Over the past few days, we've witnessed scenes of youths protesting around the western world, from New York to Madrid and Athens. Young people distrustful of government institutions and their capability of closing the growing gap between the 'have' and 'have-nots,' increasingly visible in the continuous downward slide of the industrialized world. They are asking for a rejuvenation and remoralization of society in order to bring back a social cohesion among all people.
Growth-enhancing structural reforms and job-promoting policies are central to bringing us away from a serious recession. Combining young people and state commercial assets, two under-utilized resources would be one way of creating big economic benefits.
The same economic forces that are bringing hundreds of millions out of poverty in the developing world are also bringing down the barriers and privileges for companies and employees in the so called rich world. A disproportionate share of those out of work in developed economies is young. In some countries such as Spain, half a generation of those under 25 are unemployed.
At fault is an out-dated employment legislation including a two-tier system, with permanent workers that can't be fired and the easy-to-fire temp-workers. Such legislation is misplaced in today's interdependent and interconnected world, if not based on merit.
The 'security' offered by a permanent positions is an efficient barrier against change towards a more efficient and professional business environment. It prevents young people from getting a chance to prove their worth in the professional world and state companies from transforming themselves into competitive and valuable entities.
But how do we make pathway for young to be part of and help create this brave new world? A world where merit and not age, color of your skin or connections give you the opportunity to work?
The main part in creating the necessary changes is clearly on the policy level, reforming rigid employment legislation. But governments can also act at the corporate level. With state commercial assets representing a large part of the corporate sector, on average at least 20 percent of GDP in value terms, governments have an opportunity to use these assets to lead the development in the right direction.
As former policy instruments, these assets have been political building blocks shielded from external pressure. This makes them an almost unlimited source of economic upside, if managed more commercially.
As an example, following Sweden's financial crisis in the 90's, the government restructured its portfolio of commercial assets and initiated a human revolution at the leadership as well as employment level under the slogan "Valuable companies create valuable jobs." Creating not only competitive companies and financial benefits to the government but also economic growth to the economy. Even the unions supported the changes. They recognized the value of sustainable companies and a sustainable membership based on merit rather than by decree.
Many former monopolies such as railways, post, telecom and electricity became highly competitive services, supported by everything from online procurement to internet support and sales.
Huge rationalizations were done to keep up with technological developments, reducing employments costs rapidly, while still retaining a business with the potential for further development within new areas.
The ambition was to help those who have been retrenched to find a new job using a competence renewal program. This offered the retrenched employee the opportunity during his or her notice period, possibly longer, to focus full time on retraining and seeking a new job, while at the same time having access to professional support, office premises and related tools.
The result was that more than 90 percent of the retrenched found new means of support during the duration of the program. This opened up opportunities for younger people with the relevant background and enabled the transformation of the companies to adapt to a more technology intensive and competitive structure.
Recently, the Greek government has made a start along these lines, with its renewal policy for state enterprises. For every new hire there needs to be ten retrenchments. Combining such a policy with a retrenchment program and a clear objective to find the most suitable professional for each opening with a professional and transparent recruitment process will show a way for many countries.
The Swedish transformation also created a need for a new leadership. Hundreds of professionals to more than 60 companies, including more than 85 percent of all non-executive board members, three-quarters of CEO positions and more than half of all CFOs were recruited in less than two years. On average, the age profile dropped by at least ten years across the board.
All positions were nominated and chosen in a transparent and professional process in order to gain the trust in a fair system.
Everyone who has spent time in fast growing and dynamic Asia has felt the optimism in air. A place full of opportunities so vibrant that you think you can smell and touch it as you step off the plane.
It is time we put back some of that hope in the future for our youth. State commercial assets should lead the way in this development of rejuvenating our society creating possibilities for the young and capable.
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