on the decline due to technological advance. Is this real and is it a real threat to past economic models on which nations governments and economies are based? It seems like the current wealth gap is a direct reflection of this and there does not seem to be an answer given the current economic models.

Actually, the jobs at highest risk are medium-skill level jobs where both high and low-skilled jobs are expanding. This has been going on for a long time now. What's really creating the huge wealth gap is the fact that profits are not being invested in the real economy, but being used as casino money in the financial markets.

Jeremy Rifkin's book The European Dream paints a bleak picture of the "American Dream" in the 21st century. He argues that the interconnected nature of the European model is better adapted to the challenges of a globalized economy, with safety nets and social values geared towards sustainability and communal development.

To what extent--if any--do you agree that the American belief in individualism is outdated? Moreover, in light of the recent global economic crisis, and the particular hardships faced by certain members of the EU (Ireland, Spain, Greece, etc.), do you think the social, political, and economic ties are strong enough in Europe to weather these storms in the long-run?

The great thing about globalisation is that every country has the potential to benefit from its individual characteristics. America will be strong in sectors where individualism is important, like technology startups, whereas Europe will excel in industries where you need a lot of experienced workers with strong protections. The automobile industry is one good example. Just look at German companies.

What is your take on guaranteed minimum income?

Many European countries have some form of this--it's called social assistance. It really doesn't provide you with a decent standard of living. As soon as you try to raise it to a higher standard, it becomes extremely expensive. You need high taxes to pay for it, which depresses aggregate demand and also employment.

Afternoon Mr. Ekkehard, thank you for doing an AMA.

My friends and I we're just discussing the huge impact that automated transportation could/will have on global employment. With several companies promising commercially available self-driving cars within the next several years it looks like a huge chunk of the workforce could be rapidly displaced. Entire industries that employ taxi drivers, truck drivers, public transit, and even airline pilots are likely to drastically reduce their employment levels.

I'm not sure where these displaced workers find jobs, or what the solution(s) is, but I would appreciate any of your expert insight into the matter.

Technological change will indeed continue to displace existing jobs. For instance, in Paris, an increasing number of subway trains run without a conductor. But these people do find employment, such as maintaining the kinds of systems needed to keep those trains running properly. So rather than having a medium-skilled job like train conductor, you create opportunity for highly-skilled work as a technician. The challenge is to give the right training to those who lose their jobs, so that they can apply for more highly-qualified positions.

Numerically, you might not be compensating for all of the low-skilled jobs in this manner. But by raising the incomes of the people who you can find new opportunities for, you're raising the demand for other goods and services, which leads to more jobs for everyone.

What's critical here is that the profits from these better technologies are shared equitably across the economy and not concentrated in the financial markets.

A few questions, none very technical.

Do you think that there's a significantly greater discontent with unrestrained capitalist growth than there has been in the past? If so, what effect if any do you think it could have in the coming years?

Would labor reforms in places like China be beneficial in the long run or would corporations find more loopholes?

Is it a realistic proposition to hold companies to the labor standards of the country where they're headquartered/where their top officials reside?

Thanks

So, let's start with the first question. We are seeing an increase in social unrest in countries that have been suffering from high unemployment. If nothing happens, or it doesn't happen quickly enough, that could escalate to dangerous levels.

As to your second question, it really depends on what kind of regulations are adopted. Implementing social security systems, such as universal health care, or unemployment benefits would be a great improvement for Chinese workers--and would help to sustain long-term growth.

Third, yes, absolutely.

Hi Ekkerhard, thanks for being here. What role would you like to see the nations play in the search for solutions for global inequality and unemployment?

Great question. First, all countries should make job creation their top priority. This can only happen if policy makers put together the conditions for faster growth. It will also require a lot of coordination between countries, so that businesses are less uncertain about the outlook in the future. Ultimately, we need public spending to increase across the board, at even rate for all countries.

Thoughts on negative income? As an everyday person it sounds like an easy way for people to not want to better themselves and rely on it as welfare. It also seems like something Americans couldn't graspe because of the whole having to pay taxes for making more then X amount and bring giving money without taxes for being poor

In principle, it's a great idea. But it depends on how generous the system is. If you take away a dollar for every dollar that you earn, then people get stuck at the lowest possible income. So you have to make it generous so that people can benefit from getting higher salaries and earning more.

Hi Ekkehard,

One question: How does one get to work for ILO? What are the qualifications needed?

Well, I'm an economist, and started working at the OECD first after I finished my Ph.D. While I was there, I did a lot of country-level research which focused on labour market issues. That's what I get interested in working for ILO and applied for a position on the website! So that should probably be your first port of call: ilo.org.

Checking in from South Africa here. We've got a situation where workers on the mines demand higher wages, and go on strike pretty regularly. The business sector claim that overly 'rigid' labour regulations lead to unemployment (by disincentivising businesses to employ), and that the workers are asking for too much. Recently there was a strike that ended in some pretty terrible bloodshed at Marikana. What's your take on the whole situation?

South Africa faces a number of problems, partly related to its historical situation. It is also true that many potential workers face a long commute to possible jobs due to urban segregation that makes it difficult for them to search for work. The government could certainly help here, first by removing certain types of regulations, and also by improving infrastracture and education, especially for those who didn't benefit from existing programmes.

How will the demands for higher minimum wages be met during a time when technology is increasing rapidly, and many jobs are being eliminated as a result?

Actually higher minimum wages will help spread the benefits of technological change more broadly. Some jobs will disappear due to technological advances, with or without minimum wages. The important thing is to help workers move to new opportunities that provide them with better conditions.

Which type of business do you think is better for workers: Privately-held business (small and medium enterprises) or publicly traded companies? And Why?

Thanks.

I don't really have a preference. Both create jobs and that's what matters.

What is stopping the american government from subsidizing education? It seems to be having a reverse brain drain effect wherein those who can afford it come here from around the world and then absorb many jobs that could potentially be taken up by Americans.

This is a typical problem of fiscal austerity. By trying to reduce public spending, you cut it from places where it's doing the most good. The only thing you can do really, as a voter, is to vote for representatives that continue supporting public spending for education.

Thank you for this AMA Ekkehard! As a proud UAW member I've been wondering how the TPP is going to impact labor overall, but more specifically how it will affect organized labor in industrial countries. Most articles I find seem to focus entirely on Internet rights and patent issues. Thanks for your consideration and all of your work.

Sorry, could you be a little more specific here? Not familiar with TPP.

Why do you feel that increasing wage floors will promote jobs? My basic understanding of economics was that a price floor for work will decrease supply and instead increase investment into mechanization.

If we want to increase overall demand, wouldn't direct cash payments to all citizens equitably work just as well without the job market distortion?

As to your first question, it only holds if you're in full employment. In many sectors, wages are being depressed by companies having the upper hand. So raising the minimum wage would actually help increase low incomes, thereby raising aggregate demand within the economy without destroying jobs or blocking people out of the job market.

As for your second question, direct cash payments would give companies an incentive to lower wages as much as possible and have the state pick up the slack. So essentially, you'd just be raising profits without benefiting the economy or workers.

Hi Ekkehard, In your opinion how can unemployment be tackled in Spain? Nothing whatsoever seems to be working.

What has been tried in Spain is mainly austerity policies. That's not going to work especially if the government just tries more of the same. Spain needs more growth and that can only happen if the government supports the economy through expansion of public spending and public employment. In certain regions, there are just no companies to hire anyone. So here the government needs to step in to satisfy its role as "employer of last resort".

Hi, sorry to be answering your question directed to Ekkehard, but the FT today had a long article on this, and I would like to share something with you on this, which is a quote from Denis Pennel, the MD at Eurociett, the European confederation of private employment services:

"When speaking of ‘temporary work’ it is important to draw a distinction between fixed-term contracts (direct temporary jobs) and agency work (secured via a private employment agency). Indeed, private employment agencies find jobs for workers and train them with the skills they need. They also support jobseekers in transitioning from unemployment to work and from temporary work to more long term positions. They effectively provide a stepping stone function and act as labour market intermediaries, matching workers with jobs. The problem in Spain is that labour flexibility is mostly developed via fixed-term contracts, leading to dead-end jobs while the agency work industry is so strictly regulated that it cannot offered the full range of services it provides in the other EU Member States.

As a consequence, Spain has one of the most segmented labour markets in Europe with half of the workforce enjoying highly-secure work contracts at the expense of the others who have no job security at all. If the Spanish government wants to stimulate job creation it needs to remove unjustified restrictions on the use of private employment agencies and drive better cooperation between public and private employment services in supporting people to enter the labour market."

The regulations in Spain haven't changed much since the crisis. Before the crisis, the unemployment rate was less than half what it is now. So removing any of the current regualtions is unlikely to help things in the short-term. What's missing is jobs to compensate for those loss in the construction industry that disappeared after the housing market bubble burst.

Do you think that the Fed's QE 1,2, and infinite are preventing economic growth? Why or why not?

On the contrary, they have helped to push up growth and reduce unemployment. Without these policies, unemployment would have been one to two percentage points higher in the US.