GENEVA (ILO News) – International Labour Organization (ILO) Director-General Juan Somavia has called for a “balanced” policy strategy aimed at securing a “jobs-rich” economic recovery in the face of new threats to the global economy from the sovereign debt crisis and fiscal retrenchment.

Speaking at the opening of the ILO’s 99^th International Labour Conference, Mr. Somavia warned that the recent debt crisis and deficit reduction measures, mainly in social spending, could “directly affect jobs and salaries” at a time of weak economic recovery and continued high levels of unemployment.

Mr. Somavia called for a “balanced policy convergence strategy” based on three elements: securing a job-rich recovery, moving onto a path of strong, sustainable and balanced growth, and addressing the structural imbalances of the global economy that existed before the crisis.

“We need to act on all three objectives together in a harmonious way within a short, medium and longer-term perspective,” Mr. Somavia said. “They are all interconnected. So we don’t have ‘either or’ options”.

“The immediate danger of a simultaneous fiscal retrenchment in a significant number of countries is to slow down Europe’s weak recovery even more,” Mr. Somavia said. “In turn, this would damage in different ways growth prospects around the world. A contagion effect cannot be ruled out”.

“There is no doubt that the public debt and public deficit problems of many countries are real and need to be dealt with, as both a national and a global stability issue,” said. “The question is how and in what time frame”.

Mr. Somavia addressed the opening of the Conference against a backdrop of new concern over the continuing global jobs crisis, that had elevated global unemployment to more than 210 million, or its highest level ever recorded, according to his report “Recovery and Growth with Decent Work” (Note 1). Mr. Somavia noted that the ILO had seen no indications of a reduction in the global rate of unemployment this year, despite signs of an economic recovery.

The Conference was expected to discuss progress on a Global Jobs Pact adopted last year during a Global Summit of heads of state and government in response to the crisis. The Pact has been endorsed by the international community, including the G20 Leaders’ Summit in Pittsburgh, and formed the basis of recommendations adopted by G20 ministers of employment and labour in Washington in April.

“The tripartite ILO has a responsibility to play its full part in finding a way forward. We bring two essential ingredients to the process: balance and dialogue.”

He called on governments’, workers’ and employers’ delegates from the ILO’s 183 member States to set in motion “a coordinated, orderly, balanced and credible long-term process to deal with the public debt and deficits ... according to each country’s situation and within a convergent international pattern”.

Mr. Somavia warned that “too much, too fast, will damage job prospects and the real economy, make it much harder to stabilize public finances and risk a double dip recession”. Noting that more people in work with rising earnings would translate into more tax revenue, less unemployment-related spending and a narrowing of deficits, he called for an “employment-oriented framework for strong, sustainable and balanced growth”.

“This will also require tackling a number of deep structural imbalances within and between countries which will impede sustainable development in the longer term”.

“Social tensions continue to rise,” he said. “There was already much anger and frustration over a ‘job weak’ recovery,” he said. “Today, our culture of social dialogue founded on respect for workers’ rights is needed more than ever.”

In addition to the Global Jobs Pact follow-up, the Conference is to discuss the contribution of employment policies to social justice for a fair globalization, as part of an integrated approach to decent work. Delegates will seek to identify priorities for the future work of the ILO.

“In the critical period ahead, many public and private policy options will involve choosing between human values and market values; between the interests of the financial sector and those of the productive economy; between what sections of society bear the brunt of the costs of the crisis, and how the most vulnerable can be better protected and empowered”, Mr. Somavia said.

Note 1: Report of the Director-General - Recovery and growth with decent work, International Labour Conference, Report 1(C), ISBN 978-92-2-121916-3 (Print) ISBN 978-92-2-121917-0 (Web pdf) ISSN 0074-6681. First published 2010.