Coming out of last week’s Group of 20 leaders’ summit in Seoul, President Barack Obama and his counterparts around the globe should consider uniting around the most important common challenge facing all G-20 countries: jobs.
The leaders of the top 20 developed and developing nations came together initially in response to the economic crisis in 2008, which jolted countries into seeing the interconnectedness of their economies. The countries banded together to coordinate stimulus measures to revive the global economy. But now that the world is slowly starting to recover, each country is looking to solidify its own recuperation and rebuild its own economy.
The G-20 is but the sum of all its parts. And with all the parts pulling in opposite directions, it is unlikely that the leaders at the recent G-20 summit will be able to deliver on all that they have promised.
The key to cooperation, then, is for the G-20 leaders to deliver on job creation—the common challenge on each country’s domestic agenda that will also cultivate global demand and get growth back on track. And creating “just jobs”—jobs complete with labor rights, appropriate compensation, social protections such as health care and pensions, and opportunities for economic mobility—is the most direct way to affect the real people that power the global economy.
Leaders have agreed in their communiqué to “put jobs at the heart of the recovery, to provide social protection, decent work and ensure accelerated growth in low income countries.” But the communiqué is thin on laying out a plan of action beyond this statement. Yet the leaders propose to collectively address everything from balancing fiscal budgets in a “growth-friendly” way to moving toward market-determined exchange rate systems, reforming the International Monetary Fund’s governance, and promoting development.
It is important to debate whether these are good things to do—and most of them are. But another important question is whether the Group of 20 can do all of this and do it well? The answer is no. It needs to focus. It needs to focus on the creation of just jobs.
What the G-20 wants to do with these measures is “rebalance” the global economy. Rebalancing really means fostering global demand. One sign that global demand is out of whack are the excessive trade imbalances that countries such as China and Germany have, exporting more than they import.
But it is unlikely that these countries are going to change their policies in the near future. The rules of the European Union mandate that member states cap their fiscal deficits and debt levels. Countries such as Germany are therefore cutting public spending—the so-called “austerity measures,” which is likely to decrease consumption further. A rapid appreciation in countries where the currency is undervalued would at the same time increase economic volatility as falling exports lead to higher unemployment and the potential for political instability.
The leaders may have managed to issue a communiqué and release a group photo but real and tangible progress means focusing on the creation of just jobs. This isn’t easy, of course. Just ask the Democrats that lost the majority in the U.S. House of Representatives in the recent midterm elections.
Yet there are tangible steps that the G-20 can take. President Obama should initiate a worldwide job creation initiative. The initiative would enable countries to share best practices in job creation strategies and worker training. Developed countries should support the creation of labor institutions in developing countries through financial and technical assistance. And all countries should ensure that workers have appropriate protections such as health care, unemployment insurance, opportunities for retraining, and job search assistance in order to adjust to changes brought about by trade and economic integration.
This agenda is the lynchpin linking domestic agendas to the global one. Good job creation is the one area where countries can find common ground to forge a substantive partnership that will determine the future course of the global economy. Countries must lay the groundwork now so that the issue is at the forefront of the agenda when France assumes presidency of the G-20 in 2011.
Sabina Dewan is the Associate Director of International Economic Policy at American Progress.