3. Employment-rich Economic Growth

Sustainable Development

Decent work

Economy Social Environment Employment Protection Rights Dialogue
Relevant SDG Targets
1.b, 8.3, 8.5, 8.6, 8.b
Relevant Policy Outcomes
1, 10

On this page: DWA-SDG Relationship | Cross-cutting policy drivers | Partnerships | ILO Capacity | Resources

Economic growth alone does not necessarily translate into more and better jobs, especially for the poor, vulnerable and those at risk to be left behind. Economic growth is a prerequisite for increasing productive employment; it is the combined result of increases in employment and increases in labour productivity. Hence, the rate of economic growth sets the absolute ceiling within which growth in employment and growth in labour productivity can take place. However, the pattern or nature of growth matters, too. The impact of economic growth on productive employment creation depends not only on the rate of growth, but also on the efficiency by which growth translates into productive jobs. The latter depends on a range of factors, such as the sector composition of growth and the capital/labour intensity of growth within the individual sectors. There is usually a need to increase both the number of jobs and the productivity and incomes from employment. A review of economic development from an employment perspective should therefore assess to what extent economic growth has met both the need for more jobs and for higher productivity/incomes. Such an assessment needs to be broken down by economic sectors to yield meaningful insights. The extent to which economic growth is associated with and driven by a productive transformation is of major importance to the sustainability of economic development in medium and long term (19).

Indicators that measure the ability of an economy to generate sufficient employment opportunities for its population can provide valuable insights into the economy’s overall development performance. These indicators include unemployment rates, employment-to-population ratios, labour force participation rates, and the employment intensity of growth or elasticity of employment with respect to output – this last indicator measures how much employment growth is associated with 1 percentage point of economic growth. The decline in the employment content of growth is a matter of policy concern. Explicitly integrating employment and decent work into economic growth and poverty reduction policies helps to maximize the benefits for people and to ensure that growth is sustainable and inclusive.

The situation of the “working poor” must be a matter of particular attention – especially in countries where the formal economy is small, many women and men are working, often arduously and for long hours, but are simply unable to earn enough to lift themselves and their families out of poverty. Combining paid and unpaid work, women work longer days than men, and this time poverty impacts on their ability to access decent work (8).

During the past fifteen years ILO, UNDP, the OECD,UN-DESA, the World Bank and others have carried out considerable analytical work on the growth-employment-poverty nexus [see for example: (20)]. The World Bank’s 2013 World Development Report, entitled “Jobs”, highlighted the transformational role of employment in terms of rising living standards, greater social cohesion and improved productivity (21). UNDP’s 2015 Human Development Report, published under the title “Rethinking Work for Human Development”, sought to establish the connection between work (in the broader sense) and human development (22). A joint ILO-IMF conference, organized in 2010 in Oslo, examined the relationship between growth, employment and social cohesion. The growth-employment-poverty link was also the central theme of the African Union Extraordinary Summit on Employment and. Poverty Alleviation in Africa held in Ouagadougou in September 2004; theDeclaration adopted on that occasion by the African Heads of State places “employment creation as an explicit and central objective of our economic and social policies at national, regional and continental levels, for sustainable poverty alleviation and with a view to improving the living conditions of our people;” (23).

To achieve the goal of transforming growth into employment the ILO advocates and promotes global policy frameworks and partnerships that aim at generating more quality employment opportunities. At the country level, the objective is to support the ILO constituents to develop, implement and monitor coordinated and context-specific policies and programmes that promote quality job creation through economic diversification and investment strategies, skills development for present and future needs in the labour markets and labour market activation and intermediation that integrate the most vulnerable groups. These include policies and programmes facilitating the transition to formality as well as the creation of employment and income opportunities in the rural economy (see separate section).

DWA-SDG Relationship

The very formulation of SDG 8 “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all” recognizes that economic growth will be inclusive only if it creates jobs and decent work. Because of the strong link between growth, employment and poverty reduction activities in support of SDG 8 will support the achievement of SDG 1 (poverty) and 10 (equality) as well. The targets associated with SDG 8 cover a wide range of aspects linked to the Decent Work Agenda, such as productivity (8.2), entrepreneurship (8.3), green jobs (8.4), job creation (8.5), youth employment (8.6), child and forced labour (8.7), OSH (8.8), LED (8.9) and access to finance (8.10). SDG target 8.b calls for the implementation of ILO Global Jobs Pact (2009) whose fundamental objective is to provide an internationally agreed basis for policy-making designed to reduce the time lag between economic recovery and a recovery with decent work opportunities.

From a Decent Work perspective, the topic of employment-rich economic growth is of course primarily associated with the employment pillar of the DWA; but because of the integrated nature of this agenda the ILO will take the other three pillars into account as well when advocating for the greater employment intensity of economic growth.

Cross-cutting policy drivers

Many ILO instruments refer in one way or another to employment issues. Central to the issue of employment-rich economic growth is Employment Policy Convention C.122, 1964 (considered one of ILO’s priority instruments and ratified by 111 member states), the Employment Promotion and Protection against Unemployment Convention C.168, 1988, as well as Recommendations R.122 (complementing C.122), R.169 (Employment Policy (Supplementary Provisions), 1984 and R.176 (complementing C.168). The application of standards is an integral part of ILO’s employment promotion programmes.

Employment promotion and the growth-employment nexus is of particular interest to governments and the social partners, and therefore a subject of social dialogue in all nations, especially in situations of economic crisis or downturn.
ILO’s employment policy strategy incorporates a gender-responsive approach, including research under ILO’s Women at Work Initiative and capacity building on gender equality and non-discrimination.

Climate change and the trend towards a greener economy may present both opportunities and risks for employment creation since it will change the sectoral composition of national economies. For a just and fair transition, these changes must be addressed through pro-employment macroeconomic policies as well as sectoral, industrial, trade, infrastructure investment or environmental strategies that generate more and better jobs while promoting structural transformation and enterprise development.

Partnerships

The ILO drives the global advocacy for coherence in approaches to employment-rich macroeconomic growth and scale up its support for more and better jobs, including through its leadership of the UN system-wide Global Initiative on Decent Jobs for Youth. Such global advocacy also extends to the Group of 20 (G20) and to the BRICS countries19, and fosters South–South cooperation on employment policy. Partnerships and cooperation with the UN system, international financial institutions, regional economic commissions, development banks and sub-regional economic communities will be expanded to deliver on the employment-related goals and targets of the 2030 Sustainable Development Agenda. At the national level, the strategy will require the involvement of ministries of the economy, finance, production and industry, among others, as well as close collaboration with UN country teams.

ILO Capacity

ILO’s work on making economic growth more employment-friendly is driven by the Office’s Employment Policy Department, which is responsible for developing integrated employment, development and skills policies that maximize the employment impact of economic growth, investment and development. The Department includes three Branches: Development and Investment (DEVINVEST), Employment and Labour Market Policies (EMPLAB), and Skills and Employability (SKILLS). DEVINVEST coordinates ILO’s work on crisis response and in fragile states, which include the ILO flagship programme “Jobs for Peace and Resilience.” The ILO's most recent Recommendation, which revises and supersedes, 1944 (R.71) adopted in 2017, bears a similar title: Employment and Decent Work for Peace and Resilience Recommendation, 2017 (R. 205). 

Many other ILO Departments and units contribute to employment-rich economic growth: first and foremost the Enterprises Department, but also the units working on the rural and informal economies, on migration and on sectoral activities, as well as the Research Department.

Resources

The Employment Policy Department maintains its own documentation centre which can be accessed here. The centre includes several databases on
  • youth employment
  • labour-market indicators
  • labour-based technologies.
Additional resources can be accessed through the ILO library page on employment promotion.

19. ILO. Decent Work Country Diagnostics - Technical Guideloines to draft the Diagnostics Report. Geneva : ILO, 2015.

8. ILO. Women at Work Trends. Geneva : ILO, 2016.

20. Osmani, S.R. Exploring the Employment Nexus: Topics in Employment and Poverty. New York & Geneva : UNDP and ILO, 2002.

21. World Bank. World Development report - Jobs. Washington : World Bank, 2013.

22. UNDP. Human Development Report 2015: Work for Human Development. New York : UNDP, 2015.

23. African Union. Declaration on employment and poverty aleviation in Africa. Addis Ababa : African Union, 2004.

19 - Brazil, Russian Federation, India, China and South Africa.