GENEVA (ILO News) – Economic crisis policies adopted by G20 governments saved or created an estimated 21 million jobs in 2009 and 2010, the International Labour Office (ILO) said in a study prepared for the G20 Labour and Employment Ministers meeting to be held in Washington on 20-21 April.
“Accelerating a job-rich recovery in G20 countries: Building on experience”, an ILO study with substantive contributions from the Organization for Economic Cooperation and Development (OECD) is to be presented to the G20 meeting on Tuesday by ILO Director-General Juan Somavia.
“This meeting, launched at the Pittsburgh Summit by President Obama, highlights the importance that leaders of the G20 countries put on having quality jobs at the heart of the recovery,” Mr. Somavia said. “And for the future we need an employment-oriented framework for strong, sustainable and balanced growth.”
The ILO study found that the slack in the labour market that accumulated from the second half of 2008 remains high in the first quarter of 2010 despite the beginnings of economic recovery. An additional factor is rising informal employment and poverty in some developing and emerging economies and generally weak growth in real wages in countries at all income levels.
It also says that the pace at which women and men in search of more and better job opportunities can be absorbed into productive employment will depend on the strength of the recovery in output and in employment, which in turn is a function of the policy mix adopted by countries individually and collectively.
The study concludes that exit strategies from the extraordinary stimulus measures launched in 2009 should not be activated prematurely, whilst acknowledging the need for fiscal consolidation. Growth remains fragile and private sector demand weak in many countries. Measures that support jobs and social protection should be maintained until employment growth gains significantly more momentum.
The ILO study also found that:
- Discretionary fiscal stimulus may have created or saved 8 million jobs in 2009 and 6.7 million in 2010.
- Automatic stabilizers1 - such as unemployment benefits and taxation - may have saved or generated 6.2 million jobs across G20 countries in 2009.
- Some 21 million jobs were therefore created or saved, equivalent to 1.0 per cent of total employment for the G20 group.
- Over 6 million jobs were lost in manufacturing, 2.8 million in construction and 2.3 million in wholesale and retail trade in the two years to the third quarter of 2009 among 15 G20 countries with available data. During the same period, utilities, education, public administration and health registered increases in employment.
- Employment losses have been more marked for men than for women in most countries. And,
- In the two years to the second half of 2009, the youth unemployment rate increased in 12 of the 14 G20 countries with available data.
The policy response of G20 countries to the global crisis was rapid, decisive and large scale, the ILO report says, indicating that from the latter part of 2008, monetary policy measures to stabilize weakened economies were quickly followed by fiscal measures to sustain employment, generate new activities and protect workers and households.
The report shows that while countries are balancing pressures for cutting budget deficits with the need not to withdraw the fiscal stimulus measures too early, they continue to adapt and introduce measures to overcome the crisis.
Taking into account specific country contexts, the ILO analyzed a range of crisis response measures and drew some emerging lessons on how to stimulate labour demand, extend social protection and promote employment and skills. Based on these lessons the ILO study identified six policy challenges for a sustained jobs recovery:
- Preventing premature exit from extraordinary stimulus measures, whilst acknowledging the need for fiscal consolidation.
- Sustaining recovery and shaping a path to an inclusive globalization through better articulation between employment and social protection and macroeconomic policies and basing balanced growth of the global economy on balanced growth of national economies.
- Acknowledging the link between employment and social protection policies and exploring the benefits of pursuing an integrated approach in which initiatives are packaged to exploit potential synergies.
- Gradually consolidating a basic floor of social protection in all countries to support more balanced economic and social development.
- Realizing the potential for green jobs and clean energy technologies could reap substantial employment and environmental benefits. And,
- Maintaining international policy coordination.
The Employment and Labour Ministers are meeting to assess the evolving employment situation in the context of the global financial crisis. In preparation for the meeting hosted by the U.S Department of Labour, the ILO was requested to produce a series of documents including the ILO report “Accelerating a job-rich recovery in G20 countries: Building on experience”. The report is accompanied by a statistical overview, a package of country briefs and a review of employment and social protection policies applied by countries.
For more information on the ILO report to be presented at the G20 please visit www.ilo.org.
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1 Unemployment benefits and taxation: These are 'automatic stabilizers', because they vary with the business cycle. In a boom period, taxes will increase, and unemployment benefits will fall; whereas during a downswing/ recession, taxes will fall and unemployment benefits will increase.