Theory & Strategies for Full Employment. Proceedings of the World Academy of Art & Science Conference on the Global Employment Challenge

4.3 Technological Innovation

For the past two centuries, technology has been a principal engine for economic growth and job creation. Most of the jobs in today’s economy are based on technologies that did not exist 50 years ago. A vast majority of them, such as those in information technology, communications, financial services, medicine, aerospace, and consumer electronics are based largely on technology developed in the past 10 to 20 years. R&D is essential for development of new technologies, but technology dissemination and adaptation are equally important for converting new technologies into real jobs. Countless technologies already exist that are either unknown or remain unexploited due to lack of public awareness, proven potential or entrepreneurial initiative. In a report for the Club of Rome, Gunter Pauli has documented 100 proven, ecologically sustainable technologies that have the potential for creating 100 million new jobs within the next 10 years.10 The GEC identified the need to identify a broad range of commercially viable existing technologies that can be implemented under different conditions in different parts of the world.

4.4 Filling Skill Shortages

A shortage of skills is one of the principal reasons for high levels of unemployment. Numerous studies cited confirm that large scale unemployment co-exists alongside high levels of unfilled jobs in both industrialized and developing countries.11 An article in Wall Street Journal in 2007 revealed that there were 600,000 unfilled jobs in Germany, of which 40,000 were jobs for engineers and other skilled people. Another survey revealed that 80% of small firms in Germany find it very difficult to mobilize the skilled labor force that they require. Small manufacturers and building contractors in the USA are among those that report severe difficulty in recruiting skilled workers. A World Bank study of corporations in developing countries found that 50% of them suffered from a shortage of skilled workers. Even countries like India with enormous manpower and training infrastructure suffer from this problem. A mere 5% of India’s workforce has received formal vocational training. Skills shortages prevail in a wide range of basic occupational categories such as plumbers, electricians, masons, carpenters, etc. Since in today’s world economy jobs move to where skills are available, skill shortages in one place can often be exploited to create employment opportunities. The GEC highlighted the need to identify best practices and effective strategies for identifying and meeting skill shortages.

4.5 Organizational Innovation

The internet is not merely a technological innovation. It is also a social innovation, which has created the first truly global social system. Social innovations are almost as common as technological ones and equally productive of new employment opportunities. In the mid 1980s, the Government of India introduced an innovative system to increase access to the telephone system at a time when public investment could meet only 33% of demand. A single line of legislation — “If you operate a telephone booth you will earn 20 percent commission”— transformed long-distance telephony in India. Within a few years this unique program created about 600,000 self-employment opportunities and more than a million jobs. In the process, it helped extend telephone access to more than 98% of India’s population. A comparative survey of social organizations and systems in different countries can identify hundreds or thousands of social innovations that can spur new job creation.
Organization provides the structural foundation for all economic activity. Markets, money, and banking are organizational innovations that have revolutionized economy and society over the past few centuries. A study conducted by The Mother’s Service Society for the International Commission on Peace & Food in 1991 documented the potential for creating 100 million new employment opportunities in India within 10 years by adoption of modern agricultural technology combined with innovative production and marketing organizations.12 The strategy was formally adopted by the Government of India in 1992. We need to examine a range of organizational innovations that can be widely applied to create new employment and self-employment opportunities.

4.6 Entrepreneurship

In spite of the publicity given to the downsizing of many large corporations, the fact is that throughout the world, small and medium size businesses are the major source of new jobs. During the recent recession, total employment among Canada’s small firms remained constant, whereas employment among large corporations declined 10%. In India, only about 5% of employment is in the private corporate sector. In the USA, small firms are responsible for 50% of all jobs and 64% of all new jobs created during the past 15 years, including 40% of high tech workers. That is why entrepreneurial and small business development programs and business incubators are so important.
While many countries encourage new business formation, far less attention is given to supporting small businesses after they have been established. Small businesses not only create the most new jobs, but they also destroy the most due to very high failure rates. The US economy creates about 600,000 new small firms each year, but it also loses almost an equal number due to closure and bankruptcy. Only 70% of new firms survive for two years or more and only 51% survive for five years. Many of these firms are started by individuals with little or no managerial training or experience. Unlike countries such as Netherlands, which require entrepreneurs to undergo formal training before starting a business, many small business owners in USA cannot even read a profit and loss statement. Similar conditions exist in developing countries such as India where new business failure rates are extremely high due to lack of entrepreneurial training. Organized training and counseling for such businessmen can considerably reduce business failures and losses. A set of global best practices is needed for the development of new businesses and prevention of business failures.

4.7 Comprehensive Strategies

These are just a few examples of areas in which untapped social potentials can become the source of new employment and self-employment opportunities on a very large scale. Any of these seven strategies listed above may be sufficient to dramatically reduce unemployment without reliance on the huge levels of government spending required by traditional macro-economic stimulus packages. Yet individual countries may find a combination of strategies the fastest, most cost effective way to achieve full employment. Therefore, the GEC concluded that there is need for the formulation of a comprehensive theory and set of best practices that can be implemented individually or in combination by countries at different levels of development.
It is time that we stopped thinking of economic stimulus programs, public investment and tax cuts as the principal means for creating new jobs. Society is a complex and vastly underutilized resource with a virtually unlimited appetite for new and better products and services. In an age when time, money, energy and other natural resources are considered so precious, it is a crime to neglect the most precious and underutilized of all our resources — human beings.

10 Pauli, Gunter, “The Blue Economy”, the World Academy of Art & Science e-conference on Global Employment Challenge, November 14, 2009, and The Blue Economy: 10 years, 100 innovations, 100 million jobs, webcast presentation to the World Academy of Art & Science, November 14, 2009,
11 Natarajan, Ashok, “Job shortages or skill shortages?”, the World Academy of Art & Science e-conference on Global Employment Challenge, November 3, 2009,
12 International Commission on Peace & Food, “Creating 100 Million Jobs in India”, Study conducted by The Mother’s Service Society in 1991, published in Uncommon Opportunities: Agenda for Peace & Equitable Development, Zed Books, London, 1994, p. 122.

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