One of the key motivations for PCES has been a forward-looking desire for us, as graduates of Economics, to understand our social environment and, beyond this, to change it. Following the economic crisis of 2008 enigmas such as unemployment, debt crises and threats of inter-generational inequality persist. Often as students we are left to accept these aspects of our economy without much thought or resolution, and so it was a privilege for PCES to be invited to attend the “Labour Economics after the Crisis” conference by László Andor, Commissioner for Employment, Social Affairs and Inclusion at the European Commission in Brussels last month.
As the hub for EU policy-makers, the discussion over two days was enlightening on the matter of how economic theory influences the design and implementation of socio-economic policy. It was also an exposure to the power of institutions such as the EC, and their impact on the lives of people in the EU. The conference addressed key targets set for growth, youth unemployment, female participation in the labour market and job creation, and how these would be met through macroeconomic policy.
The high calibre of speakers included Etsuro Honda, Special Adviser to the Prime Minister of Japan. Etsuro provided us with an analysis of Japan’s experience of reducing structural employment following the burst of an asset price bubble, and the movement to refocusing on “moral persuasion” to restore confidence in the Japanese economy. Japan’s experience was an intriguing start to the conference as a source of comparison for the EU. It highlighted the central issues an economy must focus on during recovery: the timing of policy, adapting to changes in demography and identifying the true cause of economic fluctuations. Outside just the framework of policy-making, such issues are exceedingly important for us to appreciate as undergraduate and graduate economists.
A further motivation of the conference was to “explain the residuals”; meaning within the EU the complexity of economic trends must rely on some factors that have not yet been understood or observed. It is clear that it is in the interest of the EC to delve further into ideas that go beyond just macroeconomic policy. There was opportunity to raise and address questions on characteristics such as low innovation, low productivity and how to factor these within policy making. Several concepts were discussed that looked beyond the usual policy measures, suggesting that the overall employment situation can be improved through reforms in how we fundamentally assess the labour market. Discussions of gender inequality alluded to changes to childcare provision policy, whilst early retirement as a solution to youth unemployment was heavily criticised and refuted.
The debate of new ideas and the progression sparked by such critical thought is an essential tool for improving social situations. Such discussion is lacking in our undergraduate degrees which PCES sees as hindering real change. Detlef Eckert, Director for Employment policies at the European Commission during the conference asked “Is there a Crisis in Economic Thinking?”; László Andor cited our campaign. For this important issue to be recognised in front of leading academics and policy-makers in Brussels, it may be an indication that institutions are open to moving away from the macro-policies of the past and adapt to changing economic trends, demographics and new technologies by looking to alternative economic perspectives. Further, Elsa Fornero, Former Minister of Labour, Social Policies & Equal Opportunity of Italy recognised a “gap between academia and policy makers”, a relationship that should be “more fruitful and more frequent”. It may be that heterodox teaching in Economics is the pollinator of new ideas, new policy and comprehensive thinking needed to “explain the residuals” and advance how institutions such as the EC affect the social dimension in the EU.