- How can #governments create sustainable jobs in a world of #digital disruption? @BCG's Vincent Chin offers up some suggestions.
- Policies that worked in the past have been rendered out of date by a more connected global population.
- One of the many benefits of technological advances is that SMEs can compete for global business on an equal footing with large companies.
The best and the brightest. That’s who John F. Kennedy – and successive leaders – sought to attract into government service.
That’s because we want the brightest, most enquiring minds at our decision-making tables. We want people who reflect the societies they represent. We want people who embrace rather than flee the trickiest of assignments. And, let’s face it, there’s no shortage of those.
Lost amid the hubbub of the latest Twitter storm or diplomatic fallout are issues that will dominate the economics and history books of future generations. Take jobs, for example. In most countries, unemployment is down and the numbers of people in work are up. That’s good, of course.
But looking more broadly, uneven job growth is being combined with disparities in economic growth in some parts of the world. For example, employment in India grew by only 1.4% per year between 2000 and 2016, even though the country’s GDP surged by a compound annual growth rate of 7.2%. And in some countries – such as the US and Germany – millions are searching for work, but at the same time, countless skilled positions remain stubbornly vacant.
Such trends have led to increasing questions over the perceived impact and benefits of globalisation. Some think that countries should go protectionist, whereas others have called for a return to traditional job creation strategies. Neither approach is sufficient. This is because policies that worked in the past have been rendered out of date by an ever more connected global population and the already significant impact of digital technologies – what we have called “the new globalisation”.
In this new era, global growth will be increasingly driven by services, personal consumption, and trade in digital goods. So, what are the implications for jobs in this new environment? How can governments best deploy new strategies that maximise employment opportunities? We have identified five key priorities.
Promote digitally enabled services
Some of the fastest-growing services are those enabled by digital technologies. Take the BRIC economies, for example. Their exports of digitally enabled services have increased by about 30% over the past decade to around US$100 billion. And in developed economies, exports have doubled to more than US$1 trillion.
Such trends are unlikely to change any time soon. On the contrary, we expect them to intensify in the coming years. Although turning this trend into jobs is easier said than done, it’s by no means mission impossible.
For example, governments should prioritise the development of “digital infrastructure stacks” – software-defined service platforms built on high-speed broadband networks – just as they did with physical infrastructure in previous eras. India is leading the way here. Although its physical infrastructure is often lacking, the country has leapfrogged other nations in the telecom sector, thanks to innovations that have resulted in the lowest worldwide prices for mobile connectivity.
Set sights on skills
I’m lucky that I get to visit the UK on a reasonably regular basis, but I’ve never had the opportunity to visit the city of Derby, about two hours from London. Maybe I should. It’s home to Rolls-Royce’s world-leading analytics facility, where staff continually monitor terabytes of real-time data – transmitted during flight – from each of the company’s 4,500 engines in service on civilian aircraft. To minimise disruption, the team use the data to proactively plan the maintenance and repairs that are performed, often remotely, by engineers around the world.
This global centre of expertise is exactly the type of thing that governments should be seeking to help facilitate and develop. They can do so by identifying the shifting nature of skill needs, and boosting investments in higher education and training for highly-skilled professionals in new technologies.
The point about training is critical – and it’s not just for young people either. Advanced manufacturing technologies, e-commerce, and AI will mean that experienced and older workers will require access to retraining programmes geared to their needs. Continuous learning will need to be a national priority, and government will need to provide licensing and certification services to authenticate skills and ensure they are transferable from one employer to another.
Help small businesses go global
One of the many benefits of technological advances is that they are reducing the costs of cross-border collaboration – which means that small businesses are able to compete for global business on an equal footing with large companies. Similarly, the growth of global platforms that bring together vast communities of buyers and sellers – along with the aggregation of distribution and logistics services – has made entering new markets and servicing remote customers much more cost-effective.
This is all good – SMEs can now compete with large companies on cost – but there is always more to do. For example, governments can help them on their way by easing regulatory requirements. They can also increase access to credit for small businesses and offer them financial incentives for creating jobs in the services and solutions sectors. These are real, quantifiable actions, which are likely to have a significant impact.
Don’t forget the self-employed
One of the main disruptions of recent years has been the rise of the sharing and gig economies – of which Uber and Deliveroo are two of the leading proponents. Although there has been some concern that they pay low wages and offer only part-time employment, both appear to be taking even firmer root in society – it’s clear they’re here to stay.
Policymakers still have a role to play here, and – again – tackling regulations can be front and centre in their approach. For example, they could make it easier for people such as drivers, construction workers and designers to obtain the licensing and accreditation they need to work on their own account.
Stimulate domestic consumption
This sounds like a familiar priority for government, and in many instances, it is – growth that does not rely on exports or government spending has long been the target of administrations worldwide, particularly in the years since the global financial crisis.
This is no less important today and, fortuitously, there are some clear steps that policymakers can take. For example, governments should actively explore providing their citizens with universal basic services – including internet access and mobile digital connectivity – as private goods. This is because removing barriers to social and financial inclusion is vital in the drive towards broad-based, inclusive growth and sustainable jobs.
I know from my own interactions with government leaders – both in my hometown of Singapore and worldwide – that they do not lack for priorities. Managing the machine on a daily basis can be all-consuming, let alone leaving time and space to think about what lies over the horizon. But nonetheless, it is incumbent on today’s generation of policymakers to prepare economies and workforces for what will matter tomorrow, not just today.
Sure, there are challenges ahead, but there are opportunities too. The question is – which governments will seize them?
READ MORE: Why countries need new strategies for creating jobs on BCG.com
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