SPOTLIGHT

Jobs and Growth

Creating jobs and fostering inclusive growth have become increasingly important themes in the work of the IMF over the past five years. Countries are facing these challenges at a time of technological change, globalization, and shifting demographic trends—as well as macroeconomic challenges growing out of the global financial crisis of 2008–09, which caused millions of people to lose their jobs and unemployment to rise sharply.

Four Things You Need to Know about Women, Work, and the Economy:

The work on inequality was spurred by research conducted by the IMF Research and Fiscal Affairs Departments on the topic, including papers on “Inequality and Unsustainable Growth: Two Sides of the Same Coin?,” “Redistribution, Inequality, and Growth,” and “Income Inequality and Fiscal Policy.” In February 2014, the Board discussed a paper prepared by staff on “Fiscal Policy and Income Inequality.” The paper focused on fiscal policy—the primary tool that governments can use to affect income distribution. It surveyed available tax and expenditure options and how they can be designed to minimize unfavorable effects on work and income growth. The staff will continue to operationalize the IMF’s recent analytical work on inequality, including in the context of annual consultations.

A staff paper prepared for Board discussion in 2013 on “Jobs and Growth: Analytical and Operational Considerations for the IMF” discussed the role of the IMF in helping countries devise strategies to meet the job creation and inclusive growth. It concluded that there was scope to improve the analysis of trends in this area and to strengthen policy advice.

Integrating jobs and growth into IMF operations

Since publication of the 2013 Board paper, the process of integrating a focus on jobs and economic growth into operations has begun, and research has continued to expand, with guidance from an interdepartmental advisory group. Area departments have identified pilots to include the work on jobs and growth in Article IV consultations. As this Article IV work proceeds, it becomes part of the Executive Board’s assessment of the respective countries. Several country consultations are scheduled to include it in FY2016.

The 2014 Triennial Surveillance Review (TSR) — recommended further strengthening work on jobs and growth. Among its recommendations, the TSR suggested increasing attention to the impact of fiscal policy and financial sector developments on growth, expanding advice on labor market policies to support member countries’ job creation objectives, and taking into account more fully country authorities’ goals and constraints to better tailor advice to individual country circumstances. The TSR survey of Article IV consultations supported the finding that jobs and growth increasingly have entered into this area of operations. Contributing factors were the strengthening of surveillance tools, improvements in labor statistics, and training.

Women and work

A crucial element of jobs and inclusive growth is the role of women in the workplace. Women make up more than half the world’s population, but their contributions to measured economic activity, growth, and well-being fall far short of potential. This has serious consequences in terms of losses to an individual country’s GDP.

Despite significant progress in recent decades, labor markets across the world remain divided along gender lines, and progress toward gender equality seems to have stalled. In a speech in September 2014 on “The Economic Power of Women’s Empowerment,” IMF Managing Director Christine Lagarde described the barriers working women face worldwide: “When women do participate, they tend to be stuck in low-paying, low-status jobs. Globally, women earn only three-quarters as much as men—this is true even with the same level of education and in the same occupation.”

Building upon the 2012 IMF Working Paper “Can Women Save Japan?,” analysis on women and work has expanded rapidly. Area departments have put in place pilot assessments of the issues related to working women in the context of Article IV consultations across a range of countries, with the goal of building expertise, facilitating collaboration with other institutions, and sharing knowledge.

As the assessments have been completed, they have become part of the Executive Board discussions of the pilot countries. A cross-country study of women’s economic participation in European countries will inform Article IV consultations of some of those countries.

A Staff Discussion Note entitled “Fair Play: More Equal Laws Boost Female Labor Force Participation,” released in February 2015, examined the effect of gender-based legal restrictions and other policies, and of demographic characteristics on labor market outcomes.

Research and surveillance

In the area of research, the wide range of issues where analytical work is being conducted includes:

Growth: quantifying gains from reforms to the structure of the economy, the role of access to finance in supporting growth, and the importance of economic diversification.

Jobs: youth unemployment in Europe, the role of wage moderation in the euro area, the impact of labor market reforms, and the informal sector in emerging and developing economies.

Inclusion and income distribution: enhancing the participation of women in the labor force, and evaluating the impact on income distribution of fiscal policies, labor market institutions, and capital account liberalization.

In the area of regional surveillance, the African Department’s April 2014 Regional Economic Outlook contained a chapter that looked at how economic policy efforts to promote job creation can help make growth more inclusive in sub-Saharan Africa. Those findings were presented at the Mozambique conference in May 2014, which had a major focus on employment and inclusive growth.

The May 2014 conference in Amman, Jordan, also addressed the issues of jobs and growth in the Middle East and Central Asia.