Financing a socio-economic recovery

Web page | 17 June 2021
Under the leadership of the ILO, Cluster 2 of the Financing for Development in the Era of COVID-19 and Beyond Initiative addresses the socioeconomic response to the COVID-19 crisis, including in the areas of social protection, gender, children, youth, health, education and human rights. The Initiative has generated a menu of policy options, aiming to address the current emergency and to promote a swift and sustainable recovery that will pave the way for more inclusive and resilient development.

COVID-19 has dramatically affected the world of work. In 2020, 8.8 per cent of global working hours were lost relative to the fourth quarter of 2019 – equivalent to 255 million full-time jobs. These working-hour losses have meant higher levels of unemployment and inactivity as well as substantial losses in income. The ILO estimates a global decline in labour income of 8.3 per cent in 2020, totalling US$3.7 trillion, or 4.4 per cent of global GDP. Projections suggest that these decent work deficits will continue to be an issue well into 2021. The impact of fiscal stimulus measures on employment has been positive but uneven, with low-income and lower-middle-income countries facing the greatest challenges and an estimated US$982 billion fiscal stimulus gap.

Unsustainable financial conditions and rising debt levels, as well as their impact on poverty and inequality, threaten to stall recovery efforts, exacerbate development challenges and increase the risk of social unrest. Efforts to combat the health impact of the COVID-19 pandemic must be undertaken in tandem with investments in socio-economic recovery.

Cluster 2 aims to provide the policy guidance needed to restore progress towards the 2030 Agenda and achieve a sustainable, inclusive, fairer and greener recovery by focusing on support for governments, workers and employers’ organizations, the private sector and other actors. These efforts contribute to mobilizing public and private investments for a human-centered socio-economic response. The work of the cluster also remains focused on determining the specific priorities, governance and architecture to implement the global standards underpinning socio-economic response efforts at the global, regional and national levels as well as supporting the alignment of the financial system with the SDGs.