THE BLOG

The Global Deal: A New Economic Consensus

06/17/2015 10:21 am ET | Updated Jun 17, 2016

Co-authored by Gregory Randolph, Deputy Director of the JustJobs Network.

These days, we've grown accustomed to economic debates winding up in bitter gridlock. In the embattled halls of the U.S. Congress, lawmakers have nearly torpedoed Obama's Trans Pacific Partnership. In the Eurozone, the failure to find agreement on Greek debt is sending the country spiraling toward default.

But underneath the rumble of political debates, the tender shoots of a new global consensus around commonsense, practical and progressive economics are emerging.

It's what Swedish Prime Minister Stefan Löfven calls the Global Deal -- a new compromise between capital and labor that would ensure shared prosperity by putting jobs at the center of global macroeconomic policy.

As Mr. Löfven remarked this spring at the ECOSOC Integration Segment organized by the ILO: "We share a planet, we share a global economy, and we increasingly share a global labor market. For this reason, we also share the task of finally taking responsibility for global working life."

A diverse range of people and institutions are beginning to buy into the vision for a Global Deal -- from political leaders like Mr. Löfven and Indonesian President Joko Widodo, to rarely allied institutions like the International Monetary Fund and the International Trade Union Confederation, to companies like those who signed a legal pact to improve safety standards in Bangladeshi factories.

What are the tenets of this new global economic consensus?

1. Inequality is a problem. With the richest one percent of the world poised to control more than 50 percent of its wealth, concern over inequality is mounting. But it's not just the conventional "leftist" groups that are sounding the alarms. The International Monetary Fund, a traditionally neoliberal institution, just released a report showing that growing inequality is constricting economic growth.

2. Creating jobs is the best way to fix inequality. Inequality has grown, in part, because governments have been paying more attention to economic growth than job creation. When economies grow without creating jobs, it means wealth is flowing disproportionately to the already rich.

Just to keep today's employment rates constant, the world needs 600 million jobs over the next 15 years. Inequality will only continue to rise unless governments and the private sector come up with new innovative strategies to spur job creation.

3. The jobs created must be "just jobs" -- jobs complete with fair remuneration, rights at work, and opportunities for economic mobility. The imperative here is social -- after all, two million people die at work every year -- but also economic. Employers that extend their employees basic rights see higher levels of productivity. Businesses require a thriving middle class to buy their products and services, and middle classes only grow when wages are fair.

The increasing recognition that high-quality job creation must be at the core of global efforts to revive growth and create opportunity is encouraging. But realizing the vision of a Global Deal will require a transformation of the status quo.

It will require that businesses value the importance of well functioning labor markets, and that labor groups recognize the role businesses play as job creators. It will require governments that measure growth differently. And it will require global institutions that can ask new questions and find new solutions to the pressing question of how to create more and better jobs.