EMPLOYMENT

Loss of manufacturing jobs may not hurt growth: IMF economist

gruss-imf-twitter Dr Bertrand Gruss, economist at the International Monetary Fund | via Twitter

Loss of manufacturing jobs may not hurt the economic growth of countries, but they will hurt individual workers and their communities, said Dr Bertrand Gruss, economist at the International Monetary Fund.

Presenting a chapter from the World Economic Outlook’s latest edition, he said manufacturing sector has faded as a source of jobs in many countries. While the share of manufacturing jobs in employment has fallen significantly in the advanced economies, it has remained relatively low in most emerging markets and developing economies.

Addressing a gathering comprising leading Indian economists including Dr Bibek Debroy, chairman of the Prime Minister’s Economic Advisory Council and former Planning Commission vice-chairman Dr Montek Singh Ahluwalia, the IMF economist said it need not hurt growth and income convergence and need not raise earnings inequality in advanced economies. Yet, policy priorities would necessitate removal of barriers to entry and trade in services, skill development and reforms to boost productivity in all sectors.

The declining share of manufacturing jobs in overall employment has been a concern for policymakers and the broader public alike in advanced economies as well as some of the emerging markets and developing economies.

This concern stems from the widely held beilief that manufacturing sector plays a unique role as a catalyst for productivity growth and well paid jobs for less skilled workers.

Gruss made a case for reskilling of displaced workers and reducing reallocation costs, and strengthening safety nets and targeted redistribution policies.

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