Integrating and Rethinking Labor Intermediation Services: Left, Right and Center

Today with global markets, rapidly changing competition, and more frequent job change in diverse national contexts, it’s time to throw away any remaining one-size-fits-all policy rule books. This book started as a practical, hands-on approach to a changing one active labor market policy, and it will end that way as well. What is already well into its experimentation stage in both developing and developed countries is the infusion or integration of better labor intermediation as part of economic development, social and human capital (skills, education, training) and social and labor policy. How to do this? Here policy learning is crossing many North-South frontiers and back again.

In all three of the policy areas reviewed here, a new set of institutional lenses need to be applied. Advancing labor intermediation as part of a jobs agenda in a global age will require collaboration and linkage across public ministries and private sector organizations. These are institutions that are used to thinking: “this is someone else’s job.” Old-line labor ministries understood their mandate as specifically for workers and their trade unions and thus against employers. Labor ministries in most developing countries have suffered from years of politicization, poor levels of funding, and politicized staffing. Their traditional roles to mitigate labor conflict, particularly with unions, and regulate an increasingly small formal labor market often led to years of underinvesting in the employment departments of labor ministries. This was compounded in most developing countries when state-funded training institutions were set apart institutionally from labor ministries so that skills development was separated from employment. Economist Howard Rosen argues that getting labor ministries a “seat at the policy table” means modernizing the role of labor ministries to target improving labor productivity and employment.⁴ A modernized role for labor ministries is needed to better connect labor intermediation to a larger employment, skills, and economic agenda.

Beyond its impact on economic growth, inflation, and employment and earnings, globalization has challenged the relevance and effectiveness of traditional public and private economic institutions, including both economic policies and the economic policy-making process, as well as the role of labor ministries. Developing countries are now far from the days of import substitution which offered national governments the luxury of conceiving of economic policies in the context of a purely “domestic vacuum.” Today, developing country governments must consider global feedback effects, including how individual policies will affect the international competitiveness of their firms and workers. Likewise, concern over international competitiveness requires policymakers to be more sensitive to how labor policies affect other policies. This requires a higher level of policy coordination across government agencies.