ILO is a specialized agency of the United Nations

GB.270/10 and Corr.
270th Session
Geneva, November 1997


Report of the Committee on Employment
and Social Policy

1. The Committee on Employment and Social Policy met on 10 and 11 November 1997. Ms. Sarmiento (Government, Philippines) was elected Chairperson. Mr. Katz and Mr. Ito were Employer and Worker Vice-Chairpersons respectively.

2. The Committee had the following agenda:

1. Follow-up on the World Summit for Social Development:

(a) ACC Task Force on Full Employment and Sustainable Livelihoods: Synthesis Report;

(b) ILO country reviews: Modalities and progress report.

2. World Labour Report 1997-98: Industrial relations, democracy and social stability.

3. Relations with the Bretton Woods institutions.

4. The second ILO Enterprise Forum: Preliminary information on preparations.

3. As some members of the Committee had not received their copies of the World Labour Report 1997-98, in time to read it thoroughly, the Committee decided not to discuss the second item at the current session.

The second ILO Enterprise Forum:
Preliminary information and preparations

4. The Assistant Director-General responsible for ILO Enterprise Activities (Mr. Hultin) introduced the agenda item. He explained that the Office paper(1)  submitted to the Committee was meant to inspire discussion on the agenda for the second Enterprise Forum in the face of the challenges enterprises would have to face over the next few years as a consequence of globalization. A planning meeting had already taken place with representatives of the Employers' and Workers' groups, and a second meeting would be organized before the end of the year. The Committee would receive a more detailed paper for discussion at its next meeting in March 1998. This would reflect the outcome of the two meetings held in 1997.

5. Mr. Oechslin, speaking on behalf of the Employer members in the absence of the Employer Vice-Chairperson (Mr. Katz), reminded the Committee that the first Enterprise Forum had been a success because of its innovative character. To ensure similar success for the second Enterprise Forum, he considered that it should take into account the real concerns of enterprises and discuss issues of direct relevance to them. He proposed that the main theme of the second Enterprise Forum be "Human resources management and skills development" in the context of globalization and restructuring. Since in-house knowledge on these issues needed to be updated if this theme was chosen, the meeting could also serve as a learning experience for ILO officials. Other organizations such as the Bretton Woods institutions should also be brought into the process. He agreed that the meeting would need to mobilize extra-budgetary resources. In order to facilitate participation by those coming from far away it would be desirable to organize the meeting in connection with the International Labour Conference itself in June 1999.

6. The Worker Vice-Chairperson (Mr. Ito) felt that the second Enterprise Forum should emphasize the social dimension of enterprise activities. To reflect this, he suggested that consideration might be given to changing the title of the event. He was disappointed that the Office paper did not seem to reflect tripartite involvement in the preparations for the meeting: such involvement was essential if his group were to support it. As regards the agenda for the meeting, it should tackle such issues as social labelling and codes of social conduct, since otherwise the impression might be given that the event was for managers only. Other issues to be considered were mechanisms to promote collective bargaining at the international level and technical assistance to managers and trade unions involved in collective bargaining at the enterprise level. In this context it was important to avoid the impression that the Enterprise Forum was an employers' event and the planned Social Forum a workers' event. Both should be truly tripartite in terms of preparation and contents. Although he did not object to the idea of sponsoring as such, care should be taken to avoid giving the impression that ILO meetings depended on any specific companies for funding. Efforts should further be made to facilitate participation by workers' representatives. He agreed with the proposed timing of the meeting.

7. The representative of the Government of Germany proposed that the meeting should pay special attention to the role of women entrepreneurs, given their increasing economic importance, particularly in the service sector. This proposal was supported by the representative of the Government of China, who also emphasized the importance of women entrepreneurs in small and medium-sized enterprises. The representative of the Government of Panama, while supporting the proposal, felt that attention should further be paid to the issue of linkages between large and small enterprises and to the promotion of tripartism. The representative of the Government of Egypt emphasized the importance of small and medium-sized enterprises in general and suggested that these questions should be discussed at the meeting.

8. Mr. Anand (Employer member) suggested that the second Enterprise Forum should build on the theme of the first one: it should emphasize the importance of promoting an enterprise culture. It should be possible to reach a consensus on the agenda for the meeting, especially if emphasis was placed on skills development and the role of the social partners in this respect.

9. The Worker Vice-Chairperson supported the suggestion to put the issue of female entrepreneurship on the agenda, provided that it aimed at reducing discrimination rather than simply promoting female entrepreneurship. He also agreed in principle to include skills development and training issues on the agenda, but considered that the issue of enterprise culture was more appropriately discussed outside the ILO.

10. Mr. Oechslin agreed that the preparation of and participation in the meeting should have a tripartite character, but reminded the Committee that the Forum was not meant to be a regular ILO meeting leading to conclusions. It should rather be aimed at promoting an exchange of views and experience with entrepreneurs. Efforts should be made to maintain this unique proactive and forward-looking aspect. He repeated his call to put the issue of human resources management and skills development high on the agenda and mentioned once more the need to find appropriate solutions to ensure proper funding for the meeting.

11. The Worker Vice-Chairperson, reverting to the issue of tripartite preparation for and participation in the meeting, suggested that it might be useful to set up a task force or similar group to reach a consensus on this matter. Mr. Mansfield (Worker member) felt that since both employers and workers were interested in the success of enterprises, it should be possible to reach such a consensus. However, the meeting should reflect the ILO's values and should therefore emphasize the social role of enterprises. The issues of child labour, discrimination, collective bargaining, labelling, codes of conduct and industrial relations at the enterprise level should be dealt with at such a meeting. If not, the Workers' group would have reservations on the holding of such a Forum.

12. Mr. Oechslin recalled the views previously expressed that a Forum should lead to an exchange of views and not to the adoption of conclusions. He agreed that further tripartite consultations, organized by the Office, would be useful to help arrive at a consensus.

13. In his reply, the representative of the Director-General (Mr. Hultin) reassured the Committee that he would do his best to ensure that a consensus was reached in the tripartite planning group, which had already met once and was to meet again in the near future. The group would naturally also take into account the views expressed by the Government members of the Committee. A progress report would accordingly be submitted to the next session of the Committee.

Follow-up on the World Summit for Social Development

(a) ACC Task Force on Full Employment and
Sustainable Livelihoods: Synthesis Report

14. The Director of the Employment and Training Department (Mr. Sengenberger) presented the Office paper(2)  containing the main findings and conclusions of the Synthesis Report of the Task Force on Full Employment and Sustainable Livelihoods. Under the leadership of the ILO and with the participation of international agencies, including the Bretton Woods institutions, the Task Force had carried out comprehensive employment policy reviews in seven countries. Three of these were conducted by the ILO (Chile, Hungary and Nepal), two by the UNDP (Morocco and Zambia), and one each by UNESCO (Mozambique) and the World Bank (Indonesia). The Synthesis Report was prepared by the ILO, based on the country reviews, and presented to the United Nations Administrative and Coordination Committee (ACC) in April 1997. The basic objectives behind the country reviews were to assess national policies towards the promotion of employment and sustainable livelihoods and to suggest changes as appropriate; to draw lessons from experience for wider dissemination; and to demonstrate the ability of the UN system to work together at the country level. For each review, the following policy dimensions were diagnosed in detail: (i) macroeconomic, sectoral and enterprise policies, paying particular attention to employment promotion and job quality; (ii) adjustment to changes in trade and capital flows and labour migration into and out of the country; (iii) labour market institutions and policies, operating according to agreed rules and regulations in conformity with international standards; (iv) democratic policy-making, social dialogue and the involvement of workers' and employers' organizations in the field of employment and labour market policies; and (v) the elimination of gender discrimination and child labour, and the operation of targeted programmes to support the most vulnerable groups.

15. The detailed results and empirical findings of the reviews were contained in the country reports and in the Synthesis Report. Some important findings were:

(i) a confirmation of the expected positive relationship between output growth and employment expansion: where significant employment growth occurred, poverty was reduced;

(ii) that most countries showed slow growth in formal wage employment: public sector employment had fallen significantly; most new employment was being generated in small enterprises and the informal sector;

(iii) the quality of employment was often unsatisfactory: concern had been expressed about low levels of labour protection, limited respect for workers' basic rights, poor conditions of work and gender discrimination;

(iv) that low levels of basic education and vocational skills posed a serious constraint on efforts to increase productivity, attain international competitiveness and attract private foreign capital: this applied to both the developing countries and more developed countries;

(v) that women continued to be discriminated against in terms of employment opportunities, wage rates, conditions of work and schooling, which was true for countries at various stages of development;

(vi) while public awareness of the problems of child labour had greatly increased, depressed economic conditions in several countries had increased the number of working children.

Paragraph 22 of the Office paper contained a set of policy guidelines drawn from the country reviews for promoting employment and sustainable livelihoods at the national level. Those guidelines could serve to facilitate the work of the UN Resident Coordinators in the fields concerned. The Synthesis Report placed strong emphasis on the importance and usefulness of the goal of full employment as an overarching policy objective. The report also contained proposals for international action, especially on how the United Nations system, working together and drawing on their respective mandates and comparative advantage, could support member countries.

16. The Worker Vice-Chairperson thanked the Office for preparing the Synthesis Report and for the timely submission of the documents. There was, however, a considerable difference between the Office paper and that submitted to the Committee in March 1997(3)  which could not then be discussed for lack of time. The present paper, unlike the earlier one, did not highlight follow-up action by the ILO to implement recommendations emerging from the country reviews. In line with paragraphs 36-44 of the earlier paper it was crucial for the ILO to offer assistance to member countries and vigorously pursue its role in promoting employment, enhancing the quality of employment, further strengthening institutions' social dialogue and the ILO's supervisory machinery, and in continuously engaging in dialogue with the Bretton Woods institutions in support of social development. The earlier paper also contained the modalities for conducting the country reviews, and the Worker members had expressed concern on how far other international agencies conducting country reviews were following them, particularly in regard to labour standards, industrial relations and tripartism. The World Bank's review of Indonesia and its failure to raise concerns about freedom of association were a major concern for the Workers' group. The decision by the World Bank to abandon the Indonesia review and the failure by the ILO to take over the organization of a national conference in Indonesia demonstrated the significant problems of involving other agencies in the review process. The current paper paid insufficient attention to the social dimension of development. Many of the countries reviewed, while shown to be doing reasonably well in terms of some economic indicators, were not performing equally on the social front, especially in respect of core labour standards. The Workers' group was concerned by the scant attention in the paper to the social dimensions of development.

17. The ILO should continue to conduct country employment policy reviews (CEPRs), but they had to follow the phases and modalities contained in the Office paper of March 1996. The CEPRs had to involve the government, workers and employers on an equal footing. While the ILO's own reviews in Chile, Hungary and Nepal had followed those modalities and covered the social dimensions satisfactorily, those conducted by other agencies hardly covered these dimensions. It was the task entrusted to the ILO at the Copenhagen Summit and the World Trade Organization Ministerial Conference in Singapore to ensure the implementation of core labour standards and provide guidance to other agencies on the pursuit of the social dimensions of development. Structural adjustment, liberalization and privatization had not necessarily led to a reduction in unemployment and poverty: they had, in fact, led to wider inequalities counter to the commitments of Copenhagen. Many of the findings and conclusions reported in paragraphs 3 to 9 of the Office paper were correct, but implementation measures and mechanisms were necessary to follow up on the policy framework suggested. However, it was not correct that the benefits of liberalization were on a par with those of democracy. There was a need for continuous social dialogue and the strengthening of tripartism in policy-making and implementation decisions. ILO support would also vary according to the priority needs of individual countries. While endorsing much of the general policy framework and guidelines in paragraph 22, he stated that the policy recommendation on structural adjustment and liberalization were at variance with the findings in the text. There was also no mention of EPZs or the role of multinational enterprises, and little attention was paid to vocational training and primary education as a result of cuts in public expenditure. There was a need to foster human resources development for high-quality employment. Finally, the ILO supervisory mechanism had to be strengthened in order to ensure achievements on the social front.

18. The Employer Vice-Chairperson expressed full agreement with the Worker Vice-Chairperson on the issue of fostering education and skills training, which critically determined the employability of the workforce in the current period of rapid change. Currently only a minority of workers could aspire to stable, life-long jobs. Workers would continue to have more than one employer, and whether in the process they climbed up or down the income scale would indeed depend on their training and skills. It was questionable whether all the efforts made in conducting the country reviews had in fact been necessary to arrive at the conclusions in the Synthesis Report. Even though some differences of emphasis existed, the conclusions were readily acceptable to the tripartite groups and had been discussed in many previous ILO fora. However, it was good that the ILO had had responsibility for follow-up on the Social Summit in this field. Despite scepticism on the need to conduct too many country studies for the kind of policy generalizations observed in the report, he acknowledged that Chile was nevertheless a good country example, Hungary was interesting as a transition economy, but Nepal was hardly representative of a policy framework. The policy conclusions in paragraph 22 of the Office paper contained good material with which the Employers were generally in agreement, though not with their order of priority. The conclusion that the solution to stable employment lay primarily in a stable macroeconomic policy and not in irresponsible government expenditure or loose monetary policies was correct. Micro-economic deregulation policies were equally necessary, such as those related to labour markets, trade, cartels and agriculture. On macroeconomic policy, the Employers hoped that the Workers would come to trust in macroeconomic stability and low inflation, which was an accepted doctrine in today's world.

19. The Synthesis Report recognized, although somewhat belatedly, the critical role of enterprises in creating jobs, as observed in the cases of Chile and Indonesia. Conversely, in Zambia and Mozambique, the lack of job creation had to be seen in relation to the lack of enterprise development. However, the role of foreign direct investment in fostering employment was missing in the policy guidelines offered in paragraph 22, and the point needed to be made that micro-economic policy was as important as the macroeconomic. This included the deregulation of products as well as of labour markets. The order of items in paragraph 22 was wrong, and thought needed to be given on presenting a stimulating package of policy measures to governments and the social partners. The report should state evidence for its finding of an increase in the incidence of child labour. The purpose of the next phase of country employment policy reviews being undertaken by the ILO should be clarified. Further country studies merely to support the policy conclusions given in the Office paper were redundant. In this context he inquired whether the cost of undertaking reviews justified the benefit in terms of the findings. Basing conclusions on the sample of countries reviewed seemed odd.

20. The representative of the Government of Bangladesh stated that the creation of employment was a huge challenge for his Government, which nonetheless was determined to meet the commitment made at Copenhagen. Employment creation was a central objective of the development plan and human resource development through education and skill training was receiving high priority. The private sector and NGOs were working hand in hand with the Government under the umbrella of a sound micro-economic policy and democratic governance. Bangladesh had achieved the highest growth in employment in South Asia in the period 1978-91. Emphasis was also placed on the quality of work and commitment to fundamental labour standards. Six core ILO Conventions had been ratified and a Memorandum of Understanding on eliminating child labour signed between ILO, UNICEF and the Garment Exporters' Association. The Government hoped that national action on full employment would be backed internationally. Given a decline in concessional aid flows, greater investment in developing countries, together with preferential market access for their products and favourable immigration laws for overseas employment could significantly help in achieving full employment.

21. The representative of the Government of Hungary referred to the country review of Hungary undertaken on the basis of political commitment and tripartite consultation. The Government appreciated the comprehensive and complex nature of the study, which also reflected the Government's policy intentions. The country study was undertaken at the same time as an OECD jobs study of Hungary, and both were equally appreciated. However, the paper before the Committee did not reflect the complexity of the country study and some statements in it on Hungary were misleading. Others, concerning for example wages and inflation, were no longer valid. Furthermore, the conclusions in paragraph 22 of the paper could hardly have been based on experience in Hungary, where there was little rural employment, no child labour, labour underutilization was not a characteristic of the economy and gender discrimination no worse than elsewhere. The new series of reviews might lead to more balanced conclusions.

22. The representative of the Government of Austria said that the ILO had fulfilled the task given it. Its approach balanced macroeconomic stability with necessary micro-level reforms in labour markets, education and training. Sustainable growth would lead to structural reform and in turn to higher, non-inflationary levels of demand. Growth could relieve problems in the labour market. Macroeconomic measures to promote employment were not just a matter of keeping inflation down: monetary policy could help employment growth. Approaches to globalization and integration had to be designed so that capital flows were not destabilizing. Investment in human resources, a reduction in gender discrimination, the elimination of child labour, special policies for the poor and functioning democratic institutions were all essential. Targets for employment creation based on tripartite dialogue were also welcome. The paper was in these respects consistent with the European Commission's employment guidelines for 1998.

23. Mr. Mansfield (Worker member) considered that ILO work on employment policies was currently more important than in the previous year, since the number of jobseekers had risen. In countries like Bangladesh much employment was marginal in nature, and in Australia the unemployment problem was intractable. This was a challenge for the ILO with its tripartite membership. The initiative of the ACC task force and country reviews had been valuable, although some parts of the process could have been improved and the review of Indonesia should have been completed. Policies should be reoriented in order to achieve faster growth, but liberalization and privatization were not the answer, as some country studies had shown. Important conclusions highlighted in the paper were that population growth was connected to unemployment levels (although some population growth was beneficial); attention had to be paid to the rural sector, which posed a different sort of challenge; achieving higher economic growth was a priority means of employment creation, although some forms of economic growth created low-quality employment. Where employers sought deregulation and flexibility the result could be very poor and unsafe working conditions, especially in production for export from poor countries. The ILO had to combat this. Equal opportunities for women were essential, as was good governance. Employability was an important current consideration, but the major cause of unemployment was a lack of jobs, not of skills, although the latter helped an individual worker's job chances. The notion of jobless growth was unacceptable: faster growth was the answer. The notion of the non-accelerating inflation rates of unemployment (NAIRU), and the threat of inflation rising as unemployment fell, had been shown to be false. The paper's conclusions contained considerable wisdom, and the Committee could work more on them to find a common position on generating better economic and employment growth. This could provide input to the 1999 high-level meeting on employment. In future, country studies should give greater attention to outcomes and to whether changes in policy had been brought about. Good statistical data were also a priority.

24. The representative of the Government of Indonesia recalled that the aim of country reviews was to draw lessons from the national pursuit of full employment and to explore their transferability elsewhere. That required an in-depth study of each country. Because of the Committee's hesitation, the study on Indonesia remained preliminary and not comparable to that of the other countries. It was therefore misleading to include Indonesia in the analysis and conclusions of the Synthesis Report.

25. The representative of the Government of Finland considered that the paper's conclusions lacked priorities. Innovative workplace or enterprise performance should be highlighted, and further study was necessary. The representative of the Government of Brazil queried some data referring to his country. The picture since the current stabilization programme was introduced in 1994 would look very different. The representative of the Government of the Russian Federation commended the ILO on its extensive and difficult work. Now that an MDT had been established in Moscow he encouraged a country review of the Russian Federation.

26. The Employer Vice-Chairperson wondered whether Mr. Mansfield had proposed abandoning reforms and reverting to protection, contrary to all recent ILO documentation. Was the Workers' group in favour of employment creation through regulation? The Synthesis Report's statements on macroeconomic policy and growth and the introduction to and analysis of the employment situation in Hungary and Chile were to be commended. So far as NAIRU was concerned, all aspects of economic policy were interlinked and could turn out differently from expected. Neglect of "good governance" had had an effect on the recent market "crisis", which in turn had interest rate consequences. The Synthesis Report and the paper before the Committee were in error in their comments on sectoral issues. The former seemed to advocate an industrial policy of intervention, which had been discredited. The latter referred to sectoral-level collective bargaining, which research had shown to be inferior to either fully centralized or fully decentralized levels of wage negotiations.

27. The Worker Vice-Chairperson asked for whose benefit an economy was run and stressed the need for good living conditions and improved livelihoods. Current efforts at deregulation and structural adjustment lacked a human aspect. Controlling inflation and achieving macroeconomic balance were not the only priorities. Giving employment to people should be, at least, an equally important objective. A capable employer was not one who merely pursued profits: working conditions and employment creation were also important. Employers in developed countries had to consider employment in developing countries. Employers in developing countries had to consider how to raise employment in their own country, especially the possibly negative employment effects of the use of advanced technology. The ILO should prepare an information paper on child labour and how it was changing.

28. The representative of the Government of Pakistan noted that country reviews were useful in finding areas of weakness in countries' employment policies and could thus help to target technical assistance. The difficulties faced by developing economies in an age of globalization needed to be acknowledged and constructive proposals made. There was a reduced compulsion at the international level to resolve structural impediments to development, such as the debt burden, difficulties in access to technology and the availability of concessional finance. Developing countries were thus unable to be effective participants in global economic relations. Developed countries needed to adopt more vigorous growth policies to speed global economic revival and present larger opportunities for trade and growth to the developing countries. Migration policies needed to be examined.

29. The representative of the Government of India thanked the ILO for an informative report. It was necessary to take stock of progress made since the World Social Summit. At that time there was a momentum towards economic reform and liberalization. For developing countries the benefits had been neither uniform nor substantial, especially where no resources were available to provide safety nets. World Employment characterized the global employment situation as very grim, with a fall in formal-sector jobs, reduced job security and lower job quality. In India organized labour feared that the country's fast rate of growth was "jobless". The ILO should continue to search for solutions to problems which hindered full employment and increased social marginalization. Market-oriented reforms of the type mentioned in paragraph 22 of the Office paper could not alone generate higher employment; they could not be divorced from considerations of social justice and of protection for vulnerable groups. India was committed to both economic reforms and the pursuit of equity, which the ILO had a mandate to promote. A balanced priority ranking of the policy conclusions was needed. This should be directed towards promoting job-oriented growth and enhancing employment opportunities; enhancing the efficiency of government responses; and promoting enterprise development and private investment. The ILO could reflect on those aspects. As a demonstration of its political commitment to full employment the Government had decided to ratify the Employment Policy Convention, 1964 (No. 122).

(b) ILO country reviews: Modalities
and progress report

30. The Director of the Employment and Training Department presented the Office paper.(4)  He stressed that the new set of reviews were entirely the responsibility of the ILO, and the comments made on the earlier reviews would be useful for the current country studies. The general objective of the reviews was to assist in the design and implementation of employment policy and in meeting Commitment 3 made at the World Social Summit. The reviews would share a number of common concerns derived from Commitment 3 and from relevant ILO Conventions, although different countries had different substantive interests. The reviews would follow the modalities already set out in March 1996, which included the need for full consent and political commitment, close collaboration of the ILO with the national authorities and the social partners in the exercise, holding a tripartite summit to ensure public exposure and the selection of recommendations, and, if requested, ILO technical assistance in implementation. Some eight to ten reviews were foreseen for 1998-99. The selection of countries for review was based on expressed interest, suggestions made in the Committee and the need for balance, including level of development and regional distribution. Reviews were under way in Brazil and Ukraine. Discussions with the Government, workers and employers were far advanced in Barbados, Pakistan and Kenya. Preliminary discussions had been held in Austria, Ireland and the Netherlands. The list of countries was, however, tentative. The reviews would serve as input to the 1999 high-level international consultation, and should be completed in time for its preparation.

31. The Employer Vice-Chairperson recalled the suggestion made by the Employers that employment policy reviews should be presented to and examined by the Committee on Employment and Social Policy or a subset of its members, in a procedure similar to that of the OECD examination of members' economic policies. That suggestion had never been rejected by the Committee. The selection of countries was superior to that under the ACC mechanism. The Netherlands and Ireland had been identified by the OECD jobs study as successful examples of employment creation. Country reviews were also under way under the aegis of the Working Party on the Social Dimensions of the Liberalization of International Trade. Since the employment reviews were also considering some aspects related to standards and since the two sets of reviews were likely to intersect, there was scope for rationalization and consolidation. There was no need for the ILO to invoke the World Social Summit to justify its action on employment policy. Such issues as employment and labour relations policies and adaptation to globalization were clearly within the ILO's own mandate.

32. The Worker Vice-Chairperson agreed generally with the previous speaker. What was most important, however, was to give an opportunity in the countries reviewed for tripartite debate on employment policy. Each country had its own problems, and national tripartite review was paramount. It was necessary to learn from the earlier reviews and implement the framework and the modalities agreed in March 1996 -- in short, to implement tripartism, respect for labour rights and adherence to core labour standards. The ILO was central to such reviews and could put forward those positions. The selection of countries was good and, in addition, Denmark and New Zealand might be approached as subjects for country reviews. The country reviews would influence the 1999 high-level meeting on employment, so it was important that it should have the same impact as the 1987 high-level meeting and should be attended by ministers of finance and government leaders, as well as by ministers of labour. The Committee should be involved in that Meeting, which would draw up the ILO's mandate and its own future agenda.

33. The representative of the Government of Austria promised full support to an ILO country employment policy review in his country if the ILO wished to proceed. The representative of the Government of Indonesia noted that lessons could be learned from both examples of success and failure in implementing employment policy. However, if democratic decision-making and freedom of association were included, perhaps only countries that had good records in employment creation and in respect for labour standards should be reviewed.

34. Mr. Taqi (Assistant Director-General) noted that the issue of a country examination by Committee members was for the Governing Body to decide. Meanwhile, the provision for country employment reviews in the 1998-99 programme and budget had been approved. Country selection was not a unilateral process, but the result of dialogue and agreement both on the country and on the time period. The positive remarks by the representative of the Government of Austria and the suggestions by the Worker Vice-Chairperson were noted. The Synthesis Report had been prepared in the context of coordinated UN system follow-up on major international conferences. It was a paper for the ACC on UN system cooperation. As such it naturally contained no proposals for future ILO action, which would be the prerogative of the Governing Body and the Conference. The report had been the outcome of a collaborative exercise which the ILO considered to have been on balance worthwhile. In future, however, inter-agency coordination would be more effective if it took full account of each organization's specialized competence and comparative advantage. The Committee had made it crystal clear that the ILO country employment reviews should be carried out by the ILO independently, and the Office would follow this course. The Synthesis Report gave only a taste of the country reports, which as the representative of the Government of Hungary had pointed out, were rich and complex. Much of the factual and statistical data the Workers' group had called for could be found in the country reports. Moreover, the country reports together with the tripartite consultations were intended to be useful to the governments and social partners of the countries concerned. In Nepal, for example, they were leading to technical cooperation activities. The policy conclusions were necessarily formulated in general terms, but they did contain many points that were important in the context in which the paper had been prepared and a number of points that still generated controversy.

35. Ms. Hagen (Deputy Director-General) noted that the Office paper on the Synthesis Report supplemented that presented in March 1997 and was not intended to repeat proposals made then. The ILO was sensitive to the importance of its follow-up activities. The Synthesis Report was not just for ILO use: its concerns were the ILO's speciality, in which other agencies could join, and it would be used also by UN Resident Coordinators. It represented the mobilization of broad UN-system support for a set of principles, some of which were controversial, giving wide support to ILO objectives. The policy conclusions were a check-list for future employment reviews and not a list of problems equally important for all countries. Genuine follow-up activities were sought but consensus-building had to come before implementation. There had been a serious problem in carrying the exercise further in Indonesia, since there was no consensus either within the task force or with the Government to proceed. The Synthesis Report represented a conceptual framework of commitments and endorsements by the ACC and UN agencies to work with the ILO.

36. Mr. Sengenberger thanked the Committee for its comments, which would guide the next set of reviews. The policy conclusions were worth stating so long as a gap remained between them and reality. They also represented a UN-system consensus. Each country report had many more policy conclusions which gave added value to the countries.

Relations with the Bretton Woods institutions

37. Ms. Hagen, presenting the Office paper, stated that the objectives for cooperation and dialogue with the Bretton Woods institutions remained unchanged. While the impact of structural adjustment programmes as such remained an important focus, there had been a shift to more socially focused concerns, which had contributed to a positive convergence of thinking on the need for social development, social consensus and respect for basic human rights. Progress had been most strikingly illustrated by Mr. Wolfensohn's participation in the 1997 International Labour Conference and his emphasis there on the importance of people's rights, the need for social justice and equity and the dependence of good economic policies on the existence of good social policies, for both peace and safe investment. Work was continuing, particularly with the World Bank, in such areas as labour law reform, wage policy, pensions, social security and social safety nets, and the dialogue was taking into account the importance of social development and social consensus, the different institutional mandates, the policy perspectives and capacities of each institution, and the reality of the intensive process of change and reform which was affecting their own relationships and their interactions with the UN system at large.

38. The Employer Vice-Chairman appreciated the greater degree of information in the paper, but more was needed. The new convergence between the ILO and the Bretton Woods institutions still seemed at the philosophical or theoretical level, but problems remained, particularly on core labour standards. The reference in the conclusions to job-creating economic growth and job creation that involved productive and rewarding employment under safe and healthy conditions might also suggest that, if this high standard could not be achieved, then nothing should be done, and the country in question should be left to adjust by itself. In view of past experience in Brazil, this approach should be applied with modesty and caution, as sometimes employment might not be so rewarding yet the alternative might be starvation or crime. The ILO had much to contribute to the work of the Bank and the Fund -- particularly in relation to structural adjustment -- not in terms of forcing recognition of ILO views, but rather in terms of practical support, where there was enormous scope for the application of ILO expertise. More information was needed on practical ILO work of this nature. With reference to the World Bank's involvement in the issue of child labour, he asked whether the Bank had developed any cooperative programmes, such as with IPEC. With its resources, the Bank could play a significant role in eliminating exploitative child labour. Finding viable alternatives was expensive and there was a limit to what private enterprises could do alone.

39. The Worker Vice-Chairman commended the Office on the progress made. He stressed that economic reforms must ensure improvements in the quality of peoples' livelihoods and in both the quantity and quality of employment. The question of relations with the Bretton Woods institutions should not be left to the ILO alone, but needed strong support from the governments of member countries of the Bank and the Fund. It was also important that the ILO's efforts were not one-sided, and that its views were actually taken into account in the implementation of the policies of the Bretton Woods institutions. Mr. Wolfensohn's statements at the International Labour Conference had placed strong emphasis on the social dimension, but his staff did not seem to follow this lead. There was a case for a level of cooperation with the IMF that was as strong as that with the Bank, yet the lack of information provided might suggest that such cooperation was not taking place.

40. First, the ILO must make the Bank and the Fund value tripartism and understand that, for the implementation of structural adjustment and economic policies, it was necessary to involve employers' and workers' organizations in all policy planning stages, and the ILO's role was pivotal in this process. Mr. Wolfensohn had emphasized the Bank's new relationships with civil society and cooperation with unions, but this should mean taking their views into account rather than forcing them to accept the Bank's policies. The Structural Adjustment Participatory Review Initiative (SAPRI) was an important step forward in the Bank's relationships with unions, but some countries were reluctant to participate because of the involvement of the latter. In such cases the ILO should exert appropriate pressure. The greater devolution of responsibility to the Bank's country directors might cause serious problems for the implementation of tripartism and, if the Bank and others strengthened their contacts with civil society, the value of tripartism might be lost.

41. Secondly, employment creation was most important for the ILO, but was a secondary issue for the Bretton Woods institutions. The ACC Task Force report showed that employment had not increased, despite structural adjustment policies, yet the ILO had not put pressure on the Bank or the Fund to include precise employment targets in their structural adjustment programmes. It seemed that the ILO had almost abandoned promoting employment targets, and that its influence was decreasing, despite the authority conferred on it by the Social Summit. The ILO must maintain its role and persuade other UN agencies and the Bretton Woods institutions that employment issues had priority in structural adjustment. There had been successful seminars, but ILO action programmes in the next biennium should address the issues afresh and reaffirm the ILO's role as international leader on employment issues.

42. Thirdly, as regards core labour standards, the ILO high-level mission to the World Bank in March 1996 had stressed the importance of core labour standards, but both the Bank and the Fund had made it clear that this was not their problem. The Bank had abandoned the preparation of the ACC Task Force report on Indonesia as soon as the issue of freedom of association had arisen. However, the Bank was clearly out of step with other international organizations and the opinion of governments. In the OECD, WTO and at the Social Summit, the importance of implementing core labour standards had been highlighted. The ILO's membership included influential members of the Bretton Woods institutions, who should exert their influence to ensure that the Bank also recognized the importance of implementing core labour standards. In 1998 the ECOSOC-Bretton Woods dialogue would be an important turning-point in the wider coordination of UN bodies, and it was imperative for the ILO to break through the deadlock on labour conditions.

43. The ILO-World Bank seminars on labour law in Africa had raised the issue of different mandates. Labour standards were the most important aspect of the ILO's mandate, but the Bretton Woods institutions were not the equal of the ILO in this regard. The Bank had interfered in some issues of social guarantees; these were clearly the mandate of the ILO.

44. The representative of the Government of Bangladesh expressed support for the ILO's efforts and satisfaction that cooperation with the World Bank had been intense and brought tangible results. ILO expertise and the Bank's resources could together achieve much in the promotion of full employment and the quality and quantity of jobs. Bangladesh was a highly populated, resource-constrained country: his Government attached great importance to job creation as a priority, but this required expertise and an adequate flow of funds. ILO-World Bank cooperation was on the increase and should be seen to bring measurable benefits. The ILO was not a funding agency, but it could be expected to develop viable job-creation projects that could attract World Bank financing. Excessive emphasis on standards aspects might not be conducive to the new flow of funds. More emphasis should be placed on vocational education and training, enterprise development and small and medium enterprises. The project in Uzbekistan was a good example of ILO-World Bank cooperation in this field that had attracted funds. More information on what role the ILO had played in attracting this investment, and on the role it would play in project implementation would be welcome.

45. The representative of the Government of Malaysia, referring to the aims for cooperation in paragraph 33 of the paper and noting ILO participation in various activities of the Bretton Woods institutions, including recent meetings in Hong Kong, recalled that the problems faced by a number of countries arising from manipulations in currency transactions had been discussed at the Hong Kong meetings. Although the Bank and the Fund were taking action within their own mandates, the Office paper provided no evidence of follow-up action by the ILO, even though the financial turmoil had had serious effects on the economy, leading to the retrenchment of workers and hardship to their families, negating the benefits of development achieved over the years. The ILO should propose strategies to cope with these problems. The report of the vocational education and training study referred to in paragraph 17 of the paper should be distributed as soon as possible.

46. The representative of the Government of France expressed satisfaction with the progress made in relations with the Bretton Woods institutions, but also disappointment at the emptiness of the conclusions. The progress made derived from the Copenhagen Commitments, which required a new relationship between the institutions and UN agencies, and the dynamism of the ILO secretariat. Concerning the conclusions, although some concrete examples of cooperation had been provided in the paper, the participation of Mr. Wolfensohn at the Conference should have led to a concrete programme of cooperation between the ILO and the World Bank.

47. The representative of the Government of Croatia shared the concern about the one-sided nature of dialogue with the Bretton Woods institutions. Citing Mr. Wolfensohn's statement to the Conference, she questioned the real reasons for such a situation. More information was needed on the real obstacles to cooperation and the difference between the approach of the Bretton Woods institutions and the ILO towards core standards, tripartism and other important areas, which prevented more effective cooperation.

48. The Director of the International Monetary Fund Office in Geneva referred to the frequent contacts and close and productive relations in Geneva, which were taken very seriously by the Fund. At a joint meeting in May their respective views on economic adjustment had been discussed, and the issues were so complicated that it would be surprising if there were no differences of opinion. It was encouraging that the staff of both institutions could come together to air these differences and better understand their respective positions in order to cooperate more fully in the future. One reason why the Office paper dwelt less on cooperation with the Fund, as had been noted by the Worker Vice-Chairman, might be because ILO-Fund relations were characterized by fairly constant discussions in Geneva, whereas this could not be the case with the Bank. He agreed with the Employer Vice-Chairman that structural adjustments had to occur, but the question was whether attempts should be made to organize the process. Disorganized adjustment -- which took place, for example, through black markets, exchange rates that depleted reserves, increasing disorganization, state intervention and bad governance -- was likely to have its worst impact on the poorest and the least represented. The Fund and the Bank, in consultation with the authorities, tried to organize macroeconomic programmes to reduce uncertainty and improve the lot of the poor and the population as a whole. By reducing uncertainty, macroeconomic stability allowed investment and savings decisions to be made in a manner consistent with underlying economic fundamentals and promoted the efficient allocation of resources. Increasing emphasis was placed on accountability and transparency in policy-making. Excessive government regulation and interference in economic activities invited widespread rent-seeking behaviour and possible corruption. Inadequate protection of individual rights and the weak rule of law were critical obstacles to growth: through the process of good governance the Fund was trying to improve certainty and ensure the rule of law. Cooperation with the ILO was important, and the Managing Director of the Fund had sent directives to all field staff that relations and cooperation with the ILO were an imperative. Such cooperation in the field had improved and was continuing to do so. The institutions were taking steps to improve cooperation, and this would expand further in the future.

49. Mr. Sunmonu (Worker member), speaking on behalf of the African Worker members, stated that most countries in Africa were undergoing structural adjustment programmes, mostly imposed by the IMF and the World Bank, which were not based on social consensus. Socio-economic groups had a democratic right to participate in decision-making processes affecting social, economic and political life. The so-called consultation promoted by the Bank and the Fund could not be called participation, and transparency was required of those institutions. African workers were not opposed to structural adjustment, but wanted to participate in decision-making processes. Referring to the African Alternative Framework to Structural Adjustment Programmes for Socio-Economic Recovery and Transformation, which the socio-economic actors in Africa had accepted and which had been ratified by heads of state and government of the OAU in July 1989, he asked why the Bretton Woods institutions were not helping to implement Africa's own initiative for structural adjustment programmes. African countries were members, although poor shareholders, of those institutions whose support was needed to help Africa, yet their orthodox structural adjustment programmes were causing destruction in Africa -- economically, politically and socially. Referring to the famine in Somalia, he quoted from a publication which asserted that the Fund alone, among the major recipients of Somalia's debt service payments, had refused to reschedule and was, de facto, helping to finance an adjustment programme one of the major goals of which was to repay the Fund itself.

50. The representative of the Government of Panama expressed satisfaction that the promotion of core labour standards and the fight against child labour were being more adequately addressed, as his Government was firmly committed to these tasks. He agreed that there was a need for more concrete conclusions and requested more information.

51. The representative of the Government of China expressed satisfaction with the development of relations with the Bretton Woods institutions. However, the actual content was more important, especially as regards how the ILO actually exercised influence over them. As regards the ILO high-level mission, the priorities of fundamental rights and child labour alone were not sufficient: the priorities should also include the promotion of employment and poverty eradication. The Copenhagen Summit had entrusted the ILO with a leadership role in these areas, and more attention to this role was required in the development of relations with the Bank and the Fund.

52. The Worker Vice-Chairman welcomed the comments by the IMF representative, and the close ties established between the ILO and the IMF in Geneva. However, this was not the case elsewhere, and this should be corrected. It was essential for the Fund, when embarking upon structural adjustment programmes, to assure adequate social dialogue. In structural and economic adjustment programmes employment creation was the most important, and in achieving job creation respect for ILO core standards was essential.

53. The Employer Vice-Chairman, referring to the statements by the representative of the IMF and Mr. Sunmonu, considered that neither the ILO nor the IMF were the source of all wisdom in the respective fields of social policy and structural adjustment. Different economists had different views: not only African workers, but also highly respected economists had criticized some of the IMF's approaches. Citing a leading economist, he observed that there was general agreement that macroeconomic policies alone could not deal adequately with the problems of structural adjustment, and micro-economic policies were also necessary. In the Russian Federation there had been a division of labour between the IMF and the World Bank concerning macroeconomic policies and the necessary accompanying micro-economic policies, and problems in that regard had illustrated the fact that all three institutions, the ILO, the IMF and the Bank, had to learn to work together. The ILO had a vital role to play in the micro-economic management of structural adjustment programmes in such areas as job creation, the alleviation of social problems and child labour. The longer adjustment programmes were delayed, the more difficult it was to organize them with the least pain, and the ILO should persist in its efforts to help resolve the practical problems involved.

54. Ms. Hagen explained that the Office paper was principally concerned with the policy dialogue, and did not therefore go into detail on the micro-economic aspects or practical activities carried out mainly, but not exclusively, in cooperation with the World Bank at the field level: that issue was more appropriately covered in the Committee on Technical Cooperation. The Office would try to make more information available on matters such as social funds and vocational training, and to provide a more concrete programme of steps to implement the policy dialogue. The various references in the paper to core labour standards illustrated the development of the dialogue on the role of the Bank and the Fund in advancing policies consistent with ILO core labour standards. The ILO had emphasized the need for such consistency, but the institutions had responded that, while they could promote and engage in good governance, they could not be drawn into a political debate with their constituents; the ILO had replied that the issue was not political but one of fundamental human rights, recognized in Copenhagen and even by ministers of trade in Singapore. With the IMF there had been extensive ongoing dialogue and agreement had been reached on the need for consistency, but with respect to the Bank such a comprehensive understanding had not yet been reached. Improving understanding and acceptance of this among staff and policy-makers at the Bank was a major challenge. It was not suggested that such acceptance would imply conditionality or even advocacy: the issue was consistency in their policy advice with ILO core standards, adopted by the international community, by governments that were also members of the Bank and the Fund.

55. Positive discussions had taken place on the need and capacity for cooperation on non-discrimination, the elimination of forced labour and the elimination of exploitative child labour. The Bank had internally approved its approach paper on child labour the previous week. The ILO had already communicated at length the range of areas in which the ILO could cooperate, and expected that steps would now be taken towards more cooperative efforts in this area. The primary remaining challenge concerned freedom of association and collective bargaining, particularly with regard to establishing an understanding of how these basic principles worked, and how the Bretton Woods institutions should be attuned to achieving consistency in their own activities with the ILO's mandate to advance such fundamental core standards. Issues of employment, including quality employment and employment promotion, continued to be an important part of the dialogue. Much of this was practical cooperation that did not raise policy challenges. The Office would try to respond to the Committee's request for more information in this area in the future. Issues concerned with tripartism would require further deliberation. Some speakers had raised the question of the World Bank's initiative to deal with civil society and the decentralization taking place within the Bank and the ILO, which were relevant to the changing nature of the dialogue with civil society. The Bank was not sufficiently attuned to the ILO's approach, and the challenge for the ILO was to establish the tripartite approach as the appropriate way of addressing the issues of concern to the workplace.

56. In conclusion, she referred to the challenge presented by the financial crises in the East Asian countries and the substantial role played by the IMF and other international financial institutions. A major concern in adjustment planning related to the social effects of the adjustments. The complementary roles of the different international institutions were still being worked out, but in the initial case of Thailand, the ILO had responded positively to a call to support its tripartite constituents, and had convened tripartite seminars to plan ways in which the adjustments could be carried out most smoothly with minimum loss of jobs and more certainty of permanent jobs in the future. The ILO would continue to look for ways to meet this new challenge, and ILO staff in the field would also be continuing this assistance in other countries in an effort to produce the right kinds of long-term solutions.

Geneva, 17 November 1997.

1. GB.270/ESP/4.

2. GB.270/ESP/1/1.

3. GB.268/ESP/2: Preliminary report on a synthesis of ACC Task Force country employment policy reviews.

4. GB.270/ESP/1/2.

Updated by VC. Approved by NdW. Last update: 26 January 2000.