ILO and IZA Conference
ILO Director-General says labour market reforms must have positive impact on social conditions
Opening remarks by Guy Ryder at ILO/IZA conference on Assessing the Effects of Labour Market Reforms – A Global Perspective, in Geneva on 10-11 March 2016.
Doctor Werner Eichhorst, Raymond, Ladies and Gentlemen,
It gives me great pleasure to welcome you here today, to this Conference on Assessing the Effects of Labour Market Reforms.
I’ll say a very few words about the themes of our meeting in a moment, but first let me acknowledge and thank our friends and colleagues in IZA who are helping us to co-host this conference.
I think I can say very sincerely that there has been a long-standing and fruitful collaboration with IZA over many years. Many of my ILO colleagues have participated as Research Fellows and Policy Fellows at IZA and in addition, there has been a lot of exchange between our researchers over the years.
Clearly we share similar interests in developing policy recommendations, based on basis of the best possible research into labour markets and welfare systems, for improving the quality of public policy-making. Hence this joint conference is another and a significant step in that joint cooperation, and I hope and believe that we can go further.
This joint ILO-IZA Conference has also enabled us to reach out to some of our research partners and think tanks in both developing and advanced countries – some which have been working or collaborating with the ILO for some time, such as CASS in China, IHD in New Delhi, IPEA in Brazil, the University of Cambridge, and IAB in Germany; and others that we are building up new relationships with recently, from other important institutes in Brazil and universities in Tel Aviv, Boston, Johannesburg, Cape Town, Paris, Budapest, and from Uruguay, India, Switzerland and the US, and last but not least our established friends at the World Bank. Developing such networks is an essential part of building our analytical capacities.
Let me return then to say a word about the subject matter of this Conference, which is of great importance to the ILO. The reforms of labour markets over recent years have been of very high visibility in many countries and regions, not least in the context of the global difficulties the world economy has faced since the 2008 financial crisis.
Looking at the international press today, we can see everywhere stories about labour market reforms and the future of work. We see pages in Le Monde devoted to the labour market reform in France. In Spain, the UGT Congress opened yesterday by discussing the removal of the labour market reforms in that country. The Anglophone press is dominated by stories about the flight of the working class to Donald Trump. From India, there are stories about the treatment of castes in the labour market. In China, the segmented workforce is under discussion. In South Africa too we see such stories. So it is clear that we are asking the right questions here today, showing the political relevance of this conference and its value.
We in the ILO believe it essential that labour market reforms be based on rigorous evidence, so that they can have a positive impact on labour markets and the social situation in any country, and we also believe that in order to be effective they need to be carried out through a consultative process involving social dialogue and the representatives of the social partners. And where possible, we have been working to try to ensure that is the case. And the ILO brings its normative framework of international labour standards to that process.
By bringing together researchers from different regions addressing these topics we hope that this Conference will be able to take stock of the effects reforms have had in terms of job quality, inequality, and impact on employment creation. And we also expect to get a broader and better global understanding of what works and how, and in which context.
Since the 2008-2009 global recession, indeed, unemployment has been on the rise, and we project increased unemployment this year and next. There has also been a continued debate in both academia and policy circles about the effects of labour market reforms, and regulation in particular. There are some who strongly argue that labour market regulation has adverse effects on employment growth, causes increased temporary, part-time or informal work, and that it leads to higher unemployment especially among the youth who are worst hit. However, I have to say that the empirical evidence has been quite mixed, and that the correlation is unclear. ILO research indicates that labour regulation usually does not have an effect on those variables to the extent claimed, however both too stringent and too relaxed regulation in a particular context can be counter-productive. I hope the case studies that you will be discussing in this Conference will shed further light on these questions.
Along with labour market reforms, a wide range of active labour market policies have also been introduced in different contexts in both advanced and emerging economies to get working age people off benefits and into productive activities during the crisis. Many of these policies or programmes were defined and implemented differently across countries and the extent to which they have been successful has also differed.
Growing inequality has been another issue raised by many authorities since the economic crisis began. In particular, as more and more countries experience increases in both income and wage inequality, some policy-makers have shown a renewed interest in minimum wages as a useful and relevant policy tool. A number of emerging and developing economies have been active in revising minimum wages on a regular basis. I think of Germany, the UK where the issue of living wages has emerged, and the minimum wage debate in the US.
Collective bargaining is another labour market institution that has long been recognized as a key instrument for addressing inequality in general and wage inequality in particular, and one that you will be addressing this afternoon. And tomorrow, I understand that you will be looking at the role of social protection, including the experiences of countries that have introduced non-contributory social security schemes to provide income to the poor and to reduce inequality.
The conference will also discuss and reflect on the transformational changes taking place in the world of work, and try to understand the processes of change and to respond effectively.
And going forward, I think we could envisage a broader collaboration with the research institutes and universities who are present here, and others as well I hope, with regard to the centenary initiative the ILO has launched on the future of work.
Another article in the press today consisted of a debate between two US academics regarding the situation of the labour market in 10 to 15 years’ time, regarding whether work would only be available to a very few highly-paid while the rest have to make do with “crummy work”; the prospect of a general penury of work; and the case for or against a move to a guaranteed minimum income.
So your fullest participation in the future of work initiative will greatly help us to identify the key trends and anticipate the labour market changes of the next century, and I hope we can count on your cooperation in that endeavour.
Colleagues, all these issues which will be part of the discussion in the next two days are of priority for the ILO. A better understanding of the effects of labour market reforms, and understanding the effectiveness of labour market policies, impacts of minimum wages and social policies, are essential for us in order to provide the best possible policy advice to our constituents.
Once again I would like to thank all our speakers and panellists for preparing their papers to this Conference and to thank the audience for listening and, I hope, to raise very challenging questions so as to break new ground and engage in new debates.
I look forward to our debates, and now I would like to ask Doctor Eichhorst, Director of Labour Policy Europe at IZA if he would like to make some opening remarks.
It gives me great pleasure to welcome you here today, to this Conference on Assessing the Effects of Labour Market Reforms.
I’ll say a very few words about the themes of our meeting in a moment, but first let me acknowledge and thank our friends and colleagues in IZA who are helping us to co-host this conference.
I think I can say very sincerely that there has been a long-standing and fruitful collaboration with IZA over many years. Many of my ILO colleagues have participated as Research Fellows and Policy Fellows at IZA and in addition, there has been a lot of exchange between our researchers over the years.
Clearly we share similar interests in developing policy recommendations, based on basis of the best possible research into labour markets and welfare systems, for improving the quality of public policy-making. Hence this joint conference is another and a significant step in that joint cooperation, and I hope and believe that we can go further.
This joint ILO-IZA Conference has also enabled us to reach out to some of our research partners and think tanks in both developing and advanced countries – some which have been working or collaborating with the ILO for some time, such as CASS in China, IHD in New Delhi, IPEA in Brazil, the University of Cambridge, and IAB in Germany; and others that we are building up new relationships with recently, from other important institutes in Brazil and universities in Tel Aviv, Boston, Johannesburg, Cape Town, Paris, Budapest, and from Uruguay, India, Switzerland and the US, and last but not least our established friends at the World Bank. Developing such networks is an essential part of building our analytical capacities.
Let me return then to say a word about the subject matter of this Conference, which is of great importance to the ILO. The reforms of labour markets over recent years have been of very high visibility in many countries and regions, not least in the context of the global difficulties the world economy has faced since the 2008 financial crisis.
Looking at the international press today, we can see everywhere stories about labour market reforms and the future of work. We see pages in Le Monde devoted to the labour market reform in France. In Spain, the UGT Congress opened yesterday by discussing the removal of the labour market reforms in that country. The Anglophone press is dominated by stories about the flight of the working class to Donald Trump. From India, there are stories about the treatment of castes in the labour market. In China, the segmented workforce is under discussion. In South Africa too we see such stories. So it is clear that we are asking the right questions here today, showing the political relevance of this conference and its value.
We in the ILO believe it essential that labour market reforms be based on rigorous evidence, so that they can have a positive impact on labour markets and the social situation in any country, and we also believe that in order to be effective they need to be carried out through a consultative process involving social dialogue and the representatives of the social partners. And where possible, we have been working to try to ensure that is the case. And the ILO brings its normative framework of international labour standards to that process.
By bringing together researchers from different regions addressing these topics we hope that this Conference will be able to take stock of the effects reforms have had in terms of job quality, inequality, and impact on employment creation. And we also expect to get a broader and better global understanding of what works and how, and in which context.
Since the 2008-2009 global recession, indeed, unemployment has been on the rise, and we project increased unemployment this year and next. There has also been a continued debate in both academia and policy circles about the effects of labour market reforms, and regulation in particular. There are some who strongly argue that labour market regulation has adverse effects on employment growth, causes increased temporary, part-time or informal work, and that it leads to higher unemployment especially among the youth who are worst hit. However, I have to say that the empirical evidence has been quite mixed, and that the correlation is unclear. ILO research indicates that labour regulation usually does not have an effect on those variables to the extent claimed, however both too stringent and too relaxed regulation in a particular context can be counter-productive. I hope the case studies that you will be discussing in this Conference will shed further light on these questions.
Along with labour market reforms, a wide range of active labour market policies have also been introduced in different contexts in both advanced and emerging economies to get working age people off benefits and into productive activities during the crisis. Many of these policies or programmes were defined and implemented differently across countries and the extent to which they have been successful has also differed.
Growing inequality has been another issue raised by many authorities since the economic crisis began. In particular, as more and more countries experience increases in both income and wage inequality, some policy-makers have shown a renewed interest in minimum wages as a useful and relevant policy tool. A number of emerging and developing economies have been active in revising minimum wages on a regular basis. I think of Germany, the UK where the issue of living wages has emerged, and the minimum wage debate in the US.
Collective bargaining is another labour market institution that has long been recognized as a key instrument for addressing inequality in general and wage inequality in particular, and one that you will be addressing this afternoon. And tomorrow, I understand that you will be looking at the role of social protection, including the experiences of countries that have introduced non-contributory social security schemes to provide income to the poor and to reduce inequality.
The conference will also discuss and reflect on the transformational changes taking place in the world of work, and try to understand the processes of change and to respond effectively.
And going forward, I think we could envisage a broader collaboration with the research institutes and universities who are present here, and others as well I hope, with regard to the centenary initiative the ILO has launched on the future of work.
Another article in the press today consisted of a debate between two US academics regarding the situation of the labour market in 10 to 15 years’ time, regarding whether work would only be available to a very few highly-paid while the rest have to make do with “crummy work”; the prospect of a general penury of work; and the case for or against a move to a guaranteed minimum income.
So your fullest participation in the future of work initiative will greatly help us to identify the key trends and anticipate the labour market changes of the next century, and I hope we can count on your cooperation in that endeavour.
Colleagues, all these issues which will be part of the discussion in the next two days are of priority for the ILO. A better understanding of the effects of labour market reforms, and understanding the effectiveness of labour market policies, impacts of minimum wages and social policies, are essential for us in order to provide the best possible policy advice to our constituents.
Once again I would like to thank all our speakers and panellists for preparing their papers to this Conference and to thank the audience for listening and, I hope, to raise very challenging questions so as to break new ground and engage in new debates.
I look forward to our debates, and now I would like to ask Doctor Eichhorst, Director of Labour Policy Europe at IZA if he would like to make some opening remarks.