Thursday, September 14, 2017

The root causes of financial instability unaddressed

Austerity budgets adopted by governments across the world since the 2008 financial crash are to blame for undermining the job security of millions of workers and threatening the progress made by women in the workplace, according to a United Nations Conference on Trade and Development (Unctad) report. The threat to jobs from the growing use of robots and artificial intelligence has been exacerbated by a lack of government investment and lack of state support for skills training, the report also said.

The rebuke of governments, including the UK’s, that have adopted austerity measures to reduce public debt while allowing households’ private debt to increase, is the main theme of the report.

Unctad’s secretary general, Mukhisa Kituyi said,  “Despite all the talk of the urgency of reform at the time of the financial crisis, and recent claims that the financial system is safer, simpler and fairer, regulatory actions have so far done little more than clip the wings of high-flying finance, with lending now somewhat backed by capital and a bit less trading in the shadows. The public purse was used generously to prevent the financial sector going under in 2007-08, but the root causes of financial instability have not been addressed by national governments or on a global scale.”

Richard Kozul-Wright, the director of Unctad’s globalisation and development strategies division, said concerns about robots were mounting against a backdrop of uncertainty over the strength of the global economy.
“This has held back the investment needed to create new sectors, where workers displaced by robots could find better jobs,” he said. Routine tasks in well-paying manufacturing and service jobs are being replaced by robots, the report said, but low-wage manufacturing jobs in areas such as clothing factories are left largely unaffected by automation. "Although most jobs in developing countries are not under immediate threat, a tendency to further concentrate manufacturing activity in existing locations could follow, raising concerns that the gap between winners and losers from robot use will widen sharply,” it said.

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