Addressing the Employment Aftermath: an ILO approach

1
Addressing the Employment Aftermath an ILO
approach

• Stephen Pursey
• Director, Policy Integration and Statistics
  Department, ILO

2
Crisis Scenarios for Unemployment

• In January ILO offered three scenarios for
  unemployment and working poverty between 2007 and
  end 2009. The worst case at that time, based on
  IMF forecasts of global growth of 2.2, was for a
  rise of around 50 million.
• ILO worst case was based on projections of what
  would happen if worst impact on unemployment of
  recent past repeated simultaneously in all
  developed economies and half worst impact in
  other regions. The impact on working poverty is
  perhaps better indicator of overall labour market
  under performance in developing and emerging
  economies.
• Now heading for worse than our previous worst
  case with global growth forecast at minus 1.3
  for 2009.

3
Working Poverty Scenarios

• Middle case scenario for working poverty for 2008
  was that those 5 above poverty line would fall
  below and in 2009 those 10 above would fall
  below. The worst case assumption was 10 in 2008
  and 20 in 2009.
• The numbers falling in two scenarios below 1.25
  would be 93 and 203 million. And below 2, 77
  million and 176 million.
• Working poverty is adults unable to earn enough
  to keep themselves and family above per capita
  poverty lines.

4
Growth and (Un)employment

• In four years from 2003-7 when global growth was
  around 5 per year world unemployment rate
  declined from 6.3 to 5.7.
• Working poverty declined from around 30 at 1.25
  and 50 at 2 levels to nearly 20 and 40
  respectively.
• Since world labour force grows by about 45
  million per year it seems we need a global growth
  rate of around 4 or more to hold unemployment
  and reduce working poverty.

5
Prospects for Recovery in Employment

• Every year below 3-4 growth will add to
  unemployment and most likely working poverty.
• Prospects for 2010 and beyond are for a weak
  recovery heavily dependent on financial
  normalization.
• Rogoff and Reinhart found that employment can
  take 5 years to get back to previous levels after
  financial crises.

6
Two Challenges

• Containing the damage to individuals, families
  and society.
• Accelerating the recovery of the labour market
  getting a faster pick up and/or a more jobs
  intensive recovery.

7
Can we dramatically expand the coverage of social
protection?

• Preventing a rise in severe poverty during a deep
  and possibly long period of labour market slack
  implies stepping up programmes that get a basic
  income to families in need.
• Minimum old age and disability pensions and cash
  transfers to families with children seem to have
  the biggest poverty impact with the lowest
  transactions costs.

8
What employment policies could make recovery more
job rich?

• Employment Intensive Infrastructure Investment
• roads, flood protection, water conservation,
  renewable energy sources, waste management, low
  cost housing, sanitation, etc
• Micro, small and medium-sized enterprise support
• Skills development
• Youth employment schemes
• Improved public employment services

9
Rights and Dialogue

• If jobs crisis is long and deep, processes of
  policy formulation and implementation may be as
  important as the policies themselves
• Anger and tension is likely to mount, not without
  justification.
• Respect for basic rights and mechanisms of
  dialogue need to be strengthened to help find
  constructive solutions to problems

10
A globally inclusive recovery

• Weaker countries will find it difficult to mount
  social protection and jobs initiatives needed
• But richer countries have their problems too
• How do we get commitment to international
  resource transfers for social protection and
  jobs?
• International cooperation for jobs is preferable
  to protectionism but may be harder to organize

11
An ILO Global Jobs Pact

• ILO Governing Body has started discussion of a
  decent work crisis response approach a global
  jobs pact to be developed at June global
  conference.
• It would be based on the ILOs main policy tools
  and constitute its contribution to national
  decision-making and international crisis policy
  coordination.
• Aims to increase international cooperation
  mechanisms to ensure that vulnerable countries
  have resources to take counter cyclical measures.
  E.g through maintenance and enlargement of aid
  flows.