Do globalization and automation increase job dislocation and income inequality? What are the policy options? Can lifelong learning help, and in particular, what is the role of Joint Vienna Institute? Celebrating its 25th Anniversary, JVI hosted a conference to discuss these very important issues.
Austria’s Vision for the JVI’s Role in the Region
Opening remarks by Hans Jörg Schelling, Minister of Finance, Republic of Austria
Mr. Schelling directed attention to current issues in Austria, Europe, and worldwide that, he said, can only be resolved through cooperation and through constant lifelong learning. This has intensified the need for institutions like the JVI to transfer experience and knowledge to countries in the region so that there is a common understanding of what is needed to overcome these problems successfully.
The Minister praised the JVI as a success story over the last 25 years and, recognizing how much work is still to be done, wished it an equally effective evolution in the future. Besides providing training, the JVI is important as a platform for cooperation and peer-to-peer learning. On behalf of the Austrian authorities, he thanked all the partners of the JVI and asserted that his Ministry is proud to be one of those partners.
Getting on Track with Trade
JVI 2017 Annual Lecture by Maurice Obstfeld, Economic Counselor and Chief Economist, International Monetary Fund (IMF)
Mr. Obstfeld noted that despite all the benefits from international commerce, we are living through a challenging period for trade.
Historically, international trade has grown faster than GDP and has brought major benefits to the countries participating. Research has found that trade increases productivity, lowers prices, gives consumers choices, and can bring better social inclusion.
However, the gains of trade are not always evenly distributed. This negatively affects the public perception of trade, leading to calls for protectionist measures. Thus, in advanced economies, the earnings of lower-income earners have been stagnating recently. In emerging markets, however, the benefits of economic growth seem to have been shared more widely. As the result, in most emerging markets the public perceives trade to be good for jobs and wages; in advanced economies the public has a more negative view.
To forestall this tendency and ensure support for trade, an elaborate policy response is needed. Stronger labor market policies, both active and passive, can promote inclusion and enhance social safety nets. Other policies are required to mitigate adjustment costs, in such areas as housing, credit, and health as well as education and lifelong learning. Macroeconomic stabilization is not to be overlooked: big recessions tend to reduce public support for trade. If successful, these policies may not only boost trade but ensure that it benefits all.
The Challenge We Face: Dislocation Attending Globalization and Technology
Session I of the conference
Harald Waiglein, Director General, Economic Policy and Financial Markets, Federal Ministry of Finance, Republic of Austria
Andrew Berg, Deputy Director, IMF Institute for Capacity Development (ICD)
Andreas Ittner, Vice Governor, Oesterreichische Nationalbank (OeNB)
Karl Pichelmann, Senior Adviser in DG ECFIN Directorate B, Investment, Growth and Structural Reform, European Commission
Robert Teh, Counsellor, Economic Research and Statistics Division, World Trade Organization
Kori Udovički, former Deputy Prime Minister and Minister of Public Administration and Local Self-Government, Serbia
Launching the first session. Mr. Waiglein reminded the audience that globalization and technological improvements have been essential for growth and development. The question is whether this state of affairs will continue. The panelists approached the issue from many different perspectives. Mr. Berg argued that technological progress is increasingly focused on intelligent machines. As workers become less central to the production process. that could radically change how the economy works. It could also have serious implications for income distribution. Ms. Udovički made the related point that the biggest policy challenge in small economies like Serbia—which want to catch up with advanced economies—is to find ways to create new and interesting jobs.
Other panelists discussed whether globalization has created losers. Mr. Teh pointed out that trade has negatively affected some workers even though the net benefit is positive. The right response is not to reestablish trade barriers but rather to adopt policies to help affected workers, for example through regional development programs. Mr. Pichelman discussed the risk of backlash against globalization in the European context. He argued that EU must strive toward greater economic integration while also ensuring a level playing field, citing as an example the need for universal minimum wage policies to complement the free movement of labor. Finally, Mr. Ittner made the case that there is actually little financial globalization: fragmentation of financial systems by country is the norm. In his opinion, lack of harmonization of the supervisory framework is largely responsible; he called for greater international coordination.
25 Years of Transition and the Role of the JVI—Reflections by Two Central Bankers
Dinner Speakers: Ewald Nowotny, Governor, OeNB, and Dimitar Bogov, Governor, National Bank of the Republic of Macedonia
The JVI is about international sharing of knowledge, began Mr. Nowotny. At first it was about how countries could successfully transition from a planned to a market economy. Then, for many countries the focus shifted to integration into the European Union. Today it is about maturing from transition and learning from each other. The JVI has not only adapted at each stage, it has excelled.
The JVI has raised the level of expertise and enabled policymakers in its target countries to participate in international discussions, added Mr. Bogov, himself a JVI alumnus. When the first IMF missions came to Macedonia, the policymakers could not understand them. The JVI helped bridge this gap. Succeeding in the transition was not only about acquiring the technical knowledge, but also about learning through dialog, networking, and cooperation.
Capacity Building as Lifelong Learning: The Joint Vienna Institute
Keynote Speech by Mitsuhiro Furusawa, Deputy Managing Director, IMF
As OeNB Governor Mr. Nowotny opened the second day of the conference, he emphasized that the secret of JVI's success is that it changes as the needs of those it serves change, developing into an institution for the true exchange of knowledge and cooperation—and this is the essence of lifelong learning.
Mr. Furusawa outlined how the IMF, JVI, and its many partners can help to ensure strong and sustainable national growth, not least through helping build institutional and policy-making capacity. Although global economic activity is picking up, many countries must still deal with serious policy challenges, such as the need for fiscal consolidation, reinforcement of monetary policy frameworks, addressing financial sector vulnerabilities, and putting in place structural reforms. More recently, the question of how to generate strong, sustainable, and inclusive growth has become a priority around the globe. In addition to policy advice and financial assistance, IMF capacity development activities are crucial if countries are to overcome these challenges. The JVI is the region’s premier venue for training policymakers. In addition to the excellent services it provides, an important advantage is that the JVI is flexible enough to respond to the changing needs of its member countries.
A Response to the Challenge: Lifelong Learning
Session II of the conference
Andrew Palmer, Business Affairs Editor, The Economist
Sharmini Coorey, Director, ICD
Aron Gereben, Senior Economist, Economics Department, European Investment Bank
Ralph de Haas, Director of Research, European Bank for Reconstruction and Development
Gill Hammond, Director, Centre for Central Banking Studies, Bank of England
Mark Keese, Head of Division for Skills and Employability in the Directorate for Employment, Labour and Social Affairs, Organisation for Economic Co-operation and Development
Fernando Restoy, Chairman, Financial Stability Institute, Bank for International Settlements
The conference concluded with a panel discussion on the importance of education and lifelong learning for coping with the challenges posed by technological change and globalization. While Mr. Keese recognized the JVI as a testament to the importance of lifelong learning, he considers it only one of the instruments needed to address the challenges. He emphasized the importance of facilitating labor mobility by using active labor market policies, providing the right type of training, and making it possible for low-skilled workers to access training early. Mr. de Haas separated two aspects of the one-shot education model: (1) the need to shift some education to later stages in life, and (2) the importance of early education being of high quality. He raised concerns about mismatches between training programs offered and employer needs and the need to improve the quality of both secondary and tertiary education.
Ms. Coorey underscored the importance of smart and adaptive public policies and of adapting social safety nets to the new realities. She also spoke about the increasing popularity of online training and the IMF’s expanding online curriculum. Citing a recent survey of companies, Mr. Gereben pointed out that many companies see the lack of skilled labor as a major barrier to investment, and that the skills mismatch was a problem for low-skilled as well as high-skilled employees. Mr. Restoy recommended that public intervention should be directed to educational systems: The role of education should be to enhance complementarity between labor and technology. One way to do this could be to promote skills like creativity, design, strategic thinking, and negotiation abilities that cannot be replaced by technology. Ms. Hammond highlighted that while a formal degree is an important way to build analytical capacity, people also often lack the interpersonal and other skills that are in demand and recommended that formal education be supplemented by job training in soft skills.
Ultimately, the consensus was that lifelong learning is essential in the modern world.
Maria Arakelyan, Senior Research Officer, Maksym Ivanyna, Senior Economist, Alexei Miksjuk, Junior Economist, Rafael Portillo, Senior Economist, JVI