Transcript ILO response to globalization and the global crisis

International Labour Office
ILO response to globalization and
the global crisis: the Global Jobs
Pact
Presentation by:
Mohammed Mwamadzingo,
Senior Economist, ILO Geneva.
ACTRAV/ITC-ILO inter-regional course on
Decent Work response to the Global Economic
Crisis,
Turin, 22-30 November 2010
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Outline of the presentation
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What crisis? Crisis of globalization
Principles of the crisis
Outlook for 2010-2011
ILO response: GJP
Update on ILO response
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What crisis?
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Crisis of globalization!
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What crisis?
But, what are the real causes of the crisis?
 Poorly regulated financial system
o Excessive risk-taking leading to sub-prime
lending
o Toxic assets spreading through the system
 Unbalanced globalization
o Export-led growth model
o Limited savings in the US
o Growing within-country income inequalities
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II Principles of the crisis
 The unbalanced model of globalization
 Conscious effort to weaken the role of the
state
 Lack of regulation of the financial markets
 Misguided policies pursued on the labour
market
 Failure of supervision role of international
financial institutions
= the rise and consolidation of neo-liberalism
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II Principles of the crisis
The rise and consolidation of neo-liberalism
• One of the underlying factors behind the resurgence of
neo-liberalism in the late 1970s was the scourge of rising
inflation and problems with the sustained balance of
payments (Margaret Thatcher in UK, and Ronald
Reagan in the US).
• The Washington Consensus (US Treasury, Western
governments, right-wing universities-University of
Chicago, the IFIs and the World Trade Organisation.
Shift from state-led to a more market-driven development.
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II Fundamental principles of the
crisis
The rise and consolidation of neo-liberalism
• Economic and social research was dominated
by neoliberal policies since the 1980s
• Globalization and financialization was an
important issue in research, but merely in a
positive and uncritical manner
• Increasing shareholder value and short-run
performance of companies and financial markets
run supreme among management and
governments.
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II Fundamental principles of the
crisis
The rise and consolidation of neo-liberalism
Example 1: 2003 Nobel prize in economics
• R. Engle and C. Granger received the Nobel
Prize for their econometric model on “risk
analysis of financial markets.”
• The model asserts that speculation on the
financial markets helps stabilize the markets,
thus calling for deregulation.
• In December 2007, Engle said “… I do not
expect a recession in the US…”
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II Fundamental principles of the
crisis
The rise and consolidation of neo-liberalism
Example 2: Income and wealth distribution
• Until the 1970s, the theory of income distribution
was an important subject in universities: equity
considerations were important for sustainable
development and functioning democracy.
• But the focus disappeared in the 1980s
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II Fundamental principles of the
crisis
The rise and consolidation of neo-liberalism
Example 2: Income and wealth distribution
Income inequalities are on the rise worldwide, 1980 - 2004
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1980s
World
Advanced countries
1990s
2000-2004
Emerging and developing countries
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III Outlook for 2010-2011
• Global economic growth, stronger than expected in
the first half of 2010, will slow down in the following
12 months amid weakness in financial sector
and other woes
• The combination of sovereign risk and a still weak
financial sector in many advanced economies poses
serious risks to the recovery
• Activity in emerging economies sustained by strong
domestic demand and the recovery of global trade.
Major economies in emerging Asia, including
China, India and Indonesia remain in the lead,
followed by Brazil in Latin America
• It could take up to 6 years for many countries to
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return to levels of GDP reached in 2007
III Outlook for 2010-2011
World GDP growth
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III Outlook for 2010-2011
Human cost of the crisis
• Over 210 million are currently unemployed, and
increase of 30 million since 2007.
• Unemployment in advanced economies has
increased by 3% since 2007
• Increase long term unemployment
• Lower lifetime earnings
• Increased risks of heart attacks and other stressrelated illness
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III III Outlook for 2010-2011
Global employment pattern
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III III Outlook for 2010-2011
Global employment pattern
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IV ILO response to the crisis and globalization
The Global Jobs Pact
• The Global Jobs Pact was adopted by the 2009
International Labour Conference following strong support
voiced during a three-day ILO Global Jobs Summit by
heads of state and government, vice-presidents and
ministers of labour, worker and employer representatives
and other leaders
• The Global Jobs Pact is a framework for the period
ahead and a resource of practical policies for the
multilateral system, governments, workers and
employers
• It was designed to guide national and international
policies aimed at stimulating economic recovery,
generating jobs and providing protection to working
people and their families
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IV ILO response to the crisis and globalization
The Global Jobs Pact
The GJP consists of five parts:• Decent work response to the crisis;
• Principles for promoting recovery and development;
• Decent work responses, consisting of:
– accelerating employment creation, jobs recovery and
sustaining enterprises,
– building social protection systems and protecting people,
– strengthening respect for international labour standards,
– social dialogue: bargaining collectively, identifying
priorities, stimulating action;
• The way forward: shaping a fair and sustainable
globalization; and
• ILO action
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IV ILO response to the crisis and globalization
The Global Jobs Pact
Part I: Decent work response to the
crisis
• ILO’s Decent Work Agenda
forms the framework for crisis
response.
• The world must do better after
the crisis
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IV ILO response to the crisis and globalization
The Global Jobs Pact
Part II: Principles for promoting
recovery and development
• Priority to employment and building social protection
• Support to vulnerable groups (women, youth, low-wage, lowskilled, informal economy and migrant workers);
• Maintaining employment and facilitating job transitions;
• Avoiding protectionist solutions, including wage deflation and
undercutting labour standards;
• Social dialogue, tripartism and collective bargaining;
• Economic, social and environmental sustainability;
• Sustainable enterprises and employment;
• Policy coherence.
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IV ILO response to the crisis and globalization
The Global Jobs Pact
Part III: Decent Work responses
• Active Labour Market Policies - Full and productive employment and
decent work should be at the heart of crisis responses, including
macroeconomic stimulus packages
• Building social protection – Sustainable social protection can
prevent increased poverty, address social hardship, stabilize
economy and promote employability
• Rights - International labour standards create and support rights at
work
• Dialogue - Strengthen respect for, and use of, mechanisms of social
dialogue, including collective bargaining, as an invaluable
mechanism for design of policies and building commitment of
employers and workers to joint action with governments
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IV ILO response to the crisis and globalization
The Global Jobs Pact
Part IV: Shaping a fair and sustainable
globalization
Policy coherence priorities for ILO
Global policy priorities
Counteracting threat to development and poverty
reduction
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IV ILO response to the crisis and globalization
The Global Jobs Pact
Part V: ILO Actions
– Produce and use labour market information for decision
making and monitoring progress;
– Prioritize employment and social protection in national crisis
response and development strategies
– Collecting and disseminating information on countries’ crisis
response and recovery packages;
– Assessing the actions taken and those required for the future,
working with other relevant organizations;
– Strengthening partnerships with other UN agencies regional
development banks and other international financial
institutions;
– Strengthening country-level diagnostic and policy advisory
capacity; and
– Prioritizing crisis response in Decent Work Country
Programmes
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V Update on ILO response to the crisis
Update: How has the Office given
effect to the Pact?
ILO Governing Body discussions:
Employment and Social Committee: Strategy to
give effect to the Global Jobs Pact
Working Party on the Social Dimension of
Globalization
Committee on Sectoral and Technical Meetings
and Related Issues
Committee on Technical Cooperation
Reports prepared for the G20 Leader’s Summits
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V Update on ILO response to the crisis
Update: How has the Office given
effect to the Pact?
Three key elements of the Office
strategy:
(i) Technical support to countries and regions
in the four pillars of the Decent Work Agenda
(ii) Research and analysis, knowledge sharing
and capacity building
(iii) International policy dialogue
Special office arrangements
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Summary and conclusions
• ILO first discussed the global crisis in November
2008 (Governing Body)
• ILO adopted the Global Jobs Pact in June 2009
(International Labour Conference)
• Mechanisms to assist countries wishing to apply the
Pact (nine countries, integrated application)
• The Pact has received strong support through UN
Economic and Social Council, G20 Leaders’
Summit, regional meetings and institutions (UNDP,
IMF, World Bank)
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Summary and conclusions
• Concerned by the new phase of the crisis: highly
differentiated pace of recovery, high unemployment
• Preventing crises requires not only the regulation of
domestic financial systems, but also a consistent set
of pro-employment macroeconomic policies
• To achieve sustainable recovery, we need to
replace the model of profit-led globalization of the
last three decades with an income and wage-led
recovery strategy.
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Way forward
We must use the financial and economic crisis for a
greater transition to a new and better world:
- rethink domestic and global development paradigms
and their accompanying processes
- re-launch sustainable growth and development
- be aware that the road to recovery and a fair
globalization is not without potholes
Thank you all for your attention
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