ILO: "Decent Work" - The primary goal

Report by the Director General for the International Labour Conference 87^th Session, 1999

The world and the ILO are going through times of turbulence. Yet, as is well known, these are the moments of opportunity.

The ILO was established in 1919 in a world which was ravaged by war, threatened by revolution and haunted by the misery and poverty of working people. Its aim was to build a social framework for peace and stability within which economic processes could generate prosperity with social justice in the life of workers and in the world of work. Since its inception, it has sought to create this framework through a combination of normative action, institution building and public policies. Through many social and political struggles, the ILO's message has, in several respects, been embodied in the law and practice of what are today considered the developed societies. The test of time has shown that the ILO stands for values for which people care.

In the last two decades, however, the traditional cornerstones of the ILO's activities have changed, shifted by the transformation of the economic and social environment brought about by the emerging global economy.

Policies of economic liberalization have altered the relationship between the State, labour and business. Economic outcomes are now influenced more by market forces than by mediation through social actors, legal norms or State intervention. International capital markets have moved out of alignment with national labour markets, creating asymmetrical risks and benefits for capital and labour. There is a feeling that the "real" economy and the financial systems have lost touch with each other.

Changes in employment patterns, labour markets and labour relations have had a profound impact on the ILO's constituents, particularly trade unions and employers' organizations.

Globalization has brought prosperity and inequalities, which are testing the limits of collective social responsibility.

For the ILO - whose vocation lies at the intersection between society, the economy and the lives of individual human beings - these are seismic changes. But they are also setting the stage for its future role. The very forces which transformed the old framework are creating new demands and new opportunities for social action.

Changes in technology and production systems have led to changes in social consciousness, and to a new awareness of personal identity and human rights.

Increasing consumer choice and access to knowledge and new means of communication have made individuals and social institutions not merely subjects but also potential actors in the process of globalization. Social preferences influence market outcomes and have an impact on corporate reputations. A good corporate social image is increasingly essential for business success.

The change is not only economic and social. Politically, many countries now find themselves under scrutiny - both by markets and by public opinion - without the benefit of the doubt and the financial subventions of the Cold War era.

Problems of human insecurity and unemployment have also returned to the top of the political agenda in most countries. The social dimension of globalization, and the problems and demands it brings to the world of work, are becoming public concerns. There is growing realization that markets do not function in isolation from their social and political contexts. Social protection and social dialogue, for example, are increasingly seen to be integral elements of the adjustment process itself. The experience of the transition economies; increasing social polarization; the exclusion of Africa; and the recent crisis in emerging markets, have all made evident the need for a strong social framework to underpin the search for a new financial architecture.

The call to give a human face to the global economy is coming from many - and very different - quarters. Pope John Paul II has emphasized the "need to establish who is responsible for guaranteeing the global common good and the exercise of economic and social rights. The free market by itself cannot do it, because in fact there are many human needs that have no place in the market". Significantly, this concern is now voiced by business itself. The convenor of the World Economic Forum at Davos, Klaus Schwab, has warned that "the forces of financial markets seem to be running amok, humbling governments, reducing the power of unions and other groups of civil society, creating a sense of extreme vulnerability for the individual confronted with forces and decision-making processes way beyond his reach".

At this juncture, the ILO therefore finds itself well positioned. Business, labour and governments sit at its table. Its instruments are social dialogue and policies to promote fundamental principles and rights at work, employment, and people's security.

All this gives new public relevance to the facilities the ILO provides to the international community: the global reference point for knowledge on employment and labour issues; the centre for normative action in the world of work; a platform for international debate and negotiation on social policy; and a source of services for advocacy, information and policy formulation. It is a moment when the ILO must once again display its historic capacity for adaptation, renewal and change.

The moment of opportunity will not last indefinitely. To take advantage of it, however, the ILO has to overcome two persistent problems.

The first is an institutional tendency to generate a widening range of programmes without a clear set of operational priorities to organize and integrate their activities. This has diluted the ILO's impact, blurred its image, reduced its efficiency and confused the sense of direction of its staff.. To some extent, the problem arises from the exceptional richness of the ILO's mandate itself.

That mandate, as eloquently expressed in the Declaration of Philadelphia, is to create the conditions of "freedom and dignity, of economic security and equal opportunity" in which "all human beings, irrespective of race, creed or sex, can pursue both their material well-being and their spiritual development". The pursuit of such a vision demands an array of programmes ranging from the promotion of rights at work to institutional development. It requires the scope of ILO activities to extend from the workplace - or the workspace - to the economy as a whole. It requires responding to changing needs which have to be accommodated within frozen budget levels, leading to activities which are inevitably small and often fragmented. It means that the ILO periodically has to refocus its programme, to restate its message in the idiom of contemporary needs, and to mobilize external partnerships for resources and expertise. It means that focus, excellence and effectiveness must guide the management culture of the house.

Secondly, the end of the Cold War weakened the sense of common purpose among the constituents. It was further eroded by the impact of globalization on all the social actors. The decline of ideology and class conflict, the multiplication of social interaction beyond the workplace, and the trend towards enterprise-level bargaining, have all led to a greater fragility of consensus among the ILO's tripartite membership. It has meant that, while constituents have strong interests in individual programmes, there are not many which attract active support and widespread commitment from all three groups. An ILO without internal consensus is an ILO without external influence.

The two problems are, of course, linked. The clearer the perception of a common purpose and a shared interest in what the ILO stands for, the stronger and wider the areas of consensus will be.

The ILO's mission is to improve the situation of human beings in the world of work. Today, that mission finds resonance in the widespread preoccupation of people at times of great change: to find sustainable opportunities for decent work.

The primary goal of the ILO today is to promote opportunities for women and men to obtain decent and productive work, in conditions of freedom, equity, security and human dignity.

This is the main purpose of the Organization today. Decent work is the converging focus of all its four strategic objectives: the promotion of rights at work; employment; social protection; and social dialogue. It must guide its policies and define its international role in the near future.

Such a goal has several important policy implications, all of which are implicit in the mandate of the Organization. They now need to be made explicit and to be pursued.

The ILO is concerned with all workers. Because of its origins, the ILO has paid most attention to the needs of wage workers - the majority of them men - in formal enterprises. But this is only part of its mandate, and only part of the world of work. Almost everyone works, but not everyone is employed. Moreover, the world is full of overworked and unemployed people. The ILO must be concerned with workers beyond the formal labour market - with unregulated wage workers, the self-employed, and homeworkers. The participation of the informal sector in total employment has reached almost 60 per cent in Latin America. In Africa the informal economy accounted for over 90 per cent of new urban jobs during the past decade.

All those who work have rights at work. The ILO Constitution calls for the improvement of the "conditions of labour", whether organized or not, and wherever work might occur, whether in the formal or the informal economy, whether at home, in the community or in the voluntary sector.

Employment promotion is a central objective. The defence of rights at work necessarily involves the obligation to promote the possibilities of work itself. The ILO's normative function carries with it the responsibility to promote the personal capabilities and to expand the opportunities for people to find productive work and earn a decent livelihood. The ILO seeks to enlarge the world of work, not just to benchmark it. It is, therefore, as much concerned with the unemployed, and with policies to overcome unemployment and underemployment, as it is with the promotion of rights at work. An enabling environment for enterprise development lies at the heart of this objective.

The ILO is concerned with decent work. The goal is not just the creation of jobs, but the creation of jobs of acceptable quality. The quantity of employment cannot be divorced from its quality. All societies have a notion of decent work, but the quality of employment can mean many things. It could relate to different forms of work, and also to different conditions of work, as well as feelings of value and satisfaction. The need today is to devise social and economic systems which ensure basic security and employment while remaining capable of adaptation to rapidly changing circumstances in a highly competitive global market.

Protection against vulnerability and contingency. As it is concerned with the human condition of work, the ILO has the responsibility to address the vulnerabilities and contingencies which take people out of work, whether these arise from unemployment, loss of livelihood, sickness or old age.

Social dialogue as a means and an end The promotion of social dialogue. Social dialogue requires participation and freedom of association, and is therefore an end in itself in democratic societies. It is also a means of ensuring conflict resolution, social equity and effective policy implementation. It is the means by which rights are defended, employment promoted and work secured. It is a source of stability at all levels, from the enterprise to society at large.

The goal of decent work therefore requires to be pursued through each of the four strategic objectives of the ILO, as well as through a balanced and integrated pursuit of these objectives in their totality. It challenges all the constituents of the ILO alike. Governments, employers and workers have to accommodate their different interests in creative ways to respond to the demand for decent work placed upon them by individuals, families and communities everywhere.

Before turning to the operational implications of this goal, it is necessary to consider the wider context in which all of the ILO's activities will be set in future.

We are in a prolonged period of adjustment to an emerging global economy. The recent crisis in the emerging markets is only the latest in a series of adjustments which began with the oil shocks, followed by the debt crises of Africa and Latin America in the seventies and eighties and the European transitional crisis of the nineties, not to speak of the particular situation in which Japan and the countries of the European Union find themselves today.

Over the next decade the major issue will be the adaptation of national economies and national institutions to global change, as well as the adaptation of global change to human needs. The nature of the problem and the solutions will vary from region to region, but no country or region will remain untouched. Globalization has turned "adjustment" into a universal phenomenon for rich and poor countries alike. It is changing the pattern of development itself, shifting long-term growth paths and skewing patterns of income distribution. If present trends continue unchecked the greatest threat we face is instability arising from growing inequalities.

The ILO will be called upon to deal with these recurring crises of adjustment and development over the next decade. It must now organize itself for this purpose.

The ILO must articulate a coherent policy response based on its own values and competencies and adapted to the diversity of regional needs. It must be capable of delivering multidisciplinary programmes which combine and integrate expertise from each of the four strategic areas of ILO action. It must have a voice in the international debate on the future systems of governance for economic stability and equitable development. All this calls for new organizational and knowledge capabilities, which are discussed in Chapter 3 and Chapter 4.

The standard policy response was formulated by the Bretton Woods institutions in the 1980s at the time of the debt crisis, and subsequently applied in the transition economies. It was based on two fundamental assumptions: that free markets were sufficient for growth; and that they were very nearly sufficient for social stability and political democracy. The strategy for economic success basically consisted in transferring responsibilities for regulation from the State to the market. This required a combination of policies: privatization, the liberalization of capital and labour markets, and financial stabilization. Macroeconomic policy was to be used primarily to control inflation rather than to stimulate growth. Employment was a secondary derivative of these policies. The function of labour markets was limited to ensuring flexible adjustment to changes in the level of demand. Global governance consisted in the application of these policies by the international organizations responsible for financial stabilization and adjustment, trade liberalization and economic development.

These policies were influential because they were simple and universal. They brought necessary macroeconomic discipline and a new spirit of competition and creativity to the economy. They opened the way for the application of new technologies and new management practices. But they confused technical means of action - such as privatization and deregulation - with the social and economic ends of development. They became inflexible and did not take the social and political context of markets sufficiently into account. Their impact on people and their families was sometimes devastating. Increasing doubts about the efficacy of these prescriptions after a decade of experience in the transitional economies came to a head with the recent crisis in the emerging markets. That crisis marked a turning point in public opinion. The result has been both greater uncertainty and greater receptivity to a wider range of opinions, including the views of developing countries and of civil society.

The solutions are still far from clear. There has been a call for a new "global financial architecture". A wide range of measures has been proposed. At the international level they include: changes in the working of the international financial organizations; better, and growth-oriented, coordination of national economic policies; early-warning systems; exchange rate policies; and measures to regulate the flow of speculative capital. At the national level, measures suggested range from improved financial supervision and regulation to better legal and accounting systems and better corporate governance. Most of these issues lie beyond the competence of the ILO. What the Organization can do is to emphasize the importance of employment and rights at work in whatever financial architecture is ultimately put in place, and to facilitate the exposure and voice of its constituents in the ongoing debate. A global economy without a sound social pillar will lack stability and political credibility.

A parallel debate has also begun on the need for a social framework for stabilization, adjustment and development policies, as part of the measures for strengthening the global financial system. The ILO has an obvious contribution to make to this debate. It must have proposals to make to deal with both the short-term and the longer term social consequences of financial and economic instability.

It needs to insist on, and demonstrate, the importance of employment policies and of institutions for social protection and social dialogue, in the interests not only of social equity but also of successful adjustment policies and long-term economic development. The need for institutions and systems for social protection and social dialogue was glaringly revealed by the crisis in Asia. Such institutions had too often been neglected in the era of rapid growth, and their weakness at the moment of crisis impeded adjustment and enterprise restructuring.

The ILO must also have a view on the design of macroeconomic policies over the medium term. In particular it needs to be able to advise on the relative merits of fiscal and monetary instruments in terms of their respective employment and social policy implications. It should focus on the complementarity between macroeconomic and labour market policies in promoting employment.

In short, the ILO needs to create and deliver portfolios of policies - covering employment, social protection and institutional development - which are appropriate to different regional situations. These ideas are explored further in Chapter 3 and Chapter 4 of the Report.

These policies must be supported by a global normative framework which is universally accepted, and which is realized at the national level through development, legislative systems and institutional structures.

The ILO's constitutional provisions have ensured respect for its normative prescriptions and enabled the Organization to retain its political legitimacy and its universality through the conflicts of the twentieth century. They are based on the principle of voluntary obligations which, once accepted, are subject to systematic supervision and open discussion. They work through public opinion and institution-building, rather than through coercive or punitive measures. They are based on international consensus and national dialogue. Such an approach is essential to manage the social tensions of global transition.

The ILO must act consistently with its own constitutional provisions and insist on its normative mandate within the international community. Albert Thomas, the first Director-General of the ILO, made the point long ago in an address to this Conference: "There is only one means of being certain as to the outcome of our efforts - of being sure of reflecting the common will, and the hopes we all share - and that is for the International Labour Office to stand firmly by the terms of its constitutional charter, and to draw attention constantly to the letter and spirit of these provisions."

If the ILO's way is to guide the international community in future, it must be effective.

The best guarantee of credibility lies in the effectiveness of the ILO's normative activities and the integrity of its supervisory and control machinery. The point of departure must be a consensus among all constituents - governments, employers and workers - that nothing should be done to compromise its principles or weaken its functioning. What is necessary is to modernize the process in order to make its work more relevant to all constituents, more practical in its results and more widely known to public opinion. Improving the visibility, effectiveness and relevance of the ILO's standard-setting system must become a political priority.

The Declaration was adopted as a promotional instrument. It must be realized in that spirit. To be effective, to be universal, and to retain legitimacy, there can be no question of conditionality attached to it. On this understanding, it should become a common objective of the multilateral system as a whole. But, to be credible, an effective and speedy follow-up is imperative.

Ensuring respect for fundamental rights at work must be accompanied by promoting their realization in economic and social practice. The Declaration has an important role to play in this respect. By calling on the ILO to assist Members, at their request, not merely to promote but to realize these fundamental principles, the Declaration provides the Organization with a clearer framework for development than it has had hitherto.

Since the undertaking to realize the fundamental principles is independent of the ratification of the Conventions in question, the Declaration enables technical cooperation to develop its full potential within the ILO. The Declaration should therefore be viewed as a promotional instrument to translate the values of the Organization into programmes of integrated development. Respect for these rights is fundamental and requires no further justification, but respect for them will facilitate development itself. For example, the guarantee of rights at work enables people to claim freely a fair share of the wealth they have helped to generate, and to seek more and better work. The guarantee of those rights is therefore also a guarantee of a permanent process of translating economic growth into social equity and employment at all stages of the development path.

The Declaration should therefore strengthen and support the ILO's technical cooperation activities as a whole. Those activities must necessarily respond to a variety of constituent needs at the national level, and be guided by the four strategic objectives of the Organization. Since the objectives are interlinked, the realization of fundamental rights at work will facilitate, and be facilitated by, progress made in respect of the other strategic objectives.

The Follow-up to the Declaration also opens the way for a more substantive policy debate on development issues and rights at work within the ILO. This could lead to a better understanding of the problems and perspectives of different countries and regions, and suggest better ways of addressing them. The effectiveness of the Follow-up will be crucial in reducing the political tensions of global adjustment. Its transparency, the feedback to technical cooperation, the emphasis on promotion and development, integration of a gender perspective, and greater public awareness of social progress and successful development, these are all key elements in building public credibility in the ILO approach to social reform in an interdependent world.

If the context of ILO activities in the future will be determined by the needs of adjustment in an interdependent world, three broad policy areas deserve particular emphasis. These are the mainstreaming of development and gender in all the ILO's activities, and making the enterprise a focus of ILO attention. Each of these is critical for the future relevance of the Organization.

The ILO has consistently maintained that economic and social development are two aspects of the same process which sustain and reinforce each other. The linkages are well illustrated by the four strategic objectives of the ILO. Principles and rights at work provide the ground rules and the framework for development; employment and incomes are the way in which production and output are translated into effective demand and decent standards of living. Social protection ensures human security and civic inclusion, and enables economic reform. Social dialogue links production with distribution, and ensures equity and participation in the development process.

The Copenhagen Summit reaffirmed this integrated vision of development at the highest international level. It is time for the ILO to take the mandate forward.

Major proposals to mainstream development policy in the ILO have already been made with reference to the Follow-up to the Declaration and the ILO's policy response to the challenges of global adjustment. But much remains to be done. The ILO has to back its advocacy of the complementarity of economic and social development with empirical evidence and theoretical justification. This requires an ILO research policy, as well as an enhanced capability within the Office for economic and financial analysis. The issues involved are discussed in Chapter 4.

Mainstreaming development in the ILO requires a specific focus on the problems of the working poor. It has long been apparent that the process of economic growth is inadequate to absorb surplus labour into the formal economy. On the contrary, uneven rates of growth and changes in the organization of production have led to pervasive informalization. It is among workers in the informal economy that the problems are the greatest. It is their rights which are the least respected. It is they who are underemployed and poorly remunerated, who have no social protection, and for whom social dialogue and participation have little meaning. The time has come to establish a coherent ILO policy for the working poor, specifically in the areas of employment generation, social protection and social organization, where their needs are most acute. The InFocus Programmes in Chapter 2 are a first step in this direction.

A major item of the ILO's development agenda also concerns institution- building, particularly institutions for participation, representation and voice, for social dialogue, and for social protection. This has long been an ILO concern, but it could benefit from recent advances in research in institutional economics, drawing upon organizational theory and practice referred to in Chapter 4.

Women have transformed the labour markets of the world. In many countries the increasing labour force participation of women is driving employment trends. The activity rates of males are declining while those of females are increasing. The structural transformation of economies, demographic change, informalization and new notions of working time have redefined working and living conditions for both for women and men.

They have also modified gender roles in the labour market. In some cases, women have succeeded in obtaining greater opportunities and economic autonomy. But many have been victims of change. Globalization and economic restructuring favour flexible modes of employment, many of which lie beyond the reach of labour legislation and social protection and are characterized by low incomes and high levels of insecurity. While both men and women are affected by these trends, women are more vulnerable. The result is occupational segregation, with women finding themselves in the least protected sectors of the economy. The growth of female-headed households, due to migration, divorce, and abandonment, also means that the insecurity of women's employment directly affects children and other dependants.

Gender inequality is often built into labour institutions. Social security systems, for instance, frequently assume that the breadwinner of the family is male. Labour market segmentation along gender lines generates structural wage differences between men and women that are difficult to address through conventional labour market policy.

A gender perspective is therefore an imperative for the ILO, not merely for reasons of equity and fairness but also because it is part of the very substance of the ILO's work today. Although the vocabulary of gender has trickled into the programmes and activities of the ILO, it is still limited to statements on equality for women and women's rights and constrained by the absence of an integrated policy. For example, gender concerns have informed ILO research on labour markets and poverty, but the results have been fragmentary. They have not been given institutional priority or led to basic policy changes. The Director-General announced a new commitment to an integrated gender policy when he inaugurated a special celebration in the ILO on 8 March 1999 on the occasion of the International Women's Day.

The ILO must articulate a gender perspective on the world of work. Building on current activities to promote equality of women, the aim will be to examine the economic and social roles of both women and men, and to identify the forces which lead to inequality in different domains. It will involve broadening the focus of attention from the de jure achievement of equality for women to the de facto results of economic policies, legislative measures and labour market outcomes for different groups of women and men.

One of the most important tools at the disposal of the ILO is gender mainstreaming. Although an established policy of the United Nations system and a methodology that is widely used in other organizations and programmes, gender mainstreaming is still at an incipient stage in the ILO.

An integrated gender policy requires action at three levels in the ILO: at the political level, within technical programmes, and at the institutional level.

Enterprises are the key to growth and employment in open economies. Their activities have an impact on all the areas of ILO concern and have a crucial bearing on future patterns of industrial relations, skill development and employment. A focus on the enterprise is essential if the ILO's work is to be informed by workplace practices and realities. The importance of small enterprises in providing jobs and improving working conditions has already been reflected in the proposal to create an InFocus programme in this area.

In many ways, the ILO is uniquely placed to tap the potential of enterprises and the business community. They are directly represented in the Organization. There is a new emphasis in the ILO on business and employer concerns. The ILO's Enterprise Forum has begun to attract growing attention in the business community.

The ILO has already developed a wide range of enterprise-related programmes, with particular emphasis on entrepreneurship development, management training and small enterprise promotion. These programmes should be developed further, taking into account the role of employers' organizations and the services they can provide to their constituents in these areas.

It is now necessary to go beyond the small enterprise sector and respond to the needs of transnational corporations - the main vehicles for transfers of capital, technology and new work practices in the global economy. A possible subject is the area of corporate social initiatives. Business is facing intensified social pressures for good corporate practices, which have a direct bearing on consumer demand and corporate reputations through the media. While communications technology has greatly enhanced the value of brand names and corporate image, it has also greatly increased their vulnerability to public opinion. The larger corporations are concerned about these pressures not merely in terms of their own markets, but because they may be a political threat to existing trade and regulatory regimes. These social pressures also come at a time when the markets within which the corporation operates are no longer easy to define or control. Many enterprises have adopted their own codes of conduct, but business is facing its own problems of monitoring and supervision because of the growth of supply chains and subcontracting practices. Under these conditions, markets could easily become minefields. The essence of the problem is to combine the need of enterprises for a recognized external source of reference, with international measures which provide a consistent framework to benchmark individual initiatives. The ILO has a unique expertise to move forward in this area, while remaining attentive to existing legal obligations and to business sensitivities. Other possibilities include training for multicultural management of social issues and for socially sensitive restructuring, which could both become important new areas of ILO activity.

To many in the business world the ILO remains a remote and impenetrable Organization. It must improve its public profile and make a strong case with the business community through better communication and improved access to its training, services and databases. The ILO has to position itself as the international centre for expertise and data of interest to business, in such areas as standards and codes, national legislative and industrial relations systems, occupational safety and health, and the dissemination of good practice in a multicultural context.

This Report presents an ambitious vision, but its intention is intensely practical. It is to provide the ILO with the political, technical and organizational orientation it needs to move forward with optimism and self-assurance into the twenty-first century.

None of these proposals is simple. All of them are necessary. They will take time to implement. They call for exceptional effort by all concerned: a strong sense of common purpose among the constituents, a renewed culture of excellence among the staff, and a vigorous outreach to people and the world at large by the Organization as a whole.

Above all, the proposals demand a common commitment and a shared endeavour by both the Office and the constituents, if they are to succeed. This Report is, therefore, a living document, a signpost rather than a blueprint, to be developed through consultation and dialogue. It is, ultimately, a statement of confidence in that partnership.

EMP/SKILLS - Skills and Employability Department