Davos Annual Meeting 2011 – The Future of Employment
October 9, 2019
Male Speaker: Ladies and gentlemen,
welcome to the CNBC Debate “The West Isn’t Working.” Please switch off your phones.
We are ready to begin. This debate is being televised by CNBC,
and your presence is considered your consent to be filmed. And now, please welcome your moderator, Maria Bartiromo.
[Applause] Maria Bartiromo: Good morning everyone.
Thank you so much for joining us this morning.
For the first time in a long time, if not ever, there is a conversation happening
around the world that is questioning the sustainability of the super
power status of the West. Why is the West not working? We are
here today to talk about one of the most urgent problems of
our time, unemployment. The global recession has resulted in
a massive loss of jobs, creating what the head of the IMF has called “a wasteland of
unemployment,” and Dominique Strauss-Kahn is not the only one concerned. President Barack Obama: That world has
changed, and for many, the change has been painful. I’ve seen it in the shuttered windows of
once booming factories and the vacant storefronts on once busy Main Streets. I’ve heard it in the frustrations
of Americans who’ve seen their paychecks dwindle or their jobs disappear — proud
men and women who feel like the rules have been changed in the middle of the game. They’re right. The rules have changed. Maria Bartiromo: Without jobs,
the economy cannot recover. We are here today to find solutions.
Meet our panelists: Arianna Huffington of The Huffington Post; Naveen Jindal, the
head of Jindal Steel and Power; Laura Tyson, professor at the University
of California Berkeley and an adviser to the Obama administration; and Philip
Jennings, General Secretary of UNI Global Union.
Ladies and gentlemen, our challengers. Today’s debate is in two parts and in each
of these, a motion will be argued by our advocates. They’ll have 90 seconds
to make their case. They’ll then face questions from
our challengers and from all of you, the audience.
We are looking forward to your participation so get ready
with your questions. Motion 1: For a dynamic
workforce, go East. Most of the jobs lost since 2007
have disappeared from the West. Meanwhile, some emerging countries
have barely felt the recession. In the battle of jobs, who is winning?
Manuel Salazar: We recorded open unemployment going up by more
than 30 million people. It becomes more and more difficult to
get those millions of people out of the unemployment and into jobs. Ian Cheshire: Our key challenge in the
West is to prepare for the next generation of jobs, the type of skills that will be
needed, the type of industries that will be around in 20 years.
Ben Jealous: We need vision for how we in the West continue to employ people who
have fewer skills or whose skills can be found somewhere else for cheaper.
David Arkless: In places like China, Vietnam, Indonesia, where the workforce
is probably as dynamic as we’ve ever seen in the industrial era.
President Barack Obama: When global firms were asked a few years back where they
planned on building new research and development facilities, nearly 80
percent said either China or India. David Arkless: They should be scared about
how efficient the Chinese economy is becoming because it will, if we allow
it, dominate the world economy. The issue is can we compete?
Can the West come back? Maria Bartiromo: Let me introduce
our first advocates. Arguing for the motion that for a dynamic
workforce, go East is Kiran Mazumdar-Shaw, CEO of Biocon.
And against the motion is Barry Silbert, CEO of SecondMarket.
Kiran, please begin. Kiran Mazumdar-Shaw: Thanks, Maria.
Well, you know, in an interconnected world, it’s just bound to happen that jobs
will move from the stagnant mature markets of the Western Hemisphere to the very vibrant
and high-growth markets in the East.
And in an interconnected world, I think companies will be compelled to move money
and jobs to make them more globally competitive to the East. So there is enough evidence to
show that this is happening. I mean if you look at what’s happening
with companies in U.S. and Europe, they are on a hiring spree in Asia whilst
they are shedding jobs back home. So the evidence is there. We have to accept that jobs will move
to regions where there is high growth and higher returns.
Manufacturing, conventional, traditional manufacturing is going to move East
because that’s where the lower label costs are.
That’s where better capital efficiencies are.
So this is the shape of things to come and the West has to accept it.
But having said that, I do believe that it’s not all bad news because the Western
consumer has benefited in a big way. Take for example mobile phones.
If it wasn’t for the huge economies of scale created by India and China, you
couldn’t get those bargain prices at Walmart or Best Buy.
So the way I look at it is that times have changed and I think the West has to accept
that fact that there has to be a different way of creating new jobs.
Jobs being lost have to be replaced with different jobs.
Maria Bartiromo: Kiran, thank you very much for that side of the argument.
Now let’s hear the other. Barry, over to you. Barry Sibert: When I was first approached
about participating in this debate, I was hesitant to accept the invitation
to defend the West. Aside from the fact that I have two very
large Asian investors in my company, how can I overlook the success of incredible
entrepreneurs like Ms. Shaw and the many startups in developing countries blazing
paths oftentimes against significant odds? But it got me thinking given that small
businesses are the largest job creators, what does it take to start a business?
I quickly realized that contrary to the title of the debate, the West
is working quite well. There are really kind of four key critical
elements that are necessary to starting and growing a business.
First, you need a skilled and educated workforce.
Second, you need rule of law, including intellectual property protection.
Third, you need a proper balance between government regulation and free markets.
And lastly, you need access to capital. And it is this final element that I believe
the West outshines the East in particular.
The West I believe has the most developed capital formation process, from angel investing
to venture in private equity funds to the markets both public and now
private necessary to support innovative businesses, and it is these types
of companies that create long-lasting sustainable jobs.
So I offer to the audience that the West can in fact be the engine for future job
creation, particularly if the government and business can work together to find
easier access to risk capital for small businesses. Maria Bartiromo: Thank you very much.
You both make terrific arguments. Challengers, these are the two arguments.
Who is right? Naveen Jindal: Well, I think Kiran Shaw
is completely right, that it is happening in the East. We are all the time looking for people.
We are hiring, say, in our steel and power business, we are looking,
we are hiring thousands of workers, skilled, semi-skilled, even unskilled people
and giving them those skills which are necessary.
In fact, we have a problem of not finding enough skilled people, and that’s
a very big responsibility. We almost need an additional 300 to
350 million trained people by 2020. And I completely disagree with what Barry
said because if the West was working well, now why would the unemployment
rate be so alarming? And all those clippings you showed, why would there be such an alarm? Why
would CNBC host a program called “The West is Not Working?” if
it was working well? So CNBC can’t be this wrong. Maria Bartiromo: A fair point.
Philip J. Jennings: We need a message of hope from this event.
The working people of the West are ready to save the West if they
are given the chance. There was a rotten business model in the
West which brought those economies to their knees.
It was the people that paid the bill. They are angry.
They are cornered. And if we have the argument, if I have
to face a group of workers and I say, “The future is in the East,” they will
be more Jasmine Revolutions by the day. Maria Bartiromo: And we’ve seen protests.
Philip J. Jennings: People have to wake up.
People have to wake up. The G20, wake up.
We’ve asked for a working party at the G20 on unemployment.
We are still arguing. Sarkozy is here tomorrow.
I hope he’s got his jobs mojo with him. We have to — there are
things to address. The G20 has to wake up.
We have to look at inequality. Henry Ford was right.
You put money in workers’ pockets and we’ll make the wheels of the economy turn.
It is not happening. The top 10ths of one percent in the States took 30 percent of all the income
during the course of the last 20 years. Maria Bartiromo: So you agree with Kiran?
Philip J. Jennings: We got to plan. Maria Bartiromo: You agree with Kiran?
Philip J. Jennings: No, I don’t agree with Kiran.
Kiran, we need to grow in the East and the West.
India, you have to create 270 million jobs in the next 20 years.
You are going to need the help of the West to help you get there.
You have 100 million people living in poverty today. Kiran Mazumdar-Shaw: Well, you know, Philip,
I do agree with you in a way that this is about creating a new
kind of global job market. This is about creating complementary
and equitable jobs in both hemispheres, and I think we have to create jobs that share
risks and resources across the innovation and commercialization continuum.
So I agree with you to that extent and I think the West will have to become more,
depend on countries like India and China to be globally competitive.
You cannot build vertically integrated job markets in the Western Hemisphere
or in any hemisphere for that matter. Maria Bartiromo: Arianna.
Arianna Huffington: What is missing in the West is what really was here in the
introduction to the show, which is that sense of urgency.
I think the introduction to this show should be played at the White House and
on Capitol Hill and in parliaments around Europe everyday because that sense of
urgency around jobs is really missing. I mean politicians, as the President said
in the State of the Union, talk about jobs but they are not really doing anything
about jobs and it’s this dysfunctional political system in the West that’s making
it so difficult to produce anything but suboptimal solutions that’s creating
that danger because remember, when the West brought a sense of urgency to saving the
financial system, they saved the financial system.
We have enough tools in our toolbox. It’s just that we never brought that
same sense of urgency around jobs. And yet, it’s not just the economic
problems that ensue. It’s the political instability
that is growing. And I have two daughters in college
and increasingly, we have college graduates who cannot get jobs.
Just imagine that. That really disrupts the natural
course of events. So as well as all the other problems
we are facing, the problem of youth unemployment in the West is particularly
large and so we cannot just, unfortunately, assume that things
will get better by themselves. Laura Tyson: Can I say something here?
I think actually Barry raised a very important point.
I think we should realize that until the crisis, if we had a discussion here five
years ago, we wouldn’t have this discussion.
Five years ago, and the evidence is very strong on this, it’s not an
either/or proposition. There was complementarity and jobs growing
both in Asia and in the emerging markets and certainly in the United States.
So we have here a very profound deep cyclical problem.
It does not mean if we go forward, we cannot find a world with enough growth
that we have jobs growing in both places. So I don’t agree it’s like a shift, oh
my God, a job there is a job lost. It’s just not true.
Research establishments in emerging markets are complementary in many respects
to research establishments in the U.S. or Europe.
To Barry’s point, I think Barry is making a very important point.
Look at issues of ease of doing business. That list is dominated by many Western
economies, including the United States. And with the right capital market
conditions, with the right demand conditions, with the right physical
and monetary policy, the U.S. has been and will be in the future a powerhouse
of entrepreneurship. Most jobs that most people have in the world
for now and the foreseeable future, even though they will be globally
integrated, will be local jobs. They will be jobs that are service jobs
for the people who live in their regions, their communities, their states,
and their nations. And those jobs will depend upon two things:
one is the amount of demand, how healthy the macro-economy is, and two
is the strength of the educational system in those economies.
And we can talk about that. That’s going to be the second session
here, but I think that’s, for me, I believe the U.S. can get
its macro house in order. I worry very much about the
educational challenge. Maria Bartiromo: Education is a critical
part of this and we are going to get there.
Let’s bring in our audience and our special invited guests will kick
that off with the front row. Comments? Who
is right? Adi B. Godrej: I think that what we
should realize, as Laura mentioned, that the recent rise in unemployment in the
Western world has little to do with job transfers to the East.
It has to do with the slowdown of the economy post the financial crisis. The system worked very well just prior
to that and we need to encourage that. Comparative advantage will create
for productivity increases which will add to global growth and lead to employment
creation in both parts of the world. I think we should also distinguish
between unemployment and unemployability. Some of the unemployment may be
because of economic factors. But a lot of it is because of unemployability
created by lack of education, lack of training.
I don’t see why in the Western world where unemployment benefits are paid out
in large numbers simultaneously insistence of those people going through training
programs is not done. Maria Bartiromo: This is a very critical
point and we will get to the skill sets that are required to get the jobs
of tomorrow in the next segment. Zhu Min, you’ve spent a long time running
the People’s Bank of China and then moving over to the IMF.
You have a special vantage point here in terms of what’s happening in the world.
Give it to us. Zhu Min: Well, thank you.
We at the IMF in the past few years coupled with the labor unions particularly
on these issues because these are absolutely important.
If we are looking for the job, there are three trends underneath this
apparent job situation. I think we really need to go further
to see the whole thing. The first is, as Laura mentioned, is the
cyclical cycle before the crisis which had hit the advanced economies so bad.
The second also is the structure issue because the manufacturing moved to the
East because labor is much cheaper and education is pretty okay
so we also saw that. But the third issue also, we have
to understand, that the whole job situation is changing, for example,
in the next 10, 20 years. For example, you mentioned in next 20
years, India will provide 250 million fresh labor into the market.
Also, South Africa will provide 450 million fresh labor in the world market.
And almost all advancing economies will probably have an active fresh
labor supply for the world. So today, we talk about unemployment rate
is very serious in the advancing economies, but in the tomorrow, the future
can be very, very different, so we have to anticipate the whole thing change. I think that’s the first important issue.
So we need to have a whole picture. But the certain issues I will say in
these situations, we have to, for the most advanced economies, this is the issue we
are today, really, the whole thing I will say advanced economies, the growth strategy
because you have to think about it given the income level.
You have to create a job. With the job is what kind of job? What
job can create a value which is high enough to pay $20 to $30 per hour which
would be paid in emerging markets with $2 to $3 per hour? You have to have a very high value-added
margin to support as a whole sector. You need a whole growth strategy to create
a confident new industry to balance the global growth.
I think this is the most important issue rather than say get manufacturing
back to the advancing economy. I think that probably will not work.
I will stop here. Thank you.
Maria Bartiromo: Thank you, Zhu Min. Duncan Niederauer.
Duncan Niederauer: Sure. If I can just add a couple of perspectives
from our vantage point. I like where Phil started. This is an opportunity for all of us.
It’s not a threat. It’s an opportunity.
And I think if we think about the focus on job creation, the impact that has on
creating demand that some of you talked about, then guess what, the pie gets bigger
for all of us and it’s good for everybody.
And I think from our vantage point at the Exchange, what we focus on is good news.
The job creation engine you’d want to fill, it’s about incentives for companies
who are positioned to be able to do an IPO and it’s about some of the things Barry
was talking about for companies who may be too small to contemplate an IPO, and
that’s about getting them capital and getting them access to revenues
and investments like Steve’s firm has, et cetera.
At the IPO level, even more great news: $270 billion of issuance globally last
year, 2011 set up to be a great year. Just keep creating incentives for
those companies to go public. It’s a great job creation engine.
And we also know, as Barry said, most of the jobs come from SMEs.
Get them the capital. Worldwide, they will create the jobs
and we can get people back to work. It’s an opportunity.
Philip J. Jennings: That’s a good point but why is capital on strike?
Duncan Niederauer: Yes. Philip J. Jennings: At $1.6 trillion
sitting in back accounts in corporate America? America has to be rebuilt. Without a new infrastructure, Laura, you’re
not going to bring those local jobs to local communities. Isn’t it time, and Barry’s getting an easy
ride here, Barry, how are you going to put that $1.6 trillion to work
to help those local communities. to build the schools, to train the workers,
and to pay them decent wages? Barry Silbert: Well, I think you have to
separate kind of where this capital is. And so I think you are referring to the
capital that’s on the balance sheets of large companies, right? Is that what you were referring to?
Maria Bartiromo: Two trillion dollars on balance sheets.
Laura Tyson: Yes. He is referring to the large companies.
Barry Silbert: Right. So yes, it will be great to see them deploy
the capital in the United States. But I think the point here is, and everybody’s
talking about it, this is not an East versus West.
This is collaborative. And at the end of the day, the jobs that
are being outsources, they are for manufacturing jobs.
They are manufacturing products that are being designed, developed, innovated
in the United States. So if you create the environment where
small businesses can get formed, if you make it easier for whether it’s the
large corporations or individuals or private equity firms investing in these companies,
whether it’s tax incentives or otherwise, you will create the next Tesla car.
You will create the next Google. You will create the next Facebook
that ultimately will create jobs worldwide, I believe.
Laura Tyson: Can I raise something that Zhu Min mentioned which is
very, very important? Up to the crisis, there was virtually
no evidence at all that outsourcing had caused a net loss of jobs
in the United States. I’ve looked at this literature.
I think it’s a very interesting and important question.
Didn’t do it. What has happened in the United States
is that we’ve had a restructuring of manufacturing.
We have technologically very sophisticated manufacturing.
We have a value chain which moved some of the employment to other low-cost labor
areas where you use people. The problem with this is the nature of
the jobs available to U.S. workers have changed and there has been a
loss of jobs in the middle. I think we should distinguish
here the structure of jobs. It’s not when demand is corrected,
the problem is not a lack of jobs. It’s the lack of good jobs.
And we have seen the polarization of employment both in the U.S. and in
the rest of the Western economies. Growing jobs and wages, particularly wages
at the top, with the skill levels that are complementary to the modern technology,
the middle being essentially made redundant by the technology moving
towards the bottom, this is a wage problem and an education problem because we need
to educate more people, as Zhu Min is saying, so that they go with the
growth strategy of the West to the high-end technologically sophisticated jobs.
The U.S. was the first advanced industrial country, before we even used
that term, to make high school education compulsory for all.
We don’t do it yet. We should make college
education compulsory. That is it.
Maria Bartiromo: The idea of spending money on education in an environment
when you’re talking about a $12 trillion deficit is another major issue.
Laura Tyson: There is a difference between operational deficits and
capital investment deficits. I agree we need investment in infrastructure,
investment in education — Arianna Huffington: But you know, Laura,
you may be absolutely right, speaking as an economist, but when you come to
the political reality, you see something completely different.
Laura Tyson: We won’t get that is what you’re saying.
Arianna Huffington: Yes, exactly. I mean in terms of our political reality
at the moment, the will is not there to do what seems absolutely the
right thing to do. You mentioned infrastructure.
Even if we are at full employment, we would need to spend over $2 trillion
according to the American Society of Civil Engineers to update our infrastructure.
And yet, the will is not there to do something bold, like create a
national infrastructure bank. So politicians including the President
talk about it, but in practice, it’s not happening.
And you know, Lloyd George, the great British prime minister, said, “You cannot
jump across a chasm in two leaps.” And that’s what we’ve been trying to do.
Take small little leaps trying to do it when [cross-talking]
— Maria Bartiromo: I want to share with you
a fantastic poll from Facebook which you will want to hear about.
A quick comment from Naveen. Naveen Jindal: Maria, I’d just like to
elaborate on what Mr. Zhu said on the high wage rates, and I think high wage rates in
the West is also not helping the situation because generally, I mean other things
would follow market mechanisms of demand and supply.
Whereas wage rates do not really follow demand and supply and continue to be high
and continue to add to this problem. Maria Bartiromo: And of course,
[cross-talking] — Laura Tyson: They’re falling.
I want to say in real terms in the United States, median real wages are falling.
Maria Bartiromo: Since unemployment affects all of us, we asked Facebook
to partner on a poll for this debate. We asked, “Is the West in decline?”
Look at these numbers. Forty-eight percent said yes.
Twenty-seven percent said no. Twenty-five percent were not sure.
Reaction from the front row? Amy Gutmann.
Amy Gutmann: Let’s look at just some numbers about unemployment to put
the relationship between unemployment and education in perspective. At the height of the great recession, under
five percent of college graduates were unemployed in the United States.
Over double that of high school graduates and then another 50 percent more than that
for those who didn’t have a high school degree.
So even when jobs are at their lowest ebb, college graduates do extraordinarily well
in the West and that’s true in the East as well, and a key to this driving innovation
economy is going to be to have an educated workforce.
Maria Bartiromo: We will get to education.
We will move on. Thank you so much for your
comments, everybody. CNBC of course is all about actionable solutions
and that’s what we want right now.
Let’s talk solutions. Arianna, most important solution,
most important action to be taken now. Arianna Huffington: Well, the most
important solution and the one that actually people can do something about
is to recognize that democracy is not a spectator sport.
So everybody can do something right now. And in fact, my source of optimism comes
from the fact that if you go around the country, people are doing the right
thing in their communities. People who cannot find jobs the conventional
ways, for example, are going to xc.com and turning their hobbies or
their passions into a way to earn a living.
People who can’t get jobs are coming together, as Seth Reams did in Portland,
Oregon, creating sites like wevegottimetohelp.org and helping
others in their communities. So there has been an outpouring of creativity
and generosity all around the country, and those of us in the media need
to actually put a spotlight on what is working in the country in
order to help scale it up. I’m less optimistic about government finding
the will to do the right things, including a payroll tax holiday, including
massive infrastructure investment, including doing something
about immigration. We need the kind of Visa Startup Act that
would allow entrepreneurs with good ideas from all around the world to come and create
jobs in the States and in Europe. Maria Bartiromo: So the people get
together and working on immigration another major component.
Naveen, solutions. Naveen Jindal: Well, solutions, I
talk in the respect of in India. We need to firstly provide quality education
to our youth and for which, we have just passed a Right to Education Act.
And also, we need to increase our graduates coming out of colleges.
Presently, only 15 percent of the graduates from school have
a college education. We need to double that, and for that, we
need to open many, many thousands of universities and colleges and also give
people employable skills, like vocational training institutes, and again, to cater
to almost 200 million new workforce because we have a large population of the
youth and obviously, we can collaborate with the West.
We would need help from the West also in educating our youth, in creating this
capacity building in our country. Maria Bartiromo: Laura Tyson, solution.
Laura Tyson: So I want do macro and then the third is structural.
On the macro side, I think a number of people agree here a lot of the unemployment,
probably almost all but a percentage point of the unemployment problem
in the U.S. is a demand problem. It’s a business cycle problem.
It’s very, very severe. I think what the President said last
night on the importance of investing and research, the importance of investing
in infrastructure, the importance of investing in education at the same time
that we do something meaningful on the medium-term deficit is exactly
the right policy. The politics, I leave it to Arianna.
She thinks the political model is broken. Maybe it is.
I think the economic solution is absolutely clear and I think economists
from the left and the right in the United States agree on that basic solution.
So that’s on the macro side. On the structural side, I will just say we
are going to talk about that in the next section, but think about the education
issue from the U.S. point of view. It’s not a great university problem.
We have the best universities in the world.
There are wonderful new ones developing in the rest of the world but people
come from around the world. There is no issue with America’s
great universities. We have highly diverse set of community
colleges and alternative technical training institutes.
We have the for-profit institutions now which are training people.
Our problem is a breakdown much, much earlier.
Maria Bartiromo: K-12. Laura Tyson: In the United
States, it is K-12. And my most negative thing I’m going to
say here right now is the state and local government disaster in the United States,
which is not being discussed enough perhaps here, is a disaster for education. So there we have the great universities
not being able to tap in to the talent, the potential talent pool that’s lost
in fourth grade in the United States. Maria Bartiromo: And we will get to that.
Philip Jennings on solutions. Philip J. Jennings: Change
the rules of the game. A new political priority on job creation.
The G20 has a Jobs Pact before it which was agreed by 150 nations.
Make it work. We have to have a policy
of inclusive growth. The crash was brought about by an
economic model of exclusivity. We need an inclusive growth model.
Working people have to be able to find their voice at work once again.
Collective bargaining should be the place where standards are set.
We want to see more fairness in the distribution of the wealth which we see
to put the demand back into the economy, which Laura mentioned.
We need active labor market policies. You can’t leave this to the market.
Those countries which survived this crisis best had active labor market
policies focused on keeping people in work.
Finally, we need a universal social protection platform. Eight out of 10 workers have no social
protection whatsoever today. You build in that social, protection, you build in demand, you build in
stability and you build in hope. Finally, stop this rush to the exit with
these austerity programs that we are seeing from government.
They are going to do more harm for jobs than good.
What we are seeing in a number of countries is going to aggravate
unemployment. Stop the rush to the exit. Maria Bartiromo: Stop the
austerity programs. Very provocative statement and we will get
to that and get some reaction from our audience.
I want to get one reaction though from this very global-minded informed audience. Based on what we have heard, if you had
to allocate money to any region in 2011, who would allocate money to Europe? Who would allocate money
to the United States? Asia? And there of course is our majority.
Reactions? Steve Pagliuca. Stephen Pagliuca: Well, I think
in allocation of money, it really is more a microeconomic problem.
I think there are great opportunities in Europe.
There are great opportunities in the U.S. and in Asia as well.
Obviously, there are trends. There is huge growth in India and Asia that’s
not going to stop, but the question is what is the price to that growth
and how sustainable is it? The panel has talked about the fact that
the United States and Europe have legal systems.
They have systems for companies to grow. And the real issue that I fear and what
Laura was talking about is that the structural unemployment is higher than
what you’re talking about here. And so we need the Manhattan Project on
the structural unemployment problem because we are not going to solve it.
We are not going to solve it with the current approaches.
Arianna is absolutely right. The politicians talk about
it but we don’t solve it. There are solutions in front of us.
We’ve invested our country’s deficit in a lot of short-term programs that aren’t
having benefit for the long-term. So the money has got to go back into
education, structural reform in education, which we’re going to talk about next.
But if that structural gap is as large, and I think it is, we have a real challenge
on our hands and we’re not going to fix unemployment until we
fix that structural gap. Maria Bartiromo: Before we move
on, Tulsi Tanti, quick comment. Tulsi Tanti: Yes.
It’s the solution point of view, I feel it’s a very great opportunity in the
Western part of the world is there. We have to revisit the industries…
university sit together. Which segment of the industries can
be allocated in those… and to make a market creation? Because the next
generation of the industries are growing and those
great opportunity for Western world is there because when we are going in India and
China, it’s not just for the cheaper manpower but we need a lot of 360
degrees infrastructure technologies, universities, low cost of the fund resources,
and the export opportunity. I greatly see the renewable industry has
a great opportunity to mitigate the climate at the same time to create a
great manufacturing base in the America and Europe.
It is possible because it’s a high — high-value product is there and
high engineering value is there so that can be there.
It’s not going to be required to go to the India and China.
It’s not required. But the whole world needs this and that’s
that new mechanisms will be developed and new markets should be market created
first in the home market. And if there is no home market and just
we are dependent on Asian market, no job creation will be sustained.
So that is the main focus area. The change in safety is required.
The second is on a value chain. There is a sum pocket of this segment can
be distributed in different geography, whether it is a technology, whether it is
a manufacturing, whether it is a service, and to allocate like that, I think we can
make a more balanced and inclusive growth of the whole world rather than
just at West and East. Maria Bartiromo: Once again, we learn
how connected we really are. Thank you very much.
That is it for Part 1 of the debate. Many thanks to our advocates and their
wonderful insights, Kiran Mazumdar-Shaw and Barry Silbert.
Thank you very much. Next up, where are the jobs? What
are the skill sets required for those jobs? We tackle
the skills gap. This was another problem addressed
by President Obama last night. Let’s hear what he had to say. President Barack Obama: Nations like China
and India realized that with some changes of their own, they could
compete in this new world. And so they started educating their
children earlier and longer, with greater emphasis on math and science.
So yes, the world has changed. The competition for jobs is real. But this shouldn’t discourage us. Maria Bartiromo: Education is
failing industry, motion two. Even with high unemployment, businesses
say they cannot find the skilled workforce they need. David Arkless: We got the wrong people
in the wrong place at the wrong time. Peter Loscher: We are urgently looking
for highly qualified engineers which we can’t find. Tristan Wilkinson: STEM subjects,
Science, Technology, Engineering, and Math, have just become unfashionable.
Ben Jealous: We are not training and we are not even really clear what
jobs we should train them for. Ian Cheshire: But I don’t think business
could sit there and simply throw rocks at the educational establishment.
We actually have to get involved and say, “This is what we need and this is
how we can help make it happen.” Sir David Bell: What we need is an education
system that trains people to be flexible, responsive, and able to change
what they are doing maybe several times in the course of their working life. John Studzinski: But the most successful
companies are successful not just because they train people well but
they retrain people well. Maria Bartiromo: On stage to argue for
the motion that education is failing industry, Jeff Joerres, Manpower CEO.
And against the motion, Amy Gutmann, the president of the University
of Pennsylvania. [Applause] Maria Bartiromo: Jeff,
your time starts now. Jeffrey Joerres: Thanks.
Well-educated people create jobs. What creates those well-educated people
are universities, and what we are finding is that universities are not producing the
amount of people coming out or, for that matter, the quality in order for
us to create this flow of jobs. Let me give you a few examples, a U.S.
one. Sixty-seven percent of all high school
students go on to college. Only half of those can finish
their degrees in six years. Twenty-five percent of the low-income students
can finish their degree, and 20 percent of the African-American community
finish any kind of secondary and post-secondary degree.
So what we see is not enough and not enough of the right kind.
Why do I say not enough of the right kind? High unemployment and
the highest level of job openings which is a massive conundrum,
a skills gap of not having the right skills at the right time produced
by university systems. Having said that, what is going on in
STEM, the Science, the Technologies, Engineering, and Math, is outstanding
and is absolutely needed. What is missing is all the way from K-4,
all the way into university are things like intellectual curiosity, problem solving, empathy, and collaboration.
It is those things that create the basis for education to move on
to be lifelong learning. If we do not fix education system, technical
schools as well as others, we will not be able to create enough people
to satisfy what jobs are required. Maria Bartiromo: Jeff,
thank you very much. Amy, the other side of that argument.
Amy Gutmann: Thank you, Maria, and thank you, Jeff.
We live in a global innovation economy, and universities are at the heart of it.
We invest billions in innovative research and we educate young people who combine
a breadth of skills with an in-depth knowledge of a subject, what an MIT
professor aptly called a “T-shaped intellect.” CEOs love to hire T-shaped individuals.
They are creative and collaborative and they also have specialized skills.
And those graduates from America’s top universities drive the future economy
that none of us can yet imagine. That is why the United States remains
the single most sought after global destination for higher education.
Last year alone, 700,000 foreign students came to study in universities in the
United States driven by a 30 percent increase in Chinese students.
India and China are avidly competing with the American model of higher education.
We welcome that competition. We can learn from them just as
they have learned from us. We also should reverse the visa restrictions
that deport foreign students who graduate from American universities
with advanced degrees. We, the Land of Liberty, send them home
even if they want to stay here. That’s a mistake.
Higher education prepares students. K-12 education is failing us.
We must invest in infrastructure and in K-12 education.
Thank you. Maria Bartiromo: Thank
you very much, Amy. And you brought up the issue of immigration
as part of the failure here in terms of education.
We’ve heard both sides. Challengers, who is right? Arianna Huffington: Well, I think in
many ways, Jeff is right that our education system is failing us, but it doesn’t
start at the college level. It starts at the K-12 level.
And it starts at a way in which we are both educating our children and the way
we are minimizing the key importance of teacher effectiveness.
Teachers are the most important thing in our children’s lives.
And yet, what do we have here? We have an impossibility for firing
bad teachers in the United States. If you are a doctor, one in every 57 doctors
loses his or her medical license. If you are a lawyer, one in 97 lawyers.
If you are a teacher, one in 2,500 teachers is ever fired for
being a bad teacher. Now, that is not sustainable because if
you are going to imbue children with a love of science or the love of math or the
love of English, you have to have these great teachers in third and fourth grade.
And one last thing, at the university level is the student loan problem.
We now have $900 billion in student loans, more than our credit card debt.
And you have students graduating with a student loan burden of over $20,000 and
not being able to get jobs, and that’s another huge crisis we are facing.
Maria Bartiromo: Well, you are talking about students getting to the
university level unprepared. Naveen.
Naveen Jindal: I would say, I mean I do not really disagree with
either Jeff or Amy. I just like to present a new point, and that
is that we also observe that not many engineers or highly skilled people, they
do not want to work in the field. They do not want to work in a steel plant
or the power plant which are mostly in remote sites, remote areas,
or building dams. They would much rather work for a software
company or a consultancy company living in big cities.
So I think that paradigm also needs to change because until these people are willing,
and these are the areas where growth is happening, where opportunities
are there in the job market. So good people have to be willing to
and keen to work in these areas. Maria Bartiromo: We want to get to
an audience question, but I wonder if, Philip Jennings, you would like to address an
issue that Arianna brought up, given you are a leader of so many workers. We can’t fire teachers, bad teachers?
Philip J. Jennings: Arianna, you’re heading in the wrong direction.
This is not going to help the discussion about improving schooling, about
improving universities if you put the finger of blame on teachers who you can’t fire. Arianna Huffington: Well,
it’s not either/or. It’s not either/or.
Philip J. Jennings: Do me a favor. I know the teaching community, they
are the angels of our societies, teachers. You get a good teacher and
those people are dedicated — Arianna Huffington: That’s
exactly what I said. I said precisely because teachers, it’s
very important to have this debate precisely because teachers are so important,
we need to be able to fire bad teachers in order to reward good teachers.
Philip J. Jennings: Arianna, please let me finish.
Amy Gutmann: Arianna, Philip, could I — Philip J. Jennings: Can I just finish?
Amy Gutmann: Absolutely. Philip J. Jennings: I don’t think it’s
right to put the finger of blame on the teaching community who are dedicated to
their kids, dedicated to their students, and to have a slash and burn approach to
the education profession I think is the wrong way.
I think Jeff is getting a free pass in the sense that when I talk to my members,
they say the skills that we have aren’t being used. They also tell me the training
budgets are being cut back. The governments, we talked about civil
servants use, they say, “Philip, austerity packages mean that the education
budget is getting cut.” So please, I’m with Amy on this one.
Jeffrey Joerres: But I don’t want to get a free pass.
Philip J. Jennings: Okay. Jeffrey Joerres: Because the fact is whether
we like it or not, the world in business is moving very quickly.
And if we can’t have an iterative process instead of maybe an episodic training process,
what will come out is antiquated skills or not as finely tuned.
So I think it’s the relationship between government, businesses, and educators to
make it a more relevant output to get people to work faster.
Philip J. Jennings: But Jeff, how strong are those short-term concerns on a business
leader with the Wall Street community that wants to see a
performance every quarter? Does that help? Jeffrey Joerres:
There are hedge funds who want to see that, but you know what?
The companies I talk to are thinking about five and 10 years.
They are not thinking about quarters. They are looking at an educated workforce
that has the ability to have lifelong learning that is taught in some areas.
Philip J. Jennings: Are we ready for lifelong learning? Jeffrey
Joerres: No. Maria Bartiromo: Amy? Amy Gutmann:
Look at the facts about what drives the economy because I think otherwise,
we are going to talk across purposes.
First of all, creative and collaborative skills coupled with in-depth knowledge
is what drives this economy, and those are the first kids to be hired.
Secondly, we don’t need to talk about the downside of teachers in K-12.
Let’s talk about the huge upside. Here is a concrete progressive proposal
that could unite everybody. Let us reward successful teachers with
a true career ladder so that there is high status in being a K-12 teacher. That would make a huge difference.
There are millions of college students who would love to enter K-12 education.
Many of them at Penn, Teach for America gets them.
They leave after three years. There is no career ladder there.
Let’s do it. That will propel the innovative economy.
Where training is for the jobs of today, education is for the jobs
of today and tomorrow. And then when industry hires
them, they won’t fire them. Maria Bartiromo: Very smart insights.
Arianna Huffington: Amy is absolutely right but let me just say one quick thing,
which is that right now, getting a good education at the K-12 level, if you are
a poor or middle class child in America, it has become a matter of chance,
literally lotteries, in order to be able to escape dysfunctional schools and go to good
charter schools, which is often where poor kids or even middle class kids now
can get a decent education. And this is not acceptable because you
cannot produce enough students with their requisite skills to go to college.
Laura Tyson: I think I would actually go to the audience at this point because I am
a little concerned that the conversation here is really too U.S.-centric,
all right? We have — no, listen. There
are lots of different school systems throughout Europe that perform
at the K-12 level better than the U.S. There are lots of countries in
Europe, Germany, Denmark. I used to hear two years ago, three years
ago, people were talking about Denmark as a successful economy that combined security
with flexibility and high levels of training in the workforce.
Germany, we know, has been able to survive this recession and basically rebuild
its manufacturing strength with very high cost, technically
trained workers. So let’s not get too hung up — yes,
I agree with Amy completely. That’s what the U.S. should do.
We should definitely do. But I do think we need to talk about the
structure of education in countries where it’s working and how it has to change because
the technology and globalization are changing the skill bases.
So when you look for workers in Europe, what are you seeing? What
needs to be done there? I’m a little too concerned we are
doing too much U.S. stuff here. Maria Bartiromo: Well, I mean the extent
of education is also a piece of the conversation.
In the U.S., students are in school five days a week, seven hours a day.
In China, six days a week, 10 hours a day. Question from the audience.
Laura Tyson: What about Europe? Male Speaker: I’m from media.
The work institution, what I look to is that the East and the West, we from
the developing nations have totally a different approach.
You are looking for graduates, high technologies.
We don’t need that. Where we are, 60 percent dependent
on agriculture. We need basic education for our kids so
that they can continue in agriculture. The investment ought to be that of based
in, as he says, about rural agriculture employment so that the farmer can do his
own agriculture, a part-time service, and then live happily in the village.
But this high technology I mean which we are getting from West to the East, I think
it’s creating a lot of problems to our developing nations.
I think there is a limit. I think you, most of you, look
at what Mahatma Gandhi said. Go back to the villages and try to limit
the needs and wants, including education, then there will be a solution,
not this high tech… Maria Bartiromo: More questions
from the audience. [Cross-talking] — Naveen Jindal: — Indian youth and they
want the best of education, even in the villages.
And they do not — they see, watch the same TV.
They even watch CNBC so they have very high expectations. And I think even there is a serious lack
of accountability in a lot of teachers in India.
We really need to improve the quality of education.
That’s a big challenge for every government, every state government, and
the government is trying to pursue that. We really give now, with the Right
to Education, also improving the quality of education and giving our youth employable
skills is very, very important and we are working very seriously on that and involving
private sector in a very big way.
Government is giving many incentives to the private sector in India to involve
in training of the youth for giving employable skills, and we can learn a lot,
especially the community college concept of the U.S., and we are trying to bring
that to India and that would help a lot in training of our youth.
And our youth is very, very ambitious and they want the best
[cross-talking] — Laura Tyson: And you don’t
need an either/or. It seems to me that having higher
value-added agriculture is the future. Having higher value-added
services is the future. You want a technically trained, sophisticated
group of workers whether they are doing agriculture in the countryside
or information services in Bangalore.
So I go back to my notion of the developed countries, college education for all,
community college very, very important as economies develop from emerging market
economies into [cross-talking] — Arianna Huffington:
But also, when we look at the system in China, which obviously,
we tend to celebrate because of their incredible prioritization that’s being
put on education there, but it is so much rote memorization that is affecting
the ability of students to be creative, to innovate, and to expand their own circles
of concern and empathy, and all these things are just as critical
when it comes to education. It’s not just about skills.
It’s also about what kind of human being do you become. Laura Tyson: Arianna, I don’t know if we
are going to be able too long to say that somehow or other, the educated students of
India or China are less innovative than American students.
I really think that is something that these are very sophisticated — the students
going on to the best universities and colleges and India and China are
extremely sophisticated and innovative. Maria Bartiromo: Question
from the audience. Very quickly, Dennis Nally.
Dennis M. Nally: Maria, I think this is really an interesting discussion.
And at the risk of oversimplifying, I don’t think this is about
the East and the West. In a recent Global CEO Survey that
we conducted, over 1,200 CEOs from all around the world participated in the survey
and basically said 2/3 of them believe there is a real shortage wherever you are
operating with skilled workers. And so I think you’ve got to take it back
to individual countries and understand exactly what is driving that issue.
And what business is saying, I believe, is it has to be a collaborative effort
working with governments, working with the educational institutions to solve that
problem in those respective countries. If you overgeneralize, I don’t think you
get anywhere with this discussion. Maria Bartiromo: We want solutions.
The conversation is getting heated. Let’s look for action. Solutions now, Philip Jennings. Philip J. Jennings: We know where
the jobs of tomorrow are. We know that when you look at the progression
of employment in Europe, in the U.S., and other parts of the world,
there is a growing shift towards the services industry and knowledge intensive. The solution must be that we have to gear
up our education, our training, and our employers that they can meet those needs
not just to give them the basics but continually through one’s working life.
We have to have a strong commitment to lifelong learning.
Learning and training at work should not stop at the age of 18, 25, or 30.
We need a new social contract, a new social contract that every worker has access
to relearning and to reeducation. Maria Bartiromo: Where does
that relearning come from? The corporate sector?
Government? Who is providing this retraining? Philip
J. Jennings: Government has to do a much better job in looking at what labor
and manpower trends are to identify where the problems are. Government has a role to
provide infrastructure. The private sector has an enormous role to
play as well in terms of the innovation requirements that they have. We can’t have a — you can’t just discuss
this with government without business and you can’t discuss with
business without labor. I would like to see a learning representative
in every workplace on the planet that that simple worker could put
his hand up and say, “I am being trained for three months.” Maria Bartiromo:
Solutions from the audience.
Yes, sir? Male Speaker: Well, in looking at models
that work, in response to Laura’s question, I think it would be
good to look at Finland. They have come out top of the list for the
last 10 years virtually, per the OECD’s PISA reports.
And they do it by investing in education, also starting with child education
at the very early stages. They have a system of social partnership.
It’s not based upon firing teachers or based on motivating teachers.
I could make one suggestion from that to the U.S. In 2006, you paid 25 hedge fund managers
the same as you paid all of the teachers at New York City for two years.
So would those people in the audience who are hedge fund managers think about giving
some of that money or accepting taxation, which will put it back into teachers’ pocket
and get incentives going the right way.
Maria Bartiromo: Good comment. Onto Carrefour.
Lars, do you have a solution? You are the largest employer in Europe.
Lars Olofsson: Thank you. Well, listen, first of all, when we are
talking about demand, what is all about demand? It’s about
growth. Now, when we talk about growth, it’s sure
that if we divide us up into West and East that East, they have a let’s call it
a demographic advantage, so in terms of quantitative growth, I don’t think
that the West can do anything. However, it’s all about value.
Now, when we talk about value growth, and I think that’s the way forward
in Europe, what are the levers? Well, long term, I think
it has been addressed. It’s all about education.
It is about the research and development. It is about giving, helping the small
and medium-sized enterprises. Now, short term, that is
the problem in Europe. How can we get back in growth? Because
without growth, we will not be able to absorb the unemployment, okay?
So the question is what do we do short term? Today, we are all
talking about rigor. Well, we need to increase the taxes.
We need to get our costs down, et cetera. That is not going to generate growth.
So my question is how can we have a rigorous growth? That’s what
it’s all about because that’s what we have to do.
And here, we have to think about how can we create value? Every good
cannot be transferred from West to the East.
This is rather an opportunity. Now, so my question is actually
how do we help? How do we help Europe in
short and medium term? Because without a rigorous growth, I’m
sorry, I will be — a tendency to be pretty pessimistic about
the future of Europe. Maria Bartiromo: First, we’ve got to see
growth before we can address the issue of education is what you’re saying.
Lars Olofsson: Yes. Maria Bartiromo: John
Studzinski, solutions. John Studzinski: The reason why, and
Laura… Germany, the reason why Germany works so well is that at the supervisory
board, you have 50 percent of the supervisory board management, 50 percent
labor, and they have to live with each other as strange bedfellows and therefore,
they take several years to work through issues and problems strategically.
And I think if we had more of this locked-on collaboration around the world
where labor — and even in the United States, labor is not enough at the table
when it comes to long-term planning. Put it very simply, we have
to change in ethos. We have to take labor away from being
an expense item on the P&L and we have to make it a long-term capital asset.
If we can do that and make it a long-term capital asset, which implies the points
that were made about education, the worker will retain their own dignity, which
I think is the most important. Philip J. Jennings: I think the worker
has to have that voice and has to have that opportunity.
I’m please to say with Carrefour, as a UNI Global unit, we have a social dialogue
at the global level with the company. We also have the same conversation with
Manpower and 40 other companies covering something like 10 million workers.
This affords you the opportunity to get away from the daily skirmish but into much
more strategic thinking about what the employment projections are.
And those people actually have a genuineness, an authenticity about them.
They know what’s going on. They know where management
is not performing. That worker’s voice needs to be heard, and
I’m pleased to see that there is a strong plug for the… an involvement of working
people in these kinds of decisions. Maria Bartiromo: That’s the
person on the ground. Philip J. Jennings: It does work.
The person on the ground needs to find his voice.
Maria Bartiromo: Zhu Min with a solution. Arianna Huffington: One
very simple thing. One very simple thing at the K-12 level
is to increase parental involvement because right now, parents very often in schools
are seen as the intruders. And if parents are not involved in their
children’s education, it’s going to get really hard.
And at the government level, we need to see the opportunity cost of where
the resources go compared to where they should be going if we are going to do some
nation building here at home. Right now in America, we are spending
$2.8 billion a week fighting a non-winnable war in Afghanistan. That money could come back home and
rebuild some of those collapsing infrastructures when it
comes to our schools. Maria Bartiromo: Education
begins at home. Zhu Min, solutions. Zhu Min:
Laura has a very important point, which is a mandatory
higher education. I think it is absolutely important because
if you think about job, what kind of job? It’s the competitiveness. If you want to get competitiveness for
the advancing economies, they have to move into upper…
You want the move in upper… and not into the small section but in
the massive scale sense. Barry mentioned you have a Facebook
or Google here and more. You have iPod.
You have Louis Vuitton. But even iPod is made in China, right?
I mean those are not enough to create job for the advancing economies today.
So when we talk about education system today, it’s not only to fix the problem
in today but looking for the future. You really need a massive educational
reform, create the hope high education system so that you would be able to bring
the people able to work in high-end industry.
I’ll give you a number. China produces six million college
graduate students every year. Among them, one million are engineers. In China, …they are not enough for the
growth of a Chinese economy in the future. What happened in the advance economies?
Laura Tyson: And as the President often points out, the U.S. has actually
had declined in this respect. We used to be number one in terms of
college completion rates and college enrollment rates for the
college-age population. We are number 14, number 16, number 17.
We are not — we are falling behind the need to, for the next 10 years, take students
and give them the education they need and the technology that
they need [cross-talking] — Maria Bartiromo: Well, Tom Friedman had
a great quote that we showed earlier. When was the last time you saw a 12-year-old
say, “I really want to be an engineer?” Laura Tyson: So
there has been a race. The demand for skills has gotten way
out of line with [cross-talking] — skills.
Maria Bartiromo: Exactly. Solution. Kiran Mazumdar-Shaw: Yes.
I just wanted to comment that when we talk about the skill deficit, it’s again
an employability debate and I think there, I really want to subscribe to
an internship-based training program within corporates because I think that’s very,
very powerful and that addresses both the training deficit and the kind
of employability issue. Maria Bartiromo: This is a great idea.
We’ve heard some great insights. Thank you very much.
We are out of time. Thank you so much to all of our contributors
and our great ideas from the audience, including of course our
panelists and our advocates. Please go to cnbc.com to find out when
the program will air on CNBC globally. I’m Maria Bartiromo from CNBC’s Davos
Debate at the World Economic Forum in Switzerland.