SUSTAINABLE GROWTH AND EMPLOYMENTOschoor, page 1 - 2 - 3 - 4
Section headings:
SUSTAINABLE GROWTH AND EMPLOYMENT
Oschoor, page 1 - 2 - 3 - 4
Section headings:
6. Conclusions and Recommendations Traditionally, economic growth is presented as a mechanism that will accelerate the possibilities of meeting human material needs and expand the range of options for human participation. It thus at first sight seems to generate and increase human welfare. Factual analysis of the growth-welfare relationship casts serious doubts on this traditional view. It cannot be ruled out that growth may continue without having any net positive effect on welfare The first Visser 't Hooft Memorial Consultation on Sustainable Growth (1993) has concluded that the fundamental tendencies of economic growth and of the associated destruction of the earth's carrying capacity for economic activity, now must "...limit the previous vision that societies can solve ... basic economic problems, such as poverty and unemployment, by means of economic growth and expansion". The most recent report to the Club of Rome (1995) suggests that for the last 20 years the link between production growth and the creation of welfare has become progressively weaker and now seems to get lost: production growth now is associated with declining welfare, in many developed countries. The Commission of the European Communities hopes for a "new model of sustainable development" to resolve its concerns over environmental quality as well as employment, towards the next century. Must we now turn around conventional wisdom and say: less or negative growth means more welfare? Growth may mean more consumption and more environmental deterioration, without many more jobs; but less growth would reduce consumption and most certainly employment. What this means ultimately is, that no categorical statements one way or the other can be made about the growth-environment relationship (at least for a period of some decades) and that even the growth-employment relationship is complex. The second Visser 't Hooft Memorial Consultation, to which this chapter attempts to contribute, is addressed to the problems of "work in a sustainable society"; and this chapter deals with two questions:
The idea that economic growth will by itself generate enough
work in a sustainable society, can be challenged on several grounds One has to do with the
inherent dynamics of the growth-innovation impulse; the other is related to the
environmental repercussions of economic growth. Growth will generate more jobs only as long as the rate of growth exceeds that of the change in labour productivity. Growth, however, may stimulate innovation, and this may easily take on labour "saving" properties, thus forming a negative feedback on employment. The fear of unemployment generally induces a cry for more growth, even to the extent that we are called upon to collectively abstain from freedoms to not consume or grow. Moreover, as labour productivity shows up in an asymmetric distribution over sectors of production, and as it tends to be the engine of wage dynamics, it tends to suppress transductive activities (that is, activities that regenerate and enhance social welfare, human and natural capital and environmental quality). Policies to address this threatening unemployment and social disintegration include wage reductions or at least cuts in labour costs, and supply side policies such as shortening the working day/week. Such policies are less easily implemented the more the economic process is dominated by international markets. Uncontrolled economic growth implies the risk of bringing the economic process (or its inherent metabolism) beyond the boundaries of the ecospace and this would lead to a destruction of environmental- capital with potentially detrimental effects on future welfare The environmental pressure per product or unit of income drops with economic growth and this process of dematerialisation may induce a delinking of the economic process and its inherent environmental pressure. Dematerialisation may be actively stimulated by environmental policy. In fact, it could be .regarded as the result of another kind of technical and economic innovation: geared towards enhancing environmental productivity If the rate of dematerialisation exceeds the rate of economic growth, then overall environmental pressure goes down and the economy becomes less unsustainable. In the long rim this process may come to a stop and even be succeeded by .a stage of "relinking" of economic growth and environmental deterioration. Empirical evidence does not support the view that environmental policies adversely affect macro employment possibilities either in the past or in the decades ahead of us. There are indeed possibilities for creating new patterns of production and consumption that are environmentally more benign and use more labour. Some of, these possibilities are already visible in environmentally progressive countries such 'as the Netherlands and Germany. Two policies to enhance both the environmental situation and employment have been discussed: (i) a proposal to create funds for environmental (and other transductive) activities by taxing away productivity gains, and (ii) proposals to shift the tax base, in order to make labour cheaper and environmental deterioration costly. On the former proposal we have no empirical data or scenario studies to explore its potentials. A brief qualitative analysis reveals that these potentials may be restricted technically as well as politically, but they may have a role to play, especially if specific designs can be elaborated that would enable the taxing away of net revenues from labour productivity increases in those sectors where these occur, without affecting the innovative incentives in those sectors. The second policy proposal is that of ecotaxes (such as,
carbon/energy taxes). The revenues of these would be used to reduce taxes and charges on
labour. From a treasury perspective, this operation would be revenue neutral. This reform
is expected to pay a 'double dividend' of enhanced environmental quality (due to the
incentive impact of such charges and taxes) and increased employment (as a consequence of
reduced costs of labour). Reviewing a range of studies on this policy makes clear that
shifting the tax base from labour to environment will have favourable impacts on the level
of employment (if there is unemployment), but the employment dividend will be smaller as
the environmental dividend is larger. There appears to be a trade off between the
employment and the environmental dividend Moreover, the fewer countries are involved in
changing their fiscal regimes, the more relocation effects will lead to net losses in
economic and employment benefits Anyhow, quantitatively, the impacts on employment should
not be expected to be very large and the short term effects may be wore substantial than
the long ran ones. Finally, as long as there are net employment and net environmental
benefits, a shift of the tax base from labour to environmental goods will raise welfare. I
tend to think that on balance the benefits of such a shift will outweigh the costs of
undertaking it. But this policy too, will not resolve the issues of unemployment and
unsustainability. If, from a sustainability point of view, societies have to curb their level of industrial metabolism, then in some sectors growth may be blocked or at least restrained by the possibilities for enhancing the environmental productivity or the rate of dematerialisation. This tends to affect sectors with a relatively low labour intensity more than those with higher labour intensities. The latter sectors or branches are also those that are affected by Baumol's "law" of dwindling low-productivity sectors. Net outflows of labour may result of these dynamics. Policies to address these have been reviewed. It is likely that some combination of positive employment generating programmes (geared towards boosting transductive activities) and reducing per capita working hours will be necessary. Both will require acceptance of less growth in relative net wages. Labour costs could be reduced through a changed tax base and this would generate some extra employment (and environmental quality) only if there are no offsetting wage claims. Can employment be increased without increasing environmental degradation? Yes it can, by shifting the pattern of productive activities to cleaner and leaner ones, by using dematerialised processes, and by adding eco-industrial activities; we can further these things by employing the strategies and policies discussed above. Can degradation of the environment be arrested without decreasing employment? Yes it can, if we shift from emphasising labour productivity to environmental productivity, at the macro level and at the sectoral level. Societies may have to resort to a combination of technological innovation and changed patterns of consumption and production. How? Again the policies discussed here would at least help: a change in the direction of innovation, changing the institutional conditions governing price formation, changing the tax base. Two final observations can be made. The first is, that there appears to be no single strategy to realise enough work in a sustainable society: we most likely will have to combine approaches such as the funding of transductive, environmental programmes with more fundamental institutional reforms such as changing the tax base and non-exclusive approaches to sharing a limited total volume of labour required. The second one is, that work in a sustainable world implies a readiness to trade off environmental concerns with remuneration for labour, and with concerns aver participation If we are all to work, we all may have to work less, and/or wage rates must be reconsidered We are back with the formulation used by the World Council of Churches some 20 years ago: what we need to work towards is a just, participatory and sustainable society 7. References
|
