Full employment, HR development, is it possible?

What are the factors that contribute to the process of employment generation in society? What is the scope for magnifying or accelerating that process? What are the inherent limits that determine its maximum speed and level of accomplishment? What is the impact of technological development on the creation and destruction of employment opportunities? How do demographic factors influence employment? These and many similar questions lie at the root of the employment issue and need to be answered before any specific set of policy guidelines can be convincingly projected. The Summit needs to present a conceptual framework that positions the process of employment generation as a natural expression of social development and to identify the factors and forces that can hasten this process.

Resources are a creation of the human mind. It is the application of human intelligence and inventiveness that converts any substance into a resource. A resource emerges when the mind evaluates a material in the context of an end use. As society develops, the application of mind continuously increases the productivity of materials, finding new applications for them and more efficient ways to utilize them. The more open and flexible the mind becomes in its outlook, the greater is its creative power. Primitive man found that sand was a useful resource for making bricks. Early craftsmen discovered that the application of heat could convert the same sand into glass. Several millenniums later, we have found that the same sand can be converted into fiber optic cables and silicon chips. Sand remains the same, but its value has been immeasurably enhanced by the application of mind.

Mind, the human being, is the ultimate resource that gives value to all other resources. The capacity of the human mind to acquire knowledge and devise improved technologies is for practical purposes unlimited. The concept that scarce resources impose ultimate limitations on human development needs to be reexamined from this perspective.

The real determinants of human development are human rather than material. Development is a function of human awareness, knowledge, openness to new ideas, human energy, willingness for innovation and risk-taking, capacity of society to organize itself more efficiently, eagerness to acquire new skills, readiness to shed out-moded ideas and behaviors in favor of more creative responses. Development is a function of peace, political and social freedoms, levels of education, levels of social organization, technological innovation and assimilation. At a more fundamental level it is a direct expression of the value the society places on the development of its individual members and on the capacity of those individuals to imagine, aspire and strive for what lies beyond their present level of accomplishment. Development is a function of human energy and attitudes.

There are no inherent limits to any of these resources, other than those imposed by our conceptions and our motivation. “The only real limits to human development are the limits to our imagination.” There is no inherent limit to the capacity of society to increase its knowledge, skill, technology, information, organization, management expertise or social values, therefore there is no inherent limit to its capacity for development and employment generation.

Certainly, society does face real constraints today on its ability to create economic and employment opportunities for all people. But these constraints are not physical. They consist of individual and social attitudes, values and behaviors that can change. They do not lie beyond the reach of public policy and individual initiative. They are consequences of choices made by people in the past and present. Society has the power to alter or reverse these choices at any time in order to achieve more satisfactory results.

The view of human development as a half empty cup or a race half completed has to be discarded. Development is an expansive, self-generating, endless process that creates new needs as rapidly as it fulfills existing ones. Development is a process of creating new ways and styles of life.

At the turn of the 20th Century, electrification, the telephone and the automobile began to transform human society across the globe. Electricity has given rise to the demand for an infinite array of consumer appliances. The automobile has given impetus to retail businesses, manufacturing, hotels, restaurants, tourism and amusement. These innovations have been followed by radio and television entertainment, air travel, college education, the computer and most recently, the internet.

Each of these social innovations in the behavior of individuals and the organization of society creates new opportunities for employment. Is there any sense in which we can say that humanity has reached or is approaching the limits of this process? On the contrary, the further it advances, the greater the possibilities and opportunities it creates.

In formulating policies and strategies to accelerate development and employment generation, emphasis should be placed on increasing the availability and productivity of the full gamut of resources at our disposal. Today society has at its disposal several very powerful levers for improving the utilization of social resources

1. Peace: Internal and external social stability are the first and most essential requirements for social development. War is a destroyer of development. The threat of war prevents people from expanding their horizons and investing their energy and resources to build a better future. The end of the Cold War has dramatically reduced the threat of armed international conflicts and the catastrophic consequences of nuclear war, providing a far more stable and secure climate for worldwide economic expansion. A commitment by the world community to the complete eradication of regional conflicts and civil wars will provide a stable basis for accelerated development of all nations. ICPF’s proposal for establishment of a global security system backed by a world army can free up at least $400 billion annually for development-oriented public investment and ensure a secure foundation for accelerated growth and employment generation.
2. Democracy: As peace provides a secure external environment for international development, democracy provides a stable and conducive environment within countries for more rapid social progress. Democracy raises human aspirations. It encourages individuals to take active initiative for their own advancement. It facilitates freer and wider social interactions. It releases greater social energy. It vastly increases the dissemination of information and the multiplication of new organizations. As the transition from monarchy to democracy was a catalyst for rapid economic advancement of Western countries over the past three centuries, the spread of democratic institutions today opens up greater possibilities for global economic expansion. Many countries have fully extended political and social freedoms in principal, but no country as yet fully provides them to all its citizens in practice.
3. Education: The capacity to utilize the opportunities afforded by a peaceful and free social environment depends directly on the knowledge and skills of the workforce, which in turn are a direct function of levels of education. Educational levels around the world continue to rise. The aspiration for education has become an urgent demand in country after country. Yet, even today universal primary education is far from a reality in many countries. For several decades, rapid expansion of college enrollment spewed out millions of new graduates with aspirations for higher levels of achievement but few opportunities or real qualifications to fulfill those aspirations. The very rapid spread of computer and internet technology is now opening up new employment opportunities by the millions for those who possess a quality higher education. Every effort to expand the reach and upgrade the quality of education at all levels will pay rich dividends in the changing international economic climate.
4. Velocity of Social Transactions: Development is a function of the velocity of social transactions. The speed of movement of information, ideas, decisions, technology, people, goods and money has significant impact on the productivity of the society and its further advancement. The shrinking of the world through better transportation and communication opens up commercial opportunities inconceivable just a few years ago. Over the past two decades the volume of international travelers, freight, telephone and other forms of electronic communication has increased by more than an order of magnitude. An additional 324 million telephone lines have been installed worldwide since 1990, of which 25% were in China. With the advent of cellular telephone technology, progress in this field can be dramatically accelerated. Since 1995, China has increased the proportion of its citizens with telephones from 1% to 10% of the population. India quadrupled its total lines during this period. Between 1980 and 1994, overseas telephone traffic to and from the USA increased from 200 million to 3.4 billion calls. New technologies such as cellular phones have dramatically reduced the cost of expanding the communications infrastructure. The meteoric growth of the Internet, from a few thousand to more than 80 million connections in 15 years, provides instantaneous low cost access to global sources of information and commercial markets. Electronic mail, which one study projects will be employed by as many as one billion people worldwide in 2002, has drastically cut the cost and increased the speed of written communications. The speed of technology diffusion is also accelerating. The Xerox machine was not introduced into India until the late 1970s, more than 15 years after its use became widespread in the USA. Today, new versions of the latest computer hardware and software are often introduced simultaneously in USA, Europe, India and China. Every measure that increases the volume and speed of knowledge, information, people, goods, money and technology is a potential catalyst of the development process.
5. Technology Application: The rate of technological innovation and diffusion is one thing, the extent of technology application is quite another. Technological development far outpaces the extent of technology application, even in the most advanced societies. Adoption and full utilization of already proven technologies can dramatically elevate performance in every country and in every field. To cite a single example, the average yield of tomatoes in India is 10 tons per acre, yet some advanced farmers achieve yields of 20 tons or more. The average yield of tomato in California is 35 tons in California, but California’s leading tomato farmers routinely obtain average yields of 55 tons or more by applying advanced systems for micro-nutrient management applicable to all crops and climates. Applying even more sophisticated and capital intensive technology, Israeli farmers achieve yields of 250 tons or more of tomato per acre. This wide variation in the application of technology within and between countries is nothing new. But it is a factor that is at least partially responsive to social policies.
6. Social organization: People the world over are fascinated by new technology and eager to embrace it as a means for economic advancement. Yet, organizational innovation has contributed at least as much as technological innovation to the astonishing progress of society in the 20th Century. Each significant developmental advance leads to the emergence of a host of new organizations designed to support it and puts pressure on existing organizations to elevate their functioning to meet the higher demands of the new phase.

Since 1950, country after country has been introducing organizational systems and structures to support modern business and international trade, such as business directories, franchising, lease purchase financing for industrial and consumer products, courier delivery services, credit rating and collection agencies, industrial estates, free trade zones, credit cards, ATM banking services, cellular and pager communication systems, and most recently, a completely new range of Internet services. Each of these organizational innovations increases the range, scope, quality, convenience, productivity or efficiency with which the available social energies can be utilized for productive purposes. The list of proven organizational resources is enormous and constantly expanding. The organizational gap between the most developed and least developed nations is even wider than the technology gap, yet the cost and time required for widespread organizational innovation is often much lower and more far reaching in its benefits. Strategies should focus on accelerating the transfer of organizational technology within and between countries. These are but a few of the major levers available for accelerating the development process.

Nor is the possibility of full employment limited to theoretical speculations. During the 1950s and 1960s the leading industrialized countries of the world not only achieved full employment but even exceeded it, creating strong demand for import of workers from abroad. In Germany and France, nearly 10% of the labor force consisted of foreign workers. During the 1980s and early 1990s, the Newly Industrializing Economies (NIEs) – Hong Kong, South Korea, Singapore and Taiwan-China – achieved full employment and experienced acute labor shortages. Prior to the Asian financial crisis which began in mid-1997, Malaysia, Thailand and Indonesia were rapidly approaching a similar status. That crisis did set back economic growth and employment in all these countries, yet their faster than expected recovery and return to high growth rates suggests that the earlier performance can be repeated.

While the Chinese economy still remains very far from full employment, its phenomenal progress on employment over the past two decades is an index of what other countries can strive to achieve. According to ILO estimates, from 1987 to 1997 China created more than 160 million additional employment opportunities.

In order to provide a strong theoretical basis for practical action, this framework will need to challenge several traditional views of employment. The notion that technological development and industrialization constitute obstacles to creating sufficient jobs is contrary to fact but still widely accepted in theory. The idea that trade between industrialized and developing countries places inevitable limits on job creation among the wealthier nations of the world needs also to be challenged. So too, the framework must challenge the view that the number of jobs created by any society is a rigid function of fixed economic laws and that any effort to modify the outcome can only be done by creating inherent economic imbalances. It needs also to identify the policy instruments available for modifying or enhancing the process of employment generation.

A solution to the current problem of unemployment can be arrived at by viewing employment as a natural function of social development. The faster and further a society develops, the greater its capacity to generate employment opportunities for its members. Development occurs when society possesses unutilized resources that are harnessed to fulfill unmet social needs.

Economics was founded on the implicit, Newtonian-like assumptions that society consists of a limited number of human needs and a limited capacity, i.e. limited resources, to produce goods and services to fill those needs. There is now ample evidence to prove that neither of these assumptions is valid. Neither human needs nor human resources are finite.

Had there truly been limits to the capacity of society to generate new needs, a number of developed nations should by now have exhibited symptoms of satiety and stagnation. The opposite seems to be closer to the truth. Human needs exist in an ascending hierarchy that includes physical, vital or social, mental and spiritual dimensions. Humanity exhibits an inexhaustible appetite for physical security and comfort; social relationship and enjoyment; invention, acquisition of knowledge and creativity; and the quest for the ultimate truths and meaning of life and existence. Each successive level of social accomplishment leads to the emergence of new and higher needs and the creation of new employment opportunities.

While physical needs may be limited in their quantity, they are not subject to any limits to qualitative expansion. The number of calories consumed by a healthy individual is certainly subject to narrow limits, but the quality and variety of foods consumed is capable of unlimited variation. The same is true of other basic physical needs such as for housing, clothing, transportation, communication, etc. Thus, the prosperity of modern societies has multiplied rather than reduced the demand for physical products and services.

Social needs include the desire for human relationship, interaction, recreation, and enjoyment. In the measure basic physical needs are met, increasing human energy is channeled into the pursuit of social forms of fulfillment. Travel, tourism, sporting events, amusement, and entertainment are fields that are presently undergoing rapid expansion in most countries. The fulfillment of mental needs has only recently begun to constitute a major force for economic expansion. Educational products and services are proliferating at all levels of society in both developing and developed nations. Demand for information, news, facts, printed materials, scientific research, and technological innovation are growing exponentially. Thus, it is evident that there is no inherent limit to the capacity of society to spawn new needs that it seeks to fulfill and new employment opportunities to fill them.

Human needs may not be limited, but common sense tells us that the capacity of society to meet those needs is subject to severe limitations. Past experience and present constraints support the view that human productive capacity depends on the availability of resources and that the limited availability of resources constitute real limits to human development and employment generation.

An impartial assessment will make it evident that the constraints society faces today are lesser rather than greater than they have been in the past. Human development is a process of expanding rather than exhausting the potentials of a finite physical and social environment. Development continuously increases the range of human potential and pushes the ceiling of accomplishment ever higher above its present level.

Since the time of Malthus, the rapid expansion of human population, the spread of industrialization and urbanization have been cited as compelling proof of the limits to growth. But equally compelling facts can be cited that contradict this view. Over the past two centuries world population has grown more than seven-fold, yet living standards in most parts of the world have soared by an even greater multiple during this period. During the 20th Century world GDP at constant prices increased 19-fold, while world population grew nearly 4-fold. This has resulted in a near 5-fold growth of global per capita GDP since 1900. Between 1950 and 1990, average, global per capita income tripled, in spite of unprecedented population growth, and average real per capita consumption in developing countries doubled.

Historically, population growth has acted as a powerful stimulus to economic development. A graphic representation of the two shows that they have advanced according to an almost one-to-one progression. Short-term, rapid expansion of population has certainly placed a heavy burden on existing productive capacities and employment opportunities in many countries. But, as the rates of population growth decline and rates of development increase, these imbalances can be rectified.

The more serious issue is whether the earth’s limited resources can support high levels of economic development for a global population that may reach nine billion before it levels off. Resources are inputs or factors for carrying out an activity effectively. They are of several types. Land, water, coal, oil, minerals, and power are physical resources. The social resources consist of the society’s capacity to manage and direct complex systems and activities. Knowledge, information, technology and the capacity to organize are mental resources. The energy, skills and capacities of people are human resource.

Economics is very much concerned with the scarcity of resources. But when viewed from a wider perspective, it can be seen that while the quantity of some physical resources may be inherently limited, the notion of scarcity does not really apply to social, mental and human resources. Any of these non-physical resources may be limited in their immediate availability, but none are subject to inherent or permanent limits. Organizational capabilities can be increased over time. The horizons of knowledge, information and technology are continuously expanding. The human resource becomes progressively more capable and productive.

As a society develops to higher levels, non-material resources play an increasingly important role as factors of production. This principle is embodied in the concept of the Information Age, an era in which access to information has become a valuable input and precious resource for improving the quality of decisions and the productivity of activities. One characteristic of information is that it is not consumed by being distributed or utilized, thus it is inexhaustible. Access to information now enables investors to move financial resources around the world instantaneously in search of higher returns. The increasing contribution of higher, non-material resources helps explain how many societies continue to expand productivity on a limited physical resource base.

Increasing the input of higher resources also makes it possible to more efficiently utilize the available material resources. Technological resources have made it possible since 1980 to increase the world’s proven and economically accessible oil reserves by 50%, while reducing the finding cost by nearly 75%. At the same time technology has reduced the materials and energy input required for a wide range of products. Land and water productivity are very low in many developing countries. Studies indicate that the earth’s land resources are capable of producing sufficient food to support a population many times the current size. Cotton grown under irrigated conditions in India on average consumes 30 times as much water and five times as much land per unit of cotton produced than is required by leading cotton growers in California using the latest technology for crop management. Dutch agricultural scientists have recently demonstrated that it actually requires only 1.4 liters of water to grow a kilogram of vegetables, compared to more than 1000 liters commonly utilized by traditional cultivation practices. In a similar manner, organizational resources can increase the speed and efficiency with which every productive activity is carried out, thereby reducing costs and making them more affordable to the masses.

Every society has a vast reservoir of unutilized and underutilized resources in terms of knowledge, skill, technology, information, organization, management expertise, money and cultural values that can be harnessed to meet those needs. Indian citizens currently invest more than $6 billion of precious foreign exchange reserves annually to import gold as a form of private savings. The country now holds more than $200 billion in the form of gold that could be much more productively invested in activities that accelerate economic growth and employment. Instead of concerning itself with how to attract an additional $5 or 10 billion in foreign investment, government policies can be introduced to encourage productive investment of this huge resource which presently remains untapped.