Tackling the global jobs crisis: A Decent Work response

by Mr. Juan Somavia Director-General of the International Labour Organization

The global financial and economic crisis is turning into a jobs crisis and a social crisis. The speed, depth and breadth of the crisis have taken all by surprise. The crisis is creating hardship for millions of workers and families in low-, middle- and high-income countries through loss of employment, lower quality employment in the informal economy, drop in earnings and low probability of finding employment, particularly for young people. Pension schemes relying on individual market capitalization have been hit hard.

This crisis was preceded by growing imbalances in the way globalization unfolded, notably a protracted aggravation of income inequalities within countries. Moreover, the crisis occurred in a context of a dominant policy vision that overvalued the capacity of markets to self-regulate, undervalued the role of the State and devalued the dignity of work, respect for the environment and the delivery of public goods, social protection and the welfare function in society.

A social recession of major proportions is upon us. Millions of persons across the globe have lost their jobs over the last few months and many more jobs are in jeopardy. ILO estimates suggest that an additional 50 million persons will enter unemployment by the end of 2009 when compared with 2007. We continue to monitor the situation closely. It could be higher. The number of working poor will swell by some 200 million over the same period. Informal employment will rise in many countries. Earnings are likely to fall on average. Workers' rights are put under pressure as suggested by rising discrimination against migrant workers, for example.

Slow recovery in employment

Several forecasts suggest that unemployment will continue to rise at least until end 2010 as the recovery slowly gains momentum and enterprises gradually reduce their idle capacity. Additionally, given the especially uncertain future outlook, investments projects are being and will be deferred. It is very likely we will experience a significant lag of four to five years, well-documented in previous crises, between recovery in economic indicators and recovery in employment to pre-crisis levels.

Most forecasts predict a long and slow economic recovery starting sometime mid 2010. This, however, is conditional on the effectiveness of measures taken to stimulate economic activity through sizeable fiscal stimuli and stabilize the financial sector laden with bad debts.

Meanwhile, the labour force continues to grow. An estimated 45 million persons worldwide, mostly young persons looking for their first job, enter the labour market every year. Prospects for job-seekers, especially first-time job-seekers, are grim.

A jobs crisis for several years with risks of instability

Putting these elements together paints a bleak picture. The world is looking at a jobs crisis of some six to eight years duration. This holds worrying implications for social and political stability and security in general. Already we have seen signs of instability, tensions and even riots in several countries. And we know the dearth of employment is one of the major sources of instability; simply because decent work remains to date the most fundamental democratic demand of people, together with basic economic security.

We should not forget the crisis before this crisis: unbalanced globalization, lack of broad opportunity for all, little social protection in too many countries, massive poverty, weakening middle classes through stagnating earnings, global warming through excessive carbon emissions, devaluation of dignity at work, of public goods and of global solidarity.

The policies of the past have failed to avoid this crisis and the earlier ones. We cannot pretend to counter this crisis with failed policies. In considering the policies needed to recover from the terrible blows inflicted by this crisis, we need to bear in mind the lessons of the recent past.

The ILO has for some time been a critique of a model of globalization that the World Commission on the Social Dimension of Globalization described in 2004 as “morally unacceptable and politically unsustainable”.

Policies are needed to re-establish balances between the power of the State, the dynamism of markets and private enterprises, the voice of societies and expression of people, the satisfaction of basic needs of families and communities.

A global jobs pact

In the immediate future, the central proposal of the ILO is a global jobs pact, to be discussed at the International Labour Conference in June 2009. The proposals integrate the extraordinary measures adopted by many governments, those agreed to by the G20 leaders in April and the process under way with the Chief Executives Board of the United Nations backing the global jobs pact.

A global jobs pact is the Decent Work response to the crisis. It is envisaged as a policy contribution by the ILO to mitigate the impact of the crisis on working families and enterprises, including the informal and rural sectors, and to help shape a productive and sustainable recovery.

Balanced growth with broad support

The strategic objective of the global jobs pact is to place employment and labour market issues, together with social protection and respect for workers' rights, at the heart of stimulus packages and other relevant national policies to confront the crisis. The use of social dialogue to define and implement policies is seen as a key consensus-building tool. Not enough priority has been given to this approach – which is what people expect from political leadership.

Policies must target employment and social protection outcomes. We need a productive way out of the crisis in order to significantly reduce the lag time between recovery of growth and the recovery of employment. This would also prepare the ground for a new model of sustainable development and a fair globalization. At the ILO we call for a new globalization providing opportunities to all, rooted in balanced growth with efficient market economies, socially just and environmentally sustainable outcomes.

This is a political project grounded in decent work for all working women and men. A project requiring the support of all: governments, parliamentarians, local and regional authorities, citizens, employers' and workers' organizations, civil society and multilateral institutions. At the heart of all this lie local politics and the interaction with global politics. Parliamentarians are conveyor belts; they must play a central role to ensure that the policies applied today and the new governance systems that will inevitably emerge tomorrow respond to the deep-rooted need we all have for dignity at work.