ILO Online – No. 52 – Wednesday 20 September 2006
By Juan Somavia, Director-General, International Labour Organization

Faced with the fact that growth is not producing enough jobs worldwide, the world’s financial leaders recently gathered in Singapore must focus on more than trade and financial imbalances, says ILO Director-General Juan Somavia. In this article, Mr. Somavia calls for significant policy reforms to deal with global imbalances between growth and job creation.
Full text of the statement by Mr. Somavia to the Annual Meetings of the IMF and World Bank.

2006 is expected to be the fourth consecutive year of global GDP growth of over 4 per cent. And in sub-Saharan Africa, growth is forecast to be the strongest in 30 years. Interest rates still remain relatively low, and corporate profits are at record highs. World trade is forecast to continue growing at around 7 per cent.

Yet even though the growth rate has been more than decent, the quantity and quality of work created are most certainly not. Almost everywhere in the world, access to decent and productive work has simply failed to keep pace with macroeconomic statistics. In the last ten years, official unemployment figures have increased by more than 20 per cent.

Worse still, in large regions of the world, the bulk of new jobs is being created in the over-crowded informal economy where working women and men eke out a living at low productivity and, consequently, low earnings.

Indeed, the absolute number of working poor living on less than $2 a day per person stands today at the same level it did 10 years ago, representing about 50 per cent of the global workforce. All this is creating challenges with profound political and security implications.

Perhaps nowhere do these imbalances stand in more stark relief than in Asia. Granted, the dawn of the ‘Asian century’ has been marked by rapid economic growth – more than double the global average since 1995, with labour productivity rising by about 41 per cent. Yet today Asia is facing a range of “decent work deficits”:

• The region is home to more than two-thirds of the world’s poor and nearly half the world’s unemployed youth.
• Informal employment as a share of non-agricultural employment ranges from 83 per cent in India, 78 per cent in Indonesia, and 72 per cent in the Philippines, to 51 per cent in Thailand and 42 per cent in the Syrian Arab Republic.

What are some of the major policy avenues needed to address the global jobs imbalance?

First, make job creation a clear objective of policymaking. This is critical to promoting economic growth that actually translates into the creation of decent jobs and encourages investment and entrepreneurship, skills development, proper labour standards and sustainable livelihoods. Facilitating enterprise creation is key – particularly to promote and expand local development including local markets through small enterprise initiatives. Ensuring young women and men get the skills they need to start their working lives right is vital.

Second, respect, promote and realize fundamental principles and rights at work, namely freedom of association, the elimination of forced labour, child labour and discrimination in employment. As most business leaders recognize, quality labour laws that secure human rights at work are essential for a sound investment environment, workplace stability and productivity.

Third, extend social protection and increase its effectiveness, particularly for workers in agriculture and the informal economy who are in practice often not covered by labour legislation.

And fourth, support institutions and systems that strengthen labour market governance, including frameworks that encourage social dialogue and help resolve workplace disputes. Social dialogue, involving strong and independent workers’ and employers’ organizations, plays a pivotal role in increasing productivity and building cohesive societies. It is the best road towards flexibility and security for both employers and workers. Experience has shown that lack of dialogue weakens development potential.

This is the “ILO decent work agenda”, developed by government ministers, employers and union leaders from all over the world. From the United Nations World Summit in 2005 to the United Nations Economic and Social Council (ECOSOC) Ministerial meeting in July of this year, the global community has made full and productive employment and decent work a central objective of national development policies. This is today an international consensus.

We must acknowledge that growth in the value of production cannot be the only criterion for economic success. Ignoring employment as a policy objective and hoping that somehow output growth yields all the decent jobs the world needs is a recipe for disaster. On a foundation of sound macroeconomic policies, we must also promote a convergence of investment, education, health, labour market, local development and other policies to meet the challenge of reducing decent work imbalances and achieving the Millennium Development Goals.

The global system also has a powerful role to play. Our multilateral system of the UN and its agencies, as well as the World Bank and the IMF, have a common responsibility to address the global jobs crisis.

I invite the leaders of the Bretton Woods institutions to join the ILO and other relevant organizations to address together the widespread democratic demand of individuals, families and communities worldwide for a fair chance at a decent job. No single organization has all the answers but our collective experience can certainly be put to better use than it is today.