ILO is a specialized agency of the United Nations

GB.273/7/1 and Corr.
273rd Session
Geneva, November 1998


Reports of the Programme, Financial
and Administrative Committee

First report: Financial and general questions


Programme and Budget for 1998-99

Financial questions relating to the International Institute for Labour Studies

International Training Centre of the ILO, Turin

Report of the Building Subcommittee

Cooperation between the ILO and multi-bilateral donors

Information technology in the ILO

Other financial and general questions

1. The Programme, Financial and Administrative Committee of the Governing Body met on 11 November 1998 under the chairmanship of Mr. N. Akao, Chairperson of the Governing Body. Mr. S. Marshall (Employer spokesperson) was the Reporter.

Programme and Budget for 1998-99
(First item on the agenda)

Regular budget account and Working Capital Fund
as at 31 October 1998

2. The Committee had before it a paper(1)  containing information on the 1998-99 regular budget account and the position of the Working Capital Fund as at 31 October 1998.

3. The representative of the Director-General (the Treasurer and Financial Comptroller) reported that, since the preparation of the Office paper, arrears of contributions had been received from the following member States:

Swiss francs



298 466



328 984



37 998



665 448

These amounts brought the total of arrears received in the current biennium to 120.6 million Swiss francs, and the total contributions received to 334.3 million Swiss francs. In addition, amounts received from Namibia (23,198 Swiss francs), Slovakia (124,593 Swiss francs), and Thailand (550,016 Swiss francs) represented full advance payment of their 1999 contributions.

4. Mr. Marshall, speaking on behalf of the Employer members, commended the member States which had paid their 1999 contributions in full or in part. The cash-flow position appeared to be satisfactory, but this was largely due to the receipt of substantial arrears of contributions. It was a matter for concern that, at the end of the tenth month, only 63 per cent of 1998 contributions had been received, and he urged member States which had not paid to make every effort to do so.

5. Mr. Blondel, speaking on behalf of the Worker members, observed that the percentage of contributions received to date was broadly in line with that of the previous year. However, a number of member States would see changes in their assessment percentages in 1999, and the Workers hoped that this would not affect the payment pattern of contributions. A number of member States were also still in arrears with their current year's contributions, and they should be brought up to date as soon as possible.

6. The representative of the Government of the United States recalled that, at the 264th Session of the Governing Body (November 1995), the Committee had discussed the question of exchange-rate fluctuations in view of the difficulties caused to some member States by an appreciating Swiss franc. The Office paper presented at that time said that the long-term solution was to reduce the proportion of expenditure in francs by progressively decentralizing and delocalizing activities that could be done equally well in less expensive regions. The Director-General had indicated he was firmly committed to proceeding in that direction and was actively pursuing feasibility studies to that end. He asked how much progress had been made with these activities.

7. The Treasurer recalled that, at the time of the November 1995 session of the Governing Body, the exchange rate was 1.16 Swiss francs to the dollar. The dollar had strengthened considerably since then, although future movements were extremely difficult to predict in view of uncertainties in the currency markets at present. The Swiss franc component of the 1998-99 budget was about 53 million Swiss francs less than the 486 million Swiss franc component of the 1996-97 budget, first because of programme reductions agreed by the Governing Body, and secondly because of the decentralization of certain administrative functions and other operations to the field. This strategy was expected to produce substantial savings in the long term.

8. The Committee took note of the Office paper.

Financial questions relating to the
International Institute for Labour Studies
(Second item on the agenda)

Authorization to accept contributions and gifts

9. The Committee had before it a paper(2)  describing the contributions and gifts received by the Institute.

10. The Committee recommends that the Governing Body accept the contributions and gifts listed in document GB.273/PFA/2/2.

International Training Centre of the ILO, Turin
(Third item on the agenda)

11. The Committee had before it the documents submitted to the 60th Session of the Board of the Centre(3)  together with the report of the session.(4) 

12. Ms. Sasso-Mazzufferi, on behalf of the Employer members, expressed appreciation for the documents presented to the Board, which were clear and well presented and contained a wealth of useful information. It was interesting to see in the details provided on the courses that the percentage of female participants had been increasing steadily. The general comments of the Employer members were contained in paragraph 8 of the report. They expressed in particular their appreciation for the continuing support to the Centre from the Government of Italy and the authorities of the region of Piedmont and the city of Turin. Other comments from Employer members were contained in paragraphs 12, 18, 19, 20 and 25 of the report. The Employers were pleased to see the Centre's finances on such a sound footing and they congratulated the Director and his colleagues for achieving such healthy results.

13. Mr. Blondel (on behalf of the Worker members) expressed appreciation for the documents before the Committee and was pleased to see the Centre in such a healthy condition in view of the fact that it had been in a catastrophic situation ten years previously. The Director and his colleagues should be congratulated for all the work accomplished since then and for the results achieved.

14. Mr. Agyei, on behalf of the Worker members of the Turin Centre's Board, described the main points covered at the Board meeting. There was room to strengthen further the links between the Turin Centre and the ILO's technical programmes, and this work should be pursued systematically and within an institutional framework. Bipartite and tripartite activities should also be intensified, and more specific targets should be set for workers taking part in the Centre's general programmes. At the Turin Centre there were separate committees for management training and workers' education, which in some cases was not a suitable structure for designing programmes. It would be useful if both committees could meet with a view to increasing the participation of workers in the Centre's activities. Certainly there had been encouraging improvements in the infrastructure at the Centre, but the service provided to course participants still needed to be upgraded and monitored. Higher priority should be given to the encouragement and evaluation of distance learning, although there had to be a balance between field programmes and those conducted at the Centre itself. Field programmes were of course an important activity, but the Centre could be promoted and gain more exposure if more programmes were based there. Furthermore, there should be a greater focus on tripartism as a priority of the Centre so as to bring its activities more into line with the goals of the ILO. The Workers commended the Director and staff of the Turin Centre on their efforts and pledged continuing support for its activities.

15. Mr. Anand (Employer member) also congratulated the Centre on its achievements in the past year. There was no doubt that, in the world of work, training would be a key activity in the years ahead, and it was gratifying to see the Director-General had taken such an interest in the work of the Turin Centre at its last Board meeting and resumed contact with developments in this field. In the light of the demands being made on the Centre and to ensure that it responded to today's needs, it might be appropriate to consider carrying out a re-examination of its Charter. Perhaps it should be extended so as to reflect more accurately the ILO principles of tripartism and to enable it to develop networks throughout the African, Latin American and Asian regions, as the Turin Centre was probably the best forum for spreading the message about the technical and cultural dimensions of ILO activities. More specifically, efforts should be made to ensure coordination between programmes proposed by the Management Development Committee and the Trade Union Training Committee. Only in this way would stable enterprise development take place. He expressed appreciation for the continued support from the Italian Government and from the Piedmont and Turin authorities, and urged governments and institutions in other regions to initiate collaborative decentralization and give similar support to the Centre in its efforts to make its programmes more widely available worldwide.

16. The representative of the Government of Italy said that his country would continue to give the Centre its full support. It supported the United Nations Staff College project, the implementation of which was developing under the guidance of the Centre in a very positive way and attracting growing interest from the agencies of the UN system and other international organizations. This programme added a new dimension to the activities of the Centre and would play an important part in the continuing reform of the United Nations. Its effectiveness would depend on the management strategy of the Turin Centre, where it had and would always have its focus. Support to the Staff College project was an essential part of Italy's contribution to the Centre, and it looked forward to further positive developments.

17. The representative of the Government of India congratulated the Director of the Turin Centre and his colleagues on the programmes carried out in 1997 and 1998. The Director's report on the Centre's activities in 1997 highlighted the growth in training programmes and described the improvements in the quality of vocational training in several member countries. The World Employment Report had brought out the grim employment situation all over the world and had highlighted the importance of vocational training and retraining to improve employment prospects. The Centre should therefore focus its work more on vocational training and leave less important activities to other organs in the UN system. The Asia-Pacific region was the largest region in the world in terms of population and was also facing extremely serious problems of poverty, unemployment and underdevelopment. Despite repeated requests in the past for the Turin Centre to give special attention to the region, the situation had not improved so far. Indeed, Turin Centre participants from the Asia-Pacific region accounted for only 10 per cent of the total in 1997, down from 11 per cent in 1991. However, the efforts of the Centre to enlarge the network of partner institutions in the field was especially welcome: a collaboration agreement had recently been signed between the Turin Centre and the Institute of Labour Development, Jaipur, India. The Government of India fully supported these initiatives, but wished to be consulted about programme details before agreements were finalized.

18. The representative of the Government of France found it especially gratifying to see the Turin Centre going from strength to strength, and the Director and staff of the Centre deserved the fullest congratulations for rescuing it from near catastrophe ten years ago. One recent and noteworthy development was the United Nations Staff College project, which added a new dimension to the activities of both the Centre and the ILO itself, as evidenced by the remarks of the UN Secretary-General. Another benefit of this project was the improved coordination between the Centre and the ILO. Over the years there had been a steady increase in resources for Turin Centre activities, which signified the growing confidence in its work. It was also placing increased emphasis on quality programmes, and this was reflected in the results of programme evaluations. The Centre could look forward to a bright future, and the Government of France would continue to give it full support.

19. The Committee took note of the report of the 60th Session of the Board and the documents accompanying it.

Report of the Building Subcommittee
(Fourth item on the agenda)

20. The Committee had before it a report(5)  of its Building Subcommittee describing progress on the construction of the ILO's premises in Islamabad.


30. The Committee recommends to the Governing Body --

  1. that the Governing Body authorize an additional amount of $290,000 for the construction of the ILO premises in Islamabad, to be financed by the Building and Accommodation Fund;
  2. that any compensation recovered by the ILO from the contractor be credited to the Building and Accommodation Fund.

Cooperation between the ILO and multi-bilateral donors
(Fifth item on the agenda)

31. The Committee had before it a paper(6)  containing information on cooperation between the ILO and multi-bilateral donors.

32. Mr. Marshall, speaking on behalf of the Employer members, stated that, on the assumption that EU funding was valued by the ILO, and that it was decided to maintain a relationship with the EU, views that the Employers upheld, his group recommended that the Office should continue to negotiate, initially within the ambit of the wider UN grouping. The Office should however remain flexible and be prepared to negotiate directly for the best possible terms. If negotiations between the United Nations and the EU became slow or reached a stalemate, the ILO should be prepared to go it alone. In doing so however, it would be important to recognize the implications of major changes in respect of ILO procedures, particularly in relation to other donors. The introduction of innovative processes, which, for example, would separate EU funds from those received from other donors, may be an appropriate approach. The Employer members looked forward to further briefings as a result of negotiations.

33. Mr. Blondel, speaking on behalf of the Worker members and referring to an observation made by the Employers group, stated that there was no question as to whether the Office was interested in continuing cooperation with the EU. The Worker members regarded such cooperation as essential. The paper under review, although referring to multi-bilateral donors in its title, dealt basically with cooperation between the ILO and the EU. That being said, however, the paper raised further issues relating to other UN agencies and perhaps the UN system as a whole.

34. The paper also identified and compared the administrative and financial rules being applied by the ILO and the EU. In some cases, however, the problem areas went beyond administrative or financial concepts and touched on matters of principle. The requirement for staff on EU-funded projects to be citizens of EU member countries was a good example, as was the insistence by the EU that such staff should be remunerated at rates fixed by the EU rather than in accordance with UN common system provisions. It was not clear whether current negotiations between the UN and the EU would produce results, and it was perhaps up to the individual European Governments involved to provide the necessary pressure that could eventually resolve the problem. As far as trade unions were concerned, such an initiative would be taken by the national trade union centres in Member States of the EU.

35. In the meantime, the Office should try to reduce the differences as much as possible, especially in purely administrative areas such as the provision for administrative and technical backstopping. Cooperation with the EU was a political and financial necessity, and ways should be found to bring the ILO and the EU closer without resorting to the delegation of such efforts, which could lead to a stalemate.

36. The representative of the Government of Canada welcomed the paper. The annex which set out the differences between the EU and the ILO was especially helpful. During the previous day's meeting of the Committee on Technical Cooperation, the low delivery rates of technical cooperation projects had been discussed, and the question of whether obstacles or administrative blocks had perhaps been a factor had been raised. Such obstacles could be reduced by increased standardization of procedures such as standard contribution agreements and reporting practices. Making special provisions for any donor would be against that general trend. As recommended by the Employer and Worker members, the Office should therefore continue to negotiate with the EU within the UN system.

37. The representative of the Government of the United States was pleased to note that CCAQ had requested input from specialized agencies, including the ILO, for the UN's talks with the Commission on a standard model agreement. Apparently little progress had been made. A number of the Commission's financial and administrative requirements in a proposed agreement remained unworkable, and further negotiations were necessary. In the meantime, the Office was urged to continue to make clear to the UN the concerns raised regarding this issue by members of the PFA Committee in March and June 1998.

38. The representative of the Government of the United Kingdom welcomed the paper. It related to the wider question of the relationship between the ILO and other donors. The ILO should continue to negotiate through the wider negotiations that were in progress between the UN and the EU. He was in favour of the standardization of procedures for donations to the ILO, and noted that, although the paper gave details of standard procedures applied to other multilateral donors, there was no indication as to who those donors were. The ILO should continue to negotiate with the EU as part of the wider negotiations between the Commission and the UN in a spirit of compromise, and the United Kingdom would continue to urge the same upon the Commission.

39. The representative of the Government of Panama noted the various differences in administrative and financial requirements between the ILO and the EU. In view of the seriousness of the problems involved, it would be very difficult for agreement to be reached.

40. The representative of the Government of France fully supported the comments made by the representative of the United Kingdom. It was understandable that differences and incompatibilities would exist between the rules and regulations of two large organizations. The ILO was however urged to continue with discussions and negotiations not only in administrative terms but also on a much wider basis. The EU had the same values as those of the ILO. It shared the same concerns relating to the social structure as well as the rights of man and the ILO had in fact served as an inspiration for the EU in these matters. It was essential therefore that these general objectives were not forgotten when differences were being resolved. The Government of France would continue to press for further negotiations both in the ILO and in Brussels.

41. Mr. Blondel, speaking on behalf of the Worker members, requested confirmation by the Office that the EU's requirements applied not only to the ILO but to all organizations.

42. The representative of the Director-General (the Treasurer and Financial Comptroller) stated in reply that the conditions demanded by the EU applied to all its subcontractors and contractors. The conditions had been designed for private enterprises, and that was part of the reason why international organizations and the UN system as a whole were having problems with them.

43. The Committee took note of the Office paper.

Information technology in the ILOInformation technology in the ILO
(Sixth item on the agenda)

44. The Committee had before it a paper(7)  on information technology in the ILO.

45. Mr. Marshall, speaking on behalf of the Employer members, welcomed the paper, which related to an area of great importance to an organization such as the ILO. He supported the upgrade of the Office's central budgetary and accounting system, and agreed with the suggestion that a fund should be established for the purposes of financing the upgrade over a number of biennia. A detailed report on the proposed upgrade was necessary, however, showing a timetable together with funding requirements in order that the fund could be properly structured and funding arrangements set up.

46. Similar funds had been established by a number of other agencies and had functioned satisfactorily. It was important not to abandon the concept of zero growth, and the possibility of using an eventual cash surplus to establish a special fund should be considered. Should the surplus prove to be insufficient, the fund could be supplemented by annual appropriations from the 2000-01 and 2002-03 budgets. In respect of PERSIS, the request for a further $1.6 million to complete the application was also supported, as it was considered important for it to be completed. This appropriation would however have to be balanced by savings elsewhere in the budget.

47. Mr. Blondel, speaking on behalf of the Worker members, also welcomed the paper, which outlined the Office's efforts to keep abreast of new IT technologies, which included the Internet, e-mail, virtual conferencing, video- conferencing and computer-aided translation. He was surprised to note, however, that the document did not include any reference to the possibility of transmitting speeches and messages by satellite. The paper also dealt with the problem of financing the upgrade to the Office's central budgetary and accounting systems, which required urgent replacement if serious breakdowns and other problems were to be avoided. The systems were obsolete, and it had become extremely difficult to find programmers capable of working on them.

48. The proposed upgrade would cost between $15 and $20 million, spread over three biennia. With the concept of zero growth in mind, the Office proposed the creation of a special fund. Such a fund was supported, but further details were required such as the conditions that would apply to the use of the fund as well as the sources of funding (savings, surpluses, arrears of contributions etc.).

49. The paper also referred to an additional $1.6 million required to complete the PERSIS payroll module. The completion of the PERSIS project was considered essential and the amount of $1.6 million should therefore be set aside in the next biennium.

50. The representative of the Government of the United Kingdom welcomed the overview of IT strategy in the paper and stressed the importance of keeping up to date in information technology. The introduction of new financial systems was essential for reforming budgetary procedures and setting up strategic budgeting systems. To realize long-term cost benefits the ILO should do away with the cumbersome manual procedures imposed by the present system.

51. It was in the nature of IT for expenditure patterns to be uneven. This created difficulties for an organization on a biennial budget. The central budgetary and accounting system should be replaced as soon as possible. Information technology expenditure should be funded out of the regular budget. It was too important to be left to the vagaries of extra-budgetary financing and should not be funded through arrears.

52. During the initial phase of installation IT expenditure should be funded through savings in Part I of the budget in the current biennium. An IT reserve fund should be created, into which those savings could be placed. In future biennia provision could be made for long-term expenditure on IT and transferred into the fund.

53. In the absence of information in the paper on the millennium question, he requested an update on developments since the Governing Body had discussed the matter in March.

54. The representative of the Government of the United States agreed that it was important to make optimal use of IT. The 1.5 million hits registered each month by the ILO website were impressive. He urged the Office to continue making the site still more useful to social partners, private individuals and governments, which did not otherwise receive hard copy of ILO products. The ILO had succeeded in reaching hitherto inaccessible audiences. By making its website more complete and even easier to use and by adding links to other sites the ILO site would become even more popular. But developments in IT went beyond the Internet. Video conferencing, internal communications and other systems promised to enhance the ILO's methods of work, but would not be cheap to install.

55. The central budgetary accounting system had to be replaced, and the personnel payroll module completed. Linking these two systems to existing resources would make more complete evaluation data available to the Office and to the Governing Body in a more timely fashion. Such tools would become even more necessary as the Organization moved into the next biennium and beyond.

56. However, neither funding through an extra-budgetary fund financed from the programme and budget nor an exceptional increase above and beyond zero growth were valid options. The term "extra-budgetary" normally denoted voluntary contributions as opposed to assessed ones, but this was not the case here. Moreover, the reasons given for extra-budgetary funding, i.e. long-term investment requirements, were not convincing. The ILO had many other equally high priority projects which did not enjoy special funding status. Investment in IT should come from within the regular budget, but without affecting normal programme allocations, and in any case from savings. Increased use of IT could offset some of the cost of other programmes. For example, the ILO planned to spend some $17 million on travel in the current biennium, but some of this expenditure could be saved through the use of video conferencing and by implementing the recommendations on official travel formulated the previous year.

57. The representative of the Government of Canada also commended the Office for making available the benefits of information technologies to its constituents, particularly those in far away places. It should aim at making access to its documents much easier. As for modernization of the ILO's financial and accounting systems, the Office should proceed without delay. As it moved towards a strategic budgeting system its financial and accounting tools had to be able to provide the kind of information and accountability that the new approach required.

58. As previous speakers had mentioned, these projects tended to cost more and take longer than originally planned, so funding should be secure and projected over several biennia. These projects were also characterized by uneven patterns of expenditure. Funding should be earmarked from Part I of the budget, starting with the 2000-01 biennium, and accumulated in a reserve fund in line with the proposal in paragraph 32. As the Employers had suggested, the establishment of such a fund could begin in the current biennium so as to take advantage of any savings that might be available in the current biennium. She agreed with both the Employers and the Workers that the PERSIS system should be given priority in the next biennium.

59. The representative of the Government of Germany remarked that the amount at issue was less than 1 per cent of the total budget for the biennium. Furthermore, since about $102 million was allocated in each biennium to service and support activities, it should be easy enough for funds for IT developments to be made available under that heading. Updating the ILO's financial systems would take place over several years, and it would be more appropriate for funding to come from the regular budget, rather than set up a special extra-budgetary fund.

60. The representative of the Government of Finland supported the proposal for financing IT through a special extra-budgetary fund. It would be unrealistic to try to meet the high costs of IT from savings alone, which in any case would only be realized over the long term. In the short term special allocations should be provided for in the regular budget.

61. The representative of the Government of Japan agreed that ILO financial systems needed updating. These systems would play an important role in the strategic budgeting process, and the cost of upgrading should be met by the regular budget. Whether or not a special fund should be set up required further study, particularly with regard to the effect on priority programmes and the availability of IT services to those who needed them.

62. The representative of the Government of Panama agreed that the ILO had to update its technology, and recalled that discussions on this issue had taken place last June. The creation of an extra-budgetary fund might be worth considering when more information was available on medium and long-term information technology requirements.

63. The representative of the Director-General (the Treasurer and Financial Comptroller) informed the Committee that the work on the millennium bug was progressing on schedule. He described the hardware, operating systems and applications that had already been made Y2K compliant. However, the most demanding and important work related to the IBM mainframe applications, and this still needed to be done. A contract had recently been entered into with a software company to undertake the necessary modifications and testing. It was expected that this work would be completed, verified and fully tested by the middle of next year. Even if the ILO itself managed to make all its computer applications Y2K compliant, it did not necessarily mean that there would be no difficulties on 1 January 2000 because if the ILO's suppliers and banks had not solved their respective problems, there would be inevitable repercussions for the Office.

64. On the subject of a new financial and accounting system, he noted that there was unanimous agreement on the need to address the problem. The issue of the ageing, cumbersome and inflexible computer systems had been brought to the attention of the Governing Body and the Conference in the Programmes and Budgets for 1996-97 and 1998-99, although no budgetary provision had been made to begin work on the new systems as the investment was significant and could not realistically be absorbed in a budget with zero real growth.

65. In ideal circumstances, significant investments in equipment or information technology would be judged on their merit and would be provided for, if justified, in the budget even if this resulted in a one-time exceptional increase. Indeed, in the 1960s and 1970s investments in mainframe computers were provided for as necessary through a budgetary increase for the biennium in question. In recent years, because of the budgetary and financial constraints with which many member States were confronted, the practice of zero real growth had been adopted thus making it very difficult to find the necessary funds for investments in infrastructure, including information technology.

66. Suggestions had been made that the resources required, which would be approximately $6 million per biennium for the next three biennia, should be found through corresponding savings in administrative expenses. The Treasurer recalled that budgetary provisions for the administrative sector had been constantly reduced over the years as a result of productivity gains and efficiency, but these savings had been redeployed in successive budgets to the priority programmes of the ILO. This was perfectly understandable but had, at the same time, led to unmet demands for the renewal of equipment and for investments in new technology. The Governing Body and the Conference had acknowledged the pressure that had built up for such investments by agreeing in the past to waive the provisions of the Financial Regulations so that budgetary surpluses were used to satisfy some of these demands.

67. The Treasurer recalled that, because of the payment of large arrears of contributions, the 1990-91 biennium ended with a cash surplus of Sw.frs.19.369 million. On the recommendation of the Governing Body, the Conference had agreed that Sw.frs.10.324 million of this amount could be retained by the Office for the following investments:

Swiss francs

Electronic voting system

600 000

Replacement of audio systems

1 600 000

Installation of cabling system

2 500 000

Replacement of telephone exchanges

3 100 000

Electronic mail

670 000

Information systems

1 054 000

Central word-processing system

800 000

10 324 000

68. Likewise, the 1992-93 biennium had ended with a surplus of Sw.frs.24.23 million, of which the Conference had authorized Sw.frs.21.73 million to be retained by the Office for priority programmes and investments in equipment and information technology, with the balance of Sw.frs.2.5 million to be credited to member States under the provisions of article 18 of the Financial Regulations.

69. Of this amount of Sw.frs.21.73 million, Sw.frs.1.63 million were set aside for the re-equipping, refurbishment and renovation of ILO external offices; Sw.frs.1.95 million were earmarked for the transfer of financial administration to field offices and for the computerization of sales records in ILO external offices, and some Sw.frs.600,000 for the modernization of the ILO's financial systems.

70. The use of these surpluses showed how the regular budget had proved to be inadequate to meet the investment demands that had built up over the years; the Governing Body and the Conference had recognized this by authorizing that a part of the cash surplus be used to meet the urgent requirements to modernize the Office's infrastructure.

71. He noted that support had been expressed, particularly by the Employers and Workers, for the creation of an extra-budgetary fund that could be built up over the years to finance investments in information technology and other capital expenditure and thus avoid large impacts on the regular budget from one biennium to the next on account of such requirements. Such a fund could be financed in a variety of ways, including recurring payments through the regular budget, the use of possible cash surpluses in the future, savings under the regular budget and also possibly by use of the provision for Unforeseen Expenditure under Part II of the budget, to the extent that it had not been used in any biennium. It was important to note that the setting up of such a fund would not solve the immediate problems with which the Office was faced, because it would take several years to build up the fund to a level which would be sufficient to meet its intended purpose.

72. The spokespersons of the Employers' group and the Workers' group had both raised the possibility of using cash surpluses or arrears of contributions to set up such an investment fund. There was a possibility that the 1998-99 biennium might end with a very substantial cash surplus, for the reasons presented to the Governing Body at its 271st Session (March 1998).(8) 

73. Because of significant savings in the 1996-97 biennium, it had been possible to balance the books in spite of the fact that the equivalent of the contribution of the United States for 1997 had not been received until January 1998. On the assumption that the United States would pay the equivalent of its contributions for 1998 and 1999 during the current biennium, this would mean that this biennium would receive the equivalent of three years' contributions from the major contributor. Under these exceptional circumstances, the Governing Body may wish to consider using a cash surplus, should it arise, for either directly financing the project for the renewal of the financial systems or to set up an extra-budgetary investment fund as had been suggested. Although such a decision was not required at the present session of the Governing Body, the Treasurer expressed the hope that serious consideration would be given to such a course of action.

74. The Committee took note of the Office paper.

Other financial and general questions
(Eighth item on the agenda)

Follow-up on the reports of the Joint Inspection Unit

75. The Committee had before it a paper(9)  describing the follow-up on the reports of the Joint Inspection Unit.

76. Mr. Marshall, speaking on behalf of the Employer members, stated that the reports of the Joint Inspection Unit (JIU) were a useful addition to the Organization's internal and external audit activities, but existing procedures concerning the availability of documents were adequate and should be maintained. The documents were available to Governing Body members and the Office was expected to draw important recommendations from these papers to the attention of the PFAC. Instead of reproducing documents and implementing an expensive tracking system, it was preferable to maintain the status quo.

77. Mr. Blondel, speaking on behalf of the Worker members, recalled that during the discussion of the report of the JIU for 1996-97, the Worker members had expressed serious reservations concerning the establishment of a different system to follow up on the JIU reports. If the JIU proposals given in paragraphs 3 to 11 of the document now before the Committee were to be implemented, it would impose major changes on the working methods of the Governing Body and an additional investment in financial and human resources. The ILO had an internal and external audit system which allowed the Governing Body to exercise adequate financial and accounting control. The Workers' group, not being convinced of the need for the proposed follow-up on the JIU reports, supported the proposal in the paper. The ILO could return to the issue once it had been discussed in the General Assembly of the United Nations.

78. The representative of the Government of India stated that JIU reports were important to assess the performance and efficiency of the specialized agencies of the United Nations system. The member States which funded an organization's programmes had a right to know that funds had been used efficiently and for their intended purpose. JIU reports could be distributed to member States of the ILO in accordance with article 11, paragraph 4(c) of the JIU statutes, possibly using the Internet. The present system of making documents available to PFAC members on request was not satisfactory because it did not allow sufficient time to study them. The value of JIU reports depended on effective follow-up in line with procedures in the JIU statutes. They should be implemented by the ILO for a few years before considering deviating from them, as proposed by the paper under discussion.

79. The representative of the Government of the Russian Federation stated that the Joint Inspection Unit's activities were very important as a means of control and supervision in the United Nations system and that proposals to set up a more effective follow-up mechanism to implement the recommendations of their reports was necessary and timely. The participation of member States and organizations in implementing JIU recommendations was important in order to rationalize the activities of the organizations' secretariats. In the ILO, the efficiency of the implementation of the Governing Body's decisions could be improved through this process. He could not agree to the point for decision in the Office paper as it stood. The only reason to defer decision on the JIU proposals would be the absence of a corresponding decision by the United Nations General Assembly. He suggested that the decision paragraph should read that the Committee proposed to return to the question of implementation of the recommendations of the JIU taking into account the results of discussion of this issue in the UN General Assembly.

80. The representatives of the Governments of the United States, Italy and Panama supported the suggestion made by the representative of the Government of the Russian Federation.

81. The representative of the Joint Inspection Unit recalled that article 2 of the JIU Statute stated that the JIU exercised its functions under the General Assembly of the United Nations and was responsible to it as well as the decision-making bodies of specialized agencies and other international organizations of the United Nations system. In addition, the JIU was a subsidiary organ of these decision-making bodies. The PFAC had concluded, two years ago, that to reinforce internal control it was necessary for the Chief Internal Auditor to have access to the Governing Body. Traditionally, the essential difference between internal and external audit was that internal audit was answerable to the administration whereas external audit reported to member States. This distinction had become less clear in the past few years both in the ILO and in the United Nations, which had created an internal control structure, the head of which was selected by and had direct access to the General Assembly. In the ILO, it was paradoxical that external audit, which was supposed to be responsible to the Governing Body, had little access to it and that although the JIU reports were available to the Governing Body members for consultation, those under inspection submitted a document to the Governing Body stating what the inspection report said. The question of distribution was also important. This was provided for in its statutes and so it was not the JIU's fault if some documents were distributed several times because different organizations were discussing the same issue. In view of the fact that the JIU was a subsidiary organ of each participating organization, it was difficult to accept the argument that because a report was being discussed by the General Assembly it was not necessary to receive it. Even if member States had access to reports through the United Nations, the social partners which were part of the tripartite structure of the ILO would not. The JIU Statute foresaw reports concerning the whole system. These were sent to the Secretary-General of the United Nations who distributed them to participating organizations. However, reports might concern only one organization, as was the case recently concerning the ILO. It seemed incongruous that a report by an external control system, which was a subsidiary organ of the ILO, should be made available only for consultation, whereas those of the Internal Auditor were submitted direct to the Governing Body. The possibility of distributing the documents by the Internet could be examined. It was obvious that if a report took several years to be examined, it would lose most of its relevance. To prevent this the JIU Statute had imposed time-limits for the examination and distribution of reports concerning only one organization. For reports concerning the whole system there was a six-month maximum for the submission of comments by the Administrative Committee. In reality, this limit was often exceeded, and reports lost their relevance. In the interest of member States, it was necessary to have efficient external control supported by a mechanism which would follow up on approved recommendations. The General Assembly of the United Nations had adopted a resolution calling for JIU reports to be examined in detail and for each recommendation to be discussed by the decision-making bodies. If a report was simply noted by the executive body of an agency, it would not be clear if all the recommendations contained in the report had been approved. It was important for the Governing Body to ensure that the recommendations approved were implemented. Since the matter was currently before the UN General Assembly, the Governing Body should rediscuss it at a later date. The JIU did not agree with the current practice whereby the Governing Body considered a summary document on a JIU report, with the report only available for consultation. This procedure did not seem correct from a legal point of view.

82. The Committee recommends that the Governing Body defer consideration of the proposals set out in the JIU annual report for July 1996 to June 1997 until after it has received the report of the United Nations General Assembly on this issue.

Regional meetings: Proposed new arrangements

83. The Committee had before it a paper(10)  on the proposed new arrangements for regional meetings.

84. Mr. Marshall, speaking on behalf of the Employer members, noted that the issue was being raised as a result of difficulties experienced at the Twelfth Asian Regional Meeting in 1997. It was very important to ensure that facilities, interpretation, meeting rooms, etc., be available for the parties to optimize the sessions and they therefore supported the points for decision indicated under 5(a)(ii), 5(b) and 5(c).

85. Mr. Blondel, speaking on behalf of the Worker members, expressed satisfaction that this matter had been placed on the agenda, as the Workers' group had heard that Worker representatives who had attended the Asian-Pacific Regional Meetings had been frustrated and disappointed. One had mentioned that, because of time pressure, the conclusions were being drafted on the second day of the meeting before the discussions had even concluded. The proposals in the Office paper were insufficient, and it would be preferable to organize five-day conferences. This would provide enough time for discussion, even with broader participation, as well as allow time for ministers, who mobilized themselves more at the regional level than at the International Labour Conference, to give their views. The Workers could not accept the option given in paragraph 5(b) allowing for ad hoc decisions to be made by the Officers of the Governing Body on the duration of each meeting. This would be unfair to regions forced to accept shorter meetings.

86. The representative of the Government of Austria considered that, rather than leaving the decision to the Officers of the Governing Body, regional meetings should be planned for four days, as it was impossible to know in advance whether three days would be sufficient. Over recent years it had become increasingly difficult to reach consensus in view of time-limits for statements and strict rules on night sessions.

87. The Director-General pointed out that the expression "authorize its Officers to decide, on an ad hoc basis ..." referred to the Officers of the Governing Body, and not ILO officials. There should be no misunderstanding on this point. The decision would be for the Officers to take, not the Office.

88. The representative of the Government of the United Kingdom had no objection to any proposals designed to improve the effectiveness of regional meetings, and she supported the point for decision 5(a)(ii). With regard to point 5(b), she hoped that the Officers would carefully examine what the focus of regional meetings should be and how they could be more effectively organized before extending their duration. It was not an easy matter to decide when there was a large number of speakers, but the Officers might wish to consider how other organizations operated before reaching a final decision.

89. Mr. Marshall recalled that major programme 30 of the current budget was quite specific that the mandate was to hold three-day meetings on a single agenda item, within which a half day was for group meetings. However, it seemed reasonable to allow the Officers of the Governing Body the flexibility to extend a meeting from three to four days as they saw fit. Five days on a single agenda item seemed excessive.

90. The representative of the Government of Japan also recalled that there had been difficulties at the Asian Regional Meeting, and she supported the proposal to extend the duration of such meetings. Nonetheless, the actual duration for each meeting should be left for the Officers of the Governing Body to decide. With regard to the interpretation facilities and rooms for the group meetings, she expressed support for the proposal to hold preliminary Government group meetings in order to make more effective use of the time available, and was therefore in favour of point 5(a)(ii).

91. The representative of the Government of the United States shared the concern expressed that regional meetings had often lacked focus, and extending them to five days could make it worse. He urged the Officers of the two forthcoming meetings, as well as the Office and interested social partners and governments, to ensure that they aimed at achieving concrete results directly related to priority goals. Regarding the point for decision, he expressed support for the proposal to finance the additional cost from existing resources, even though additional resources had been approved by the Governing Body in March for group meetings. He supported point 5(a)(ii) to provide resources for additional interpretation and rooms at regional meetings for four days, as it did not make sense to hold such meetings without adequate facilities.

92. The representative of the Government of China, which had participated in the Asian Regional Meeting in Bangkok, also considered that three days was too short for in-depth discussions. The Government group indeed needed to hold consultative meetings, and therefore the provision for additional interpretation and meeting rooms was necessary. He agreed to the proposed four-day duration and did not consider it necessary for a decision to be taken on an ad hoc basis for each meeting. He also agreed to the financing of additional costs from savings in Part I of the Programme and Budget for 1998-99.

93. The representative of the Government of Panama, speaking on behalf of the Governments of the Americas region, reiterated the importance of adequate interpretation facilities and emphasized that at the forthcoming Regional Meeting for the Americas they did not wish to risk having the problems experienced at the Asian Regional Meeting. He supported the proposal that the Officers should be allowed, on an ad hoc basis, to approve the duration of regional meetings to a maximum of five days.

94. The representative of the Government of Canada associated herself with the remarks by the Employers concerning the purpose and time-frame of the meetings, and those by the representative of the Government of the United Kingdom on finding better ways to organize meetings. Interpretation facilities for the Government group were very important, and she thus agreed with point 5(a)(ii). With regard to paragraph (b), four-day meetings should be authorized only on an exceptional basis, but in a spirit of compromise she would accept the formulation in the Office paper. She did not agree that meetings should last more than four days. She expressed support for the financing proposal in paragraph 5(c).

95. Mr. Blondel pointed out that meetings were provided for under article 38 of the Constitution. Decisions taken on a case-by-case basis would constitute discrimination and would be unacceptable to ILO constituents. What would happen if the Officers of the Governing Body took a decision which led to a situation similar to that experienced by the Asian Regional Meeting? He could not accept that statements in meetings should be subject to time-limits. Meetings were held for good reason and participants should be given every opportunity to express themselves. Anything less than five days was inadequate, and the duration of meetings should not be determined by ad hoc decisions.

96. Mr. Marshall agreed with the comments made concerning possible discrimination between the regions. However, it was important to realize that regional meetings had a specific mandate and agenda. The Committee at the present session had 16 items on its agenda concerning major issues and had to conclude its work in one-and-a-half days, which it achieved by the proper management and structuring of its work. The Committee should avoid excessively strict application of constitutional provisions which might not allow the full flexibility that was sought.

97. Mr. Brett (Worker Vice-Chairperson of the Governing Body), recalling the recent Asian Regional Meeting in Bangkok, said that the meeting had heard a number of very important contributions from ministers and senior civil servants from the nations of that region, which had taken up a valuable but large part of the time and therefore restricted the time available for debate. Taking Africa as an example, of its 53 nations 46 were undergoing structural adjustment. To do justice to the African States -- and the same reasoning would apply to the Americas -- their regional meetings should be attended by persons holding senior positions. Ministers could not be denied the time to make a speech and five days were hence needed for regional meetings, both in Africa and in the Americas. Postponing a decision would be the equivalent of asking the Officers in March to make a decision which clearly could be made today, for the number of governments would not change. The problems facing Africa and the Americas were the same as those facing Asia. Already it was known that there would be several speakers with valuable contributions to make, and no useful purpose would be served by delaying a decision on the duration of these meetings.

98. Mr. Marshall considered that, in view of the differences of opinion expressed by Committee members and the fact that the two meetings were planned for the latter part of 1999, it would be appropriate to review the issue in more depth and to take a decision at the next session of the Governing Body in March 1999.

99. Mr. Blondel agreed that since a decision in March would still leave sufficient time for preparations for the regional meetings later in 1999, the matter should be considered again at the next session of the Governing Body.

100. The Committee decided to defer decision on this matter until the 274th Session of the Governing Body to be held in March 1999.


Geneva, 17 November 1998.

(Signed) S. Marshall,

Points for decision:

1. GB.273/PFA/1.

2. GB.273/PFA/2/1.

3. GB.273/PFA/3/1.

4. GB.273/PFA/3/2.

5. GB.273/PFA/4.

6. GB.273/PFA/5.

7. GB.273/PFA/6.

8. GB.271/PFA/7.

9. GB.273/PFA/8/1.

10. GB.273/PFA/8/2.

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