White Paper

Interconnectedness among insurers and reinsurers at a global level is not well understood and may pose a significant risk to the sector, with implications for the macroeconomy. Models of the complex interactions among reinsurers and with other participants in the financial system and the real economy are at a very early stage of development. Parts of the market remain opaque to both regulators and market participants, particularly the counterparty arrangements among reinsurers through retrocession agreements. The authors create several plausible networks to model these relationships, each consistent with the financial statement data of the reinsurer. These networks are stress-tested under a series of severe but plausible catastrophic-loss scenarios. This analysis contributes to the literature by (i) applying a network-model approach common in the banking literature to the insurance industry; (ii) assessing the interconnections among reinsurers through potential claims rather than premiums; and (iii) investigating the most opaque part of the global insurance market, namely, counterparty arrangements among global reinsurers (retrocession). The authors find that contagion in the global reinsurance market is plausible and that the size of the potential market disruption is sensitive to (i) the distribution of risk among counterparties, (ii) the trigger for financial distress, (iii) the time horizon for claims resolution and (iv) the degree of loss netting. The findings suggest that further study of industry practices in these four areas would improve our ability to assess risk in the insurance sector and promote financial stability.

We develop new evidence on the cumulative earnings losses associated with job displacement, drawing on longitudinal Social Security records from 1974 to 2008. In present-value terms, men lose an average of 1.4 years of predisplacement earnings if displaced in mass-layoff events that occur when the national unemployment rate is below 6 percent. They lose a staggering 2.8 years of predisplacement earnings if displaced when the unemployment rate exceeds 8 percent. These results reflect discounting at a 5 percent annual rate over 20 years after displacement. We also document large cyclical movements in the incidence of job loss and job displacement and present evidence on how worker anxieties about job loss, wage cuts, and job opportunities respond to contemporaneous economic conditions. Finally, we confront leading models of unemployment fluctuations with evidence on the present-value earnings losses associated with job displacement. The 1994 model of Dale Mortensen and Christopher Pissarides, extended to include search on the job, generates present-value losses that are only one-fourth as large as observed losses. Moreover, present-value losses in the model vary little with aggregate conditions at the time of displacement, unlike the pattern in the data.

Thriving in an era of promise and uncertainty demands a velocity of innovation, experimentation and collaboration inside and outside the organization. Work cultures that have grown up over decades, however, can be complex, slow moving and complacent. Leaders need to intentionally reshape the organizational culture to energize people for work in the digital age.

U.S. labor markets became much less fluid in recent decades. Job reallocation rates fell more than a quarter after 1990, and worker reallocation rates fell more than a quarter after 2000. The declines cut across states, industries and demographic groups defined by age, gender and education. Younger and less educated workers had especially large declines, as did the retail sector. A shift to older businesses, an aging workforce, and policy developments that suppress reallocation all contributed to fluidity declines. Drawing on previous work, we argue that reduced fluidity has harmful consequences for productivity, real wages and employment. To quantify the effects of reallocation intensity on employment, we estimate regression models that exploit low frequency variation over time within states, using state-level changes in population composition and other variables as instruments. We find large positive effects of worker reallocation rates on employment, especially for young workers and the less educated. Similar estimates obtain when dropping data from the Great Recession and its aftermath. These results suggest the U.S. economy faced serious impediments to high employment rates well before the Great Recession, and that sustained high employment is unlikely to return without restoring labor market fluidity.

The BIS Growth Review described advanced manufacturing as that part of the manufacturing sector which: • is intensive in the use of capital and knowledge; • requires long term investment decisions to develop processes and buy equipment (that can take more than a year to manufacture); • uses high levels of technology and R&D and intangible investments (training, improvements to business process) to support innovation; • requires a flexible workforce with strong specialist skills in the areas of science, technology, engineering and mathematics and design; • competes in international and domestic markets. In many respects the aim is to encourage all of manufacturing to become advanced manufacturers since it is only becoming this that business will be able to thrive and contribute to the rebalancing of the economy. Advanced Manufacturing represents one of the best opportunities for the UK to rebalance the economy. The sector has the potential to drive up levels of value-added in the economy and make a substantial contribution to export growth. Its global competitiveness is ultimately dependent upon the skills of its workforce. The sector’s potential is evidenced in that it accounted for over half of all UK exports in 2009 and had the fourth highest technology balance of payments of OECD countries. It accounted for 12 per cent of gross value-added (GVA) - at £130bn - and employed approximately 2.6 million people in 2010. Several sub-sectors and major companies have global significance such as the UK aerospace sector with a 25 per cent share of the global aerospace market; its high productivity generates 20 per cent of UK manufacturing sector output from five per cent of its employment. The UK manufacturing sector as a whole contains several world leaders. JCB, for instance, is the world’s third largest manufacturer of construction machines and the UK automotive sector employs approximately 156,000 people directly in vehicle manufacturing - accounting for almost six per cent of all manufacturing employment. And the UK Johnson Matthey company is the world’s largest manufacturer of catalytic converters.

The UK Commission’s Employer Skills Survey 2011 is the key UK data source on employer demand for and investment in skills. It is the first UK-wide employer skills survey and is one of the largest employer skills surveys undertaken in the world, involving over 87,500 interviews with employers across all sectors and covering all sizes of employer. The survey covers topics such as skill related recruitment difficulties, skills gaps, training investment and the work-readiness of education leavers.

The UK Commission’s Employer Skills Survey 2011 is the key UK data source on employer demand for and investment in skills. This report focuses on the findings from the more than 74,000 interviews in England, enabling time series comparisons with the earlier National Employer Skills Surveys (NESS), carried out in England from 2005 to 20091 Work-readiness of those leaving education. The survey covers topics such as skill related recruitment difficulties, skills gaps, employer investment in training, product market strategy and the work-readiness of education leavers. Results are presented by size, sector, occupation, region and local area.

The UK Commission’s Employer Skills Survey 2011 is the key UK data source on employer demand for and investment in skills. It is the first UK-wide employer skills survey and is one of the largest employer skills surveys undertaken in the world, involving over 87,500 interviews with employers. In Wales 6,012 interviews were completed across all sectors and covering all sizes of employer. The survey covered topics such as skill related recruitment difficulties, skills gaps, training investment and the work-readiness of education leavers. Headline findings on these and other topics are provided below.

The UK Commission’s Employer Skills Survey 20111 is the key UK data source on employer demand for and investment in skills. This report focuses on the findings from the 2,500 interviews in Scotland which covered topics such as skill related recruitment difficulties, skills gaps, employer investment in training, product market strategy and the work-readiness of education leavers. Results are presented where possible by size and by sector.