Research programme 2010-11

For 2010-11, the aim is to deepen the analysis on the crisis, assess responses and identify those that promote recovery and decent work as mandated by the G20. This will contribute to fulfilling the organization-wide mandate to implement the Global Jobs Pact and lead to two new issues of the World of Work Report.

This work will offer significant opportunities for cooperation with different sectors in the Office, in line with the organization’s proposed Knowledge Strategy, while at the same time drawing on the comparative advantage of the Institute, namely its autonomous research capacity. The Institute is also establishing an experts’ group with a view to enhance peer review of the work and thus promote analytical quality.

Global jobs crisis: sustainable recovery strategies

Though there are signs that an economic recovery, fragile as it is, might be underway, the global jobs crisis remains an issue of considerable concern. The World of Work Report will therefore examine conditions for a sustainable exit and recovery from the crisis. The Reports for 2010 and 2011 will complement the assessment of specific crisis measures carried out by the Office by focusing on key longer-term analytical issues, including the following:

The Report will analyze

employment and social sustainability issues. First, the extent to which a prolonged jobs crisis is being averted will be discussed. Initially, the crisis affected skilled workers, the financial sector and large firms. However, the crisis has spread more widely. As the economy recovers, there is a risk that certain disadvantaged groups like the lowskilled, women and youth, temporary and informal workers and small entrepreneurs will be the main longer term victims of the crisis. The Report will examine how these groups have been affected across a wide set of countries. Second, the Report will discuss the prospects for broader based recovery. It will examine different employment and income scenarios for successful exits from the crisis, and will discuss how these scenarios interact with announced reforms. The model recently developed by the Institute, Global Economic Linkages, will serve as basis for the scenarios.

The Report will examine how a successful decent work response to the crisis can be carried out without compromising long term fiscal sustainability. Government deficits and public debt have increased significantly in the wake of the crisis – partly as a result of fiscal stimulus measures, and partly reflecting the bail out of the financial system. Reining in deficits is imperative. But it is equally important to build a solid social protection system, as highlighted in the Global Jobs Pact. The Report will consider how the two goals can reinforce each other over the medium term, even if tradeoffs may exist in the shortterm. This will require consideration of how the most effective employment and social protection programmes, while creating a social floor, can also support the economy and fiscal sustainability in the long term. The Report will pay specific attention to the situation of emerging and developing economies in the context of inadequate fiscal space.

As stressed in the Global Jobs Pact, a successful jobs recovery needs to address the global imbalances that lay behind the crisis. The 2008 Report suggested a link between global imbalances and trends in the world of work. It is proposed to carry out more research to deepen analysis of this crucial issue. This would directly respond to the Global Jobs Pact’s requirement to make globalization fairer. It will entail, first, an analysis of wage, productivity and income developments on the one hand, and global imbalances on the other. Second, financial development will continue to be centre-stage for growth, jobs and social protection. The Report will therefore examine how financial reforms can support sustainable enterprises and decent work goals. This will include an analysis of the impacts on jobs and incomes of alternative mechanisms for funding enterprise investments (such as market-based finance, bank loans or private equity funds). An analysis will be made on how the composition of funds affects the real economy, employment and incomes and associated policy issues. More generally, the crisis has also raised broader issues regarding the respective roles of government intervention and markets. Given the urgency of the situation, governments have so far responded in an ad hoc manner, including through unprecedented support to the financial sector. However the issue arises as to whether a more strategic response is desirable and possible in the medium-term.

The Report will consider the employment and social dimensions of policies to promote environmental sustainability. It will build upon modeling work carried out by the Institute concerning the employment effects of green taxes. In particular, the report will examine the possible effects of green technologies on changing patterns of production and employment both within countries and internationally. It will also discuss the distributional effects of different green policies–an issue which has received little attention so far.

The economic crisis has exposed longstanding vulnerabilities in developing countries that had been overshadowed by strong economic growth during the recent commodity boom. First, underinvestment in agriculture has been a longstanding problem: the FAO estimates that the amount of food available in developing countries will have to double by 2050 in order to keep pace. Investment in agriculture if labour-intensive could promote business and employment opportunities, improve wages and productivity, and foster more sustainable economic growth. The Report will discuss the prospects for green jobs, food security and agricultural productivity in developing economies and the role of international initiatives and aid in this respect. Second, integrating the informal economy more effectively into domestic and international production chains would support resilience to future crises. Building on the recent joint project with the WTO, the Report will consider how informal economies can generate a self-sustained economic recovery, and how the linkages and interactions with the formal economy can be made more decent-work friendly. The Report could also identify additional support that policy makers could provide in terms of infrastructure investment, the development of local banking systems and the creation of proper legal and administrative frameworks extending to the informal economy.

Migrants have been strongly hit by the crisis, eroding the flow of remittances to countries of origin. Countries of origin may also be confronted with return migrants seeking sustainable income sources. This raises the issue of how to make migration a stronger factor of development that relies not just on remittances. The Report will consider several options in this respect, including: shaping new entrepreneurship possibilities for returning migrants in their home country; and government’s role in maximizing employment-enhancing outcomes for returning migrants. This work will draw upon the ongoing project on migration in African countries.

Globalization in the aftermath of the global crisis

A follow up to the report produced jointly with WTO on globalization and informal jobs in developing countries is under consideration. This may involve consideration of how well-designed trade reforms can help improve the international integration of developing countries and at the same time improve decent work outcomes. Particular attention might be devoted to agricultural trade, development and decent work in these countries.

As part of the follow-up to the 2008 Declaration on Social Justice for a Fair Globalization, the Institute will coordinate country studies that put together lessons from successful crisis responses. The Declaration emphasises the need for examining the interactions between the different domains of the Decent Work Agenda and calls for better knowledge and evidence that the Strategic Objectives are inseparable, interrelated and mutually-supportive. To support ILO constituents in developing responses to the economic and social challenges they face, including the consequences of the current economic crisis, five country studies will be initiated in 2010 to analyse the economic and labour impacts of the crisis and other developments at the country level and the implications of the policy packages implemented. Participation will be on a voluntary basis and the constituents will be involved in the process. This project will involve team-work with ILO Regional Offices and Technical Departments.