00:00Eckhart Ernst is Chief Macroeconomist at the International Labour Organization.
00:05Lovely to have you on the program.
00:06Well, look, McKinsey, to Volvo, to Walmart, to where you are at the ILO.
00:11What is driving this global wave of job losses?
00:16Well, first of all, I think your trader already mentioned it.
00:20The uncertainty that is surrounding the global trade war that's currently going on
00:25is certainly not helping employment growth.
00:28One has to say, however, that the global employment growth has slowed down over the last few years
00:34simply because what we saw right after the pandemic, it was not sustainable in any case.
00:40So we see a reduction in global employment growth gradually happening over the last few years.
00:45And then on top of it, the trade disruptions that we're currently seeing.
00:49But I would say that for the moment, this is actually just the beginning.
00:53I think we should be cautious that this is probably not the end of what we're seeing so far.
00:57Because we have had that new court ruling against many of Trump's tariffs that we were talking about early in the program.
01:03And I wonder if you think that the economic damage has already been done or were companies, as you say,
01:09streamlining despite not because of the added tariffs pressures?
01:14Well, the biggest danger is really the uncertainty right now.
01:19So even if there was this court ruling today, that might be reversed again in a few weeks or a few months.
01:25And so we don't really know what's going to happen.
01:27What is sticking in the sense?
01:29And companies really hate that.
01:30If they are uncertain, they may have open vacancies, but they don't fill them.
01:35Because unless they really have a certainty about the demand, they will not fill the vacancies.
01:40So even, as I said, even if the court ruling happened yesterday or today, the uncertainty is there.
01:46And that is really what's most damaging.
01:48Okay.
01:49So it's a fragmented economic environment.
01:52We're still recovering from the pandemic.
01:54There's tariff tensions.
01:56What about the fast changing pace of new technology?
01:58Is AI a big part of this story?
02:02Only partly and in only in very few segments or sectors of the economy.
02:08So obviously software engineers right now are very much affected, but that has something to do with the fact that there was an overhiring, if you want, right after the pandemic in this segment.
02:19And so a lot of IT companies are currently scaling down and coming back to a more reasonable type of hiring dynamics in that sector.
02:29There are other occupations, such as in the creative industries, where you start feeling some of the effects.
02:34You saw last year, you saw the revolt of some of the writers in Hollywood, and I think you start feeling the effect of AI.
02:43But broadly, I would say for most workers, the AI effect is not there yet.
02:47So where might we see some potential jobs growth?
02:51And you're saying that IT is scaling down.
02:53You've mentioned some of the creative industries.
02:55Those are the industries under pressure.
02:57Where are the jobs going to be of the future?
03:00Well, sorry, green industries are certainly an area where we will see a lot of demand.
03:06And you saw, I mean, you mentioned Germany earlier.
03:08You saw the new government coming in with a massive amount of investment in infrastructure and especially in the green transition.
03:15So there are certainly new jobs to be had.
03:17Typically, green industries are the ones that are quite labor intensive and they require a significant amount of investment.
03:24You see also in electric vehicles.
03:26I mean, China is a forerunner, obviously, in this area, in this era, in electric vehicles.
03:31There will be a massive creation of new jobs, whether in China or in downstream in some of the supply and real estate industries in those countries where they are delivering their cars to.
03:44So, I mean, these are for me the key sectors of new growth.
03:49I would caution against the idea that manufacturing is coming back.
03:54I think that the idea in the U.S. that we see a rebound in manufacturing employment is probably overstated.
03:59There might be some more jobs, but certainly not enough to fill in all the additional people looking for jobs.
04:06I'm conscious of what you said earlier about this just being the beginning.
04:11And I know you haven't got a crystal ball.
04:14But looking to the future, what would you say are the key risks to global employment?
04:20And what are maybe those beacons of hope?
04:22Well, the slowdown in global growth is really what is devastating for employment growth.
04:31I mean, we have just released yesterday new figures that our forecast for global employment growth is reduced for this year alone by 7 million people.
04:42That doesn't sound a lot if you compare this with the global labor force.
04:45But if that continues to add up, a lot of these people who can't find a job, they will either be unemployed or will have to engage in some survival activities.
04:55I think the beacon of hope is that so far, surprisingly, the jobs market has been quite resilient.
05:02We don't see that massive increase in unemployment, especially in Europe, where unemployment used to be quite high in the past.
05:10Unemployment rates have remained relatively sticky.
05:13So that, in a sense, gives us some hope that if people don't, if you just see a reduction in the demand for labor, but it doesn't transpire in massive job losses, you will continue seeing people spending money and consuming goods.
05:29So, in that sense, that's a bit of a beacon of hope.
05:31But, I mean, at this stage, I would say I would caution towards the pessimistic side.
05:36Eckhard Ernst, Chief Macroeconomist at the International Labor Organization.
