Research programme for 2012-13

For 2012.13, the aim is to deepen the analysis of the process of global rebalancing which is under way as a result of the global crisis and to analyse longer term challenges for the world of work. This will lead to two new issues of the World of Work Report and an assessment of effective country responses to this re-balancing.

This work will offer significant opportunities for cooperation with different sectors in the Office as well as other international organizations, in line with the Organizationfs knowledge strategy.

Contribution of well-designed employment and income policies to global rebalancing

The global recovery has begun to weaken due to the fact that a number of factors underlying the financial and economic crisis have not been adequately addressed. Moreover, the pace and quality of employment growth continues to vary considerably across and within regions and countries. There is growing concern, including in the IMF, the G20 and among global worker and employer organizations, that a sustainable recovery will not happen unless quality employment prospects are improved. With this in mind, the World of Work Report for 2012 would explore how well-designed employment and income policies can support rebalancing . both between countries and within them. Some of this work could be carried out in cooperation with other international organizations (notably IMF and UNDESA) and other parts of the ILO. As part of the overarching theme, some of the following specific issues could be explored:

Jobs and macroeconomic policies. Macroeconomic imbalances have intensified, especially in advanced economies. New financial bubbles have appeared in several emerging economies. And yet decent work gaps remain acute. The purpose of this work will be to provide an evidence-based assessment of positive interactions between macroeconomic policies and employment and social policies.

Promoting investment in sustainable enterprises for more and better jobs. A global and fair economic recovery will require changing global patterns of investment and employment. In particular, a closer investigation of the determinants of investment, notably as regards access to finance and corporate governance issues, is needed, paying particular attention to assessing the implications for employment creation. In this regard, one of the most pressing concerns for enterprises is lack of adequate access to finance. Since the onset of the crisis, this has been of particular concern for small and medium-sized enterprises (SMEs) that account for the bulk of employment creation. Indeed, a number of studies point to the fact that SMEs are financially more constrained than large firms, and thus face growth constraints . considerably affecting job creation. It is crucial to investigate the policy factors and conditions conducive to the creation and expansion of SMEs, and the impact on decent work opportunities.

Income distribution and growth re-balancing. There is growing consensus that developing and emerging economies can no longer rely on exports to advanced economies as a driver of growth. The issue is how well-designed incomes, investment and social policies can contribute to this rebalancing.

More generally, growing income inequality has played a central role in the onset of the financial and economic crisis. However, while there was a short-lived reduction in inequality (as equity markets fell and incomes of the wealthiest declined), income inequality has continued to widen. Importantly, inequality is likely to worsen considerably as lower skilled workers have more difficulty re-entering the labour market, with earnings loss often associated with re-employment. Earnings loss of this nature is particularly acute among youth, persisting for many years. Research will identify policies which can improve income distribution while supporting employment, productive investment and growth.

International labour standards as part of a re-balancing strategy. Given the challenges labour law regimes are facing at the national level, the question arises of how international regulation can be used to ensure a level playing field for enterprises and workers and contribute to rebalancing of globalization. Based on this analysis, proposals will be developed as to how to improve and better coordinate the existing instruments.

The future of work

The 2013 World of Work Report will tackle a series of structural changes affecting the nature of work and the workplace. Given that many countries are confronted with high unemployment rates, the issue of population ageing has receded from the forefront of the policy-making agenda. Yet most countries . advanced, emerging and developing . are ageing at a rapid pace, which can have serious socio-economic implications unless adequately addressed.

Welfare systems, the financial crisis and population ageing. As the number of retirees to working-age persons rises, the financial sustainability of social protection schemes is in jeopardy . exacerbated by wealth destruction associated with the financial and economic crisis. In other instances, notably in emerging and developing countries, such schemes are little developed or non-existent . which can have devastating consequences on individual well-being with important economic spillover effects. At the same time, policies that address fiscal consideration of such schemes must be designed in such a way as not to discourage employment.

Ageing populations have also been associated with rising health-care costs. Currently, health-care costs are growing faster than GDP in most countries, posing major challenges to social security systems. Most health-care systems are financed through taxes or social security contributions borne by active labour. The Report will analyse the causes of rising health-care costs, including the impact of public and private health-care systems on labour productivity. In particular, a relatively new phenomenon that has been observed over the past years has been rising costs associated with work-related psychological diseases such as the burn-out syndrome and depression, leading to a trend increase in absenteeism and lower productivity.

Youth, skills matching and productivity. As labour force growth slows, productivity gains will be key to sustaining past improvements in living standards. However, skills mismatch is often highest among young graduates. In the first instance, efforts are needed to ensure that the skill levels of young people are of high quality. But education is not enough: well-educated youth must be able to find jobs that are commensurate with their educational attainment, otherwise future labour market prospects will suffer and overall productivity and competitiveness will decline.

Social impacts of growing scarcity of natural resources. Globalization over the last decades has clearly demonstrated the limited impacts of national legislation on economic processes. But strong governments and supranational institutions are needed to establish and to maintain public goods. For instance, the stabilization of global climate change and other environmental public goods need to be addressed through policy measures on an international level. Research in this area will evaluate which policies can significantly increase resource productivity in economies without endangering employment goals and competitiveness and the role of social dialogue in this regard. A main focus will be set on the effects of major renewable energy investments on employment and incomes.

Studies on Growth with Equity: Assessment of country policies that work

In order to better understand the link between social equity and economic growth, the Institute has been involved in producing a series entitled Studies on Growth with Equity. The primary objective was to examine the so-called trade-off between social equity and economic growth. However, the results from the first five studies (Brazil, Germany, Indonesia, Spain and Tunisia) show that growth can be combined with equity to achieve economic recovery and job creation . if policies are well-designed.

The Studies on Growth with Equity series will continue to examine policies at the country and regional level to complement its cross-cutting thematic work. This may take the form of three special topics for publication: (i) mobilizing domestic sources of growth in selected developing and emerging economies and the contribution of decent work in this respect; (ii) promoting employment policies in the Euro area; and (iii) a contribution to a new development approach in Arab countries.