KOF Forecast Day: Inequality on the Labour Market

According to the conclusions reached by the International Monetary Fund (IMF), “increased inequality can erode social cohesion, lead to political polarization, and ultimately lower economic growth”. The IMF has increasingly engaged with this issue in recent years. Also the Organisation for Economic Co-operation and Development (OECD) has been calling for the debate concerning inequality to be brought to centre stage. As a result, the issue has been firmly placed on the public agenda.

However, discussions in this area continue to be beset with difficulties. They are often emotionally charged and guided by political interests. The results of research are heavily dependent upon the choice of the underlying data and are seldom universally valid. At the upcoming KOF Forecast Day to be held on 2 October we shall therefore focus on one specific area: the labour market. This is because a well-functioning labour market is key in achieving equality.

As part of this process, the issue of inequality will be considered from an economic perspective: KOF Director Jan-Egbert Sturm will consider income distribution over the economic cycle. Ben Jann, Professor of Social Structure Analysis at the University of Bern, will focus on gender differences. However, he will not engage with standard results like statistical salary differences, but rather with indirect mechanisms – such as for instance gender-based differences in the perception of what a fair salary is. He will also address research which shows that men and women engage in salary negotiations differently due to differences in self-expectation.

“Training up unskilled workers reduces inequality”

The presentation by Monika Bütler from the University of St. Gallen will focus on the role of social insurance, along with the consequences of inequality during old age. Finally, Josef Maushart will attempt to build bridges between theory and practice. He is CEO and Chairperson of the Board of Directors of the Fraisa Group – an industrial company that has made particular efforts to train up workers who are unskilled or lacking qualifications.

According to Maushart, technological change and digitalisation are confronting industry with the challenge of how to carry the entire workforce together into the future. “Training up unskilled workers will allow these people to climb on board the Swiss training system and reduce inequality on the Swiss labour market”. This - so the argument goes - also benefits companies during periods of labour shortages, having been able to develop and secure the loyalty of qualified specialist staff. Maushart claims that, “from a pan-economic perspective, catch-up training helps to eliminate structural unemployment and also to reduce levels of social benefits payments over the long term”.