New Publication: “Trade and Employment: From Myths to Facts”

A joint project of the European Commission and the United Nation’s International Labour Office has resulted in a major publication analysing the link between trade reforms and employment.

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Bilateral, regional or multilateral trade negotiations routinely lead to debate on the implications for employment. Promises of new and better jobs, as well as concerns over job losses and pressure on wages and labour rights are common. But factual assessments of the employment and distributional impacts of trade agreements are too often missing.

“Trade and Employment: From Myths to Facts” tries to address this knowledge gap by pulling together the most recent evidence on the impact of trade agreements on employment, and by providing guidance on the design of tools to assess this impact. The paper also provides guidance on the design of policy mixes that promote open markets whilst at the same time promoting quality jobs with adequate levels of social protection.

The authors argue in favour of developing more appropriate methodologies for the evaluation of the employment effects of trade, including the informal economy and adjustment processes.

For the last 25 years, most economists have asserted that trade liberalisation has a strong potential to contribute to growth and therefore to employment. This is however not systematically the case, as trade liberalisation’s efficiency gains can be cancelled outby unemployment. For example, imported technologies need to find a matching capacity base, both in human resources and systems, in order to trigger growth and employment.

This conclusion finds support in the observation of successful globalisers, such as China, Costa Rica, South Korea and Vietnam. They have invested in expanded access to education and vocational training while at the same time linking those policies with their trade and sector support strategies.

This paper is recommended for all those interested in the effects of trade on employment, including: workers and employers, academics and policy-makers, and trade and labour specialists. You can download and read the paper in full, here.

A special event to launch the paper, attended by Kristian Schmidt Director of Human and Society Development Directorate at DG Europeaid, is scheduled for the 21^st October at the EuropeAid Infopoint in Brussels. A separate launch event takes place at the ILO-World Trade Organisation in Washington DC on 4^th October.