First Annual Global Employers' Summit

“Predicting the Unpredictable – The Future of Work”

Keynote speech by Guy Ryder, Director-General of the International Labour Organization (ILO) on the occasion of the First Annual Global Employers' Summit in Bahrain.

Statement | Bahrain | 06 October 2015
Your Royal Highness Crown Prince Mohamed Ben Mubarak Al-Khalifa, Deputy Prime Minister of the Kingdom of Bahrain,

Chair of the BCCI, H.E. Khalid Abdulrahman Almoayed,

President and Secretary-General of the IOE,

Ministers, Excellencies,

I want to thank the International Organisation of Employers, our hosts the Bahrain Chamber of Commerce and Industry, and His Royal Highness Crown Prince Sheikh Salman Bin Hamad Al Khalifa, under whose patronage this first Global Employers’ Summit takes place for the honour of delivering this keynote address and for the chance to be once again in Bahrain.

You ask me to address “Predicting the Unpredictable”, which offers me plenty of scope – particularly to make mistakes – because (as the Danish physicist Niels Bohr liked to say) “prediction is very difficult – especially if it is about the future”, and I will indeed be focusing on the future of work.

But before that a few thoughts – three in fact – about the art – or the science – of prediction.

Firstly, we are all in the business of prediction. We all do it, albeit within widely varying time horizons and for different reasons: to optimize business outcomes or policy results, and to manage risk. So what we do today is heavily conditioned by what we expect to happen in the future. And the logical consequence here is that the act of prediction actually influences what does happen. Most obviously for this audience, your investment decisions are made on the basis of future expectations. In everyday usage business confidence – the mood of the markets, even those much desired “animal spirits” are reflections of predictive behaviour.

Secondly, and in defiance of both past experience and the inherent unknowability of the future we have a tendency to attach exaggeratedly high levels of confidence to our predictions and to imbue them with false precision. Economic forecasting is said to be like weather forecasting but less accurate. So let me join in by forecasting confidently that those meeting this week at the World Bank/IMF meeting in Lima will once again downgrade their global growth forecasts. A side product of all this is a tendency to cling to the orthodox thinking on which predictions are made even when discredited by events: it is difficult in human terms, and inconvenient in political terms to recognize why we get things wrong.

Thirdly, prediction is not an innocent exercise, and that impacts on its rigour and its objectivity. Whatever our intentions may be, the issues we select to make predictions about and the substance of our predictions are the result of a combination of what the evidence would lead us to believe will happen; what we would like to happen; and what is in our interests to happen. Think of an issue very much on our minds now – climate change. From the same available data, observers are able to come up with wildly diverging forecasts of its likely course and effects. These contradictions stem from the lost innocence of the prediction game.

Ladies and gentlemen,

Underpinning these three thoughts – and everything else I want to say to you this morning – is a point which I hope we can all come together around and keep constantly in mind. Namely, that the future is not already definitively or unalterably decided by what exists today even if our present provides us with major signposts to the road ahead. Our collective fate is not "written in the stars". It is subject to human intervention. It can be, if we decide to summon the necessary will and are able to generate enough common purpose (big "ifs" I know) very much what we want it to be. So there should be no paralysis-inducing fatalism, and a great deal more effort should be made to design a future that corresponds to a genuine conception of our common good. Nowhere is that more crucial than in the world of work.

Perhaps our efforts in this regard can be guided by two ideas – two words – which we are hearing very often at the moment: "sustainability" and "inclusiveness". I think we are all attached to the need for sustainability in the world of work. If I am hearing you right, ensuring the enabling environment for sustainable enterprises is the key concern for employers at the ILO. And since the genesis of the concept of sustainability in the environmental debates, beginning a quarter of a century ago, we have reached consensus that it has three pillars – economic and social as well as environmental. And these stand at the heart of the 2030 sustainable development agenda adopted by the UN General Assembly just over one week ago.

Prominent in that agenda too is the need for inclusiveness and, more specifically, inclusive growth.

If I can carry you with me in agreeing that we have every interest in acting together to bring about a future of work which can be sustained over time – environmentally, economically and socially – and which does not marginalize or leave people out or behind but includes all in the benefits that it generates, then let me turn to what seem to me some of the key specific challenges we will need to confront.

The 800 kg gorilla in this particular living room is the jobs challenge. With over 200 million out of work, and the figure continuing to rise, and with 40 million young people joining the labour market each year, realizing the UN sustainable development goal of full employment and decent work for all means the creation of 600 million jobs by 2030.

Are we serious about this? If you listen to our leaders, the answer is "Yes". The very first sentence of last November's G20 leaders' communiqué adopted in Brisbane says that "raising global growth to deliver better living standards and quality jobs for people across the world is our highest priority". No ambiguity there, and you may remember that this was backed by a commitment to take action to raise G20 growth by 2 per cent above the trend by 2018.

At present, performance is not living up to that commitment, and I wonder how many of us would today predict that it will be met.

Research carried out by the ILO, OECD, World Bank and the International Monetary Fund for the current Turkish G20 Presidency has given us some insight into what is going wrong. The notion of jobless growth is largely misplaced. In fact, post-crisis employment elasticity of growth remains generally at the levels it was at pre-2008. The problem is much more that we are not growing fast enough. The world is now set on a distinctly lower growth trajectory and the news currently coming out of the emerging economies, as well as Europe's continuing travails, offer little prospects for improvement.

Unanimity among policy-makers about the need to kick start global growth is not matched by consensus on how. And yet the stakes could not be higher. The sustainability of the global economy and including people in it depend on overcoming the employment policy failures since the crisis and rectifying those that led us into it. We all bring pieces of a credible response but to date they have not been assembled into a workable engine for growth and jobs. Obstinacy and partial vision – some of the occupational hazards of policy-making in the face of disappointed predictions – need to give way to more comprehensive approaches even at the expense of established orthodoxies. Supply side measures, while needed, will not be effective without action on chronic shortfalls in demand. For example, the employability that follows from skills and training has to go hand in hand with the employment opportunities that come only from investment, growth and confidence.

We are able to measure the dimension of this jobs challenge with confidence because demographics is the most exact of the disciplines of prediction. We know how many babies are born and where. We accept, with regret, that each day we get older and will eventually die. So it is that demographics present to the world of work two certain and unavoidable challenges.

The first is the economics of aging and rising dependency rates and what that means in particular for the future of social protection. The second is the very different relationship by region between supply and demand for labour. Demographic dynamism is outpacing decent job creation in much of the developing world at the same time as demographic stagnation is generating a shortfall of labour market participants in others, particularly in the industrialized world.

The policy complexities arising from these circumstances are undeniable, but one very clear conclusion can be drawn from them. It is that mobility of workers will be a key feature of the future of work. We already have over 230 million economic migrants and the trend continues upwards despite a mild immediate post-crisis dip. Moreover we are witness today, in conditions of indescribable human suffering, of unprecedented numbers of people displaced and on the move. Millions are leaving homes with their families for reasons which have no connection with work but which inevitably will have major labour market consequences. Refugees too will need to work for a living.

Faced with this drama, it is first of all our humanitarian and solidarity reflexes which are tested. And in the light of current debate in Europe it is proper to remember the proportionally much greater effort of solidarity made by the authorities and people of Lebanon, Jordan and Turkey than that now demanded of Europe.

But the longer term and permanent challenge will be to manage labour migration in an orderly way that respects fully the rights of the workers concerned and meets the legitimate needs of origin and destination countries. Any lucid assessment of the current situation must conclude: that all too frequently the recruitment and treatment of migrants falls well short of these criteria and that this needs to be corrected urgently – nowhere more so in this Gulf region, and that needs to be part of the conversation about doing business in the Gulf; and, more widely, policy failures are contributing to a situation in which the economic case for migration has never been stronger while political and social obstacles to it seem to be growing ever greater. This contradiction needs to be addressed urgently.

As the ILO has made the effort to raise its sights to look beyond the immediate policy horizon, I have become aware of the existence of a whole community of endeavour of which I had previously only been vaguely aware: futurology. It is entirely respectable and serious. There is even an international society for it. And from what I have learned it is focused firmly and above all on predicting the likely future effects of technological invention and innovation.

The volume of work being done on this subject, as well as the variety of conclusions arrived at, are fairly bewildering. This is truly about predicting the unpredictable and a strong disincentive to my delving very deeply into speculation about it on this occasion.

Instead, I will limit myself to one question which seems to me to lie at the heart of the debate and to demarcate the variety of predicted technology-induced utopias and dystopias on display for our consideration.

Stated simply, it turns around the issue of whether the present and coming technological transformation is comparable or not to those that drove past processes of revolutionary change. If you believe that it is, then history would seem to teach us that after a period of very considerable and, for many, painful turbulence the world of work will come out better from the next technological shake up. Higher productivity, liberation from dehumanizing drudgery, more jobs and above all a major step up in global prosperity.

But there is a compelling school of thought which holds that this time it is different. And different not just because the balance sheet of job wins and losses will be negative, with the Schumpeterian equation of creative destruction less positive than in the past when – unless you were unlucky – you came out ahead. Instead, the really distinctive thing this time around, it is said, is that the coming technologies have within them the capacity to disrupt entirely the way that production is organized and the relations between suppliers of goods and services and those that seek them.

We are already familiar with the precursors of what may not be generalized disruption of centuries-old institutions and relationships as they are now constituted: the enterprise for example and the contracted employer-employee relationship. They have spawned a new vocabulary: uber-isation, the gig economy, crowd work. Some futurologists are already conjuring up the prospect of a handful of virtual mediated global production platforms as the mainstays of the world economy within the space of our lifetimes. They will not look much like the enterprises we know. Others may feel that the future leaders of business are being formed not in business schools but in suburban garages, that they will reach the heights of their powers by different routes than those that preceded them, will get there several decades more quickly and bring with them ambitions and value sets quite different from what we have previously known.

If this, or something like it, does come about then we are in for a process of unprecedented transformation which will require a recasting of the institutions of the world of work which, while they have been subject to major modification have been with us for more than a century and which in their current form would be recognizable for example to those who founded the ILO.

All of this is difficult to grasp because it represents such radical discontinuity with everything which has gone before. But there is a further challenge of similar significance which is none the less important for being familiar to us. Indeed, severe and deepening inequality has been described as the defining problem of our times. It is widespread, it is longstanding and it is deeply rooted in the world of work.

For many, it has been the severe social injustices associated with inequality that have been a primary source of concern, but more recently it is the growing body of evidence that current levels of inequality are a serious impediment to economic growth as well as tendencies for political instability that has amplified the calls for remedial action. And they are echoed in the Post-2030 Sustainable Development Agenda. We may each have our own personal ideas and tolerance abut acceptable levels of inequality in our societies. But most would argue, I believe, that some sort of threshold has been crossed. Inequality in wealth and income has topped the World Economic Forum's survey on global risk perceptions in recent years. It has dramatically impacted social mobility so that the most accurate predictor of social status throughout life is now status at birth – and that reflects a great waste of economic potential as well as unfairness.

What is striking to date is that, in this case, diagnosis of the problem has yet to produce clear thinking about what to do about it. That may be explained by processes at work in the global economy which inherently tend to accentuate inequality – competition for rare skills, automation and devaluation of others, production mobility, the secular transfer of income share away from labour; and equally by the accompanying fear that corrective action – higher minimum wages, better social protection, greater fiscal redistribution, reinforced collective bargaining – would carry a penalty in terms of economic competitiveness. Better educational systems provide limited ground for consensus, but alone do not really answer the question.

Yet it is difficult to conceive of inequality continuing to grow for the next 30 years at the rate that it has for the last 30. If it does then the consequences truly would be impossible to predict except that they would be dramatic.

Ladies and gentlemen,

I trust that this survey of some of the keys to the unpredictable forward trajectory of the world of work will be explanation enough of why the ILO has decided to launch a major initiative on the future of work to mark its centenary. It begins now with four centenary conversations on work and society; on the jobs of tomorrow; on the future organization of work and production; and on the governance of work. It is not a merely academic or celebratory exercise, but one designed to contribute to answering the questions I have addressed this morning and many others too which time, not their significance, has prevented me talking about but which are on your agenda this week.

Let me close by inviting you to join in this initiative. It promises to be exciting and rewarding and let me leave you with a last personal thought.

It is that the context in which we are tackling these issues is one not only of serious economic difficulties but of renewed geo-political tensions and heightened conflict and extremism. One of the worst predictions of recent times was that the end of the cold war would mark "the end of history". I was recently rebuked by an eminent Ambassador in Geneva for suggesting that we were witnessing a reversion to the confrontational politics of the cold war era. No, he said it is much more complicated than that – and more dangerous.

The best way to navigate these times of turbulence is through reinforced international cooperation and that must include increased investment in the multilateral system of which the ILO is a part. It is a safe prediction that the stronger the multilateral system is the greater success we will have in meeting the urgent global challenges we face.

It is said to be the arrogance of every generation that it believes that it is living at a key moment in human history. And history records that from the beginning some have been imbued with optimism and exuberance, others with sentiments of deep and even apocalyptic foreboding. Few seem to have felt that not much was going on or at stake.

Our generation has been described by the UN Secretary General as the first with the capacity to free the last 10 per cent of humanity from extreme poverty and the last with the chance to save the planet from environmental destruction. Doing so will depend on the international community’s capacity to set aside secondary sectional interests and to join forces around the crucial common imperatives of sustainability and inclusion.

There are messages here for the ILO and its tripartite membership of employers, governments and workers. We have had some difficult debates in recent years on matters of considerable significance – international labour standards for example. There is nothing wrong with that – indeed, such debates can be necessary and beneficial. But we need to be sure that legitimate defence of divergent interests and ideas inherent to the world of work do not spill over into an abdication of the search for consensus nor withdrawal of the effort of compromise that tripartism needs if it is to succeed. There have been moments over the years at the ILO when confrontation and polarization have prevailed over that approach. When that happens I believe that at the ILO as at the workplace nobody gains very much and in some way we all lose.

The future of work that we would like to see will be the product of our common efforts to realize a common vision. Predicting whether that will actually come about depends not so much on any insights I can provide this morning – although I hope they may help – but very much on the will and skill of all of you and all of your partners at work.

So good luck this week. Thank you for your attention.