Questions and answers on the global jobs crisis

More than 4,000 delegates representing governments, employers and workers are meeting at the annual Conference of the ILO from 3 to 19 June to discuss ways of addressing the global crisis in jobs and social protection. ILO Online asked Raymond Torres, Director of the ILO International Institute for Labour Studies about the current jobs situation, and how decent work policies can tackle the crisis.

Article | 02 June 2009

ILO Online: What is the labour market situation today?

Raymond Torres: Since the onset of the financial crisis, the labour market situation in most countries has deteriorated dramatically with millions of workers losing their job over the past 18 months and the outlook continues to deteriorate. In fact, the overall impact of the crisis is still unfolding and the ILO expects unemployment to rise further this year. At the same time, businesses are under stress and the number of bankruptcies is growing. Vulnerable employment is also increasing, and more people are being pushed into poverty. What is also of concern is that the shortage of new employment opportunities is worsening: in 2009, global employment is expected to rise by between 0 and 1 per cent only. Some regions – including the most developed countries – are even expected to show a contraction in employment this year. And in the midst of all this, we will still need to create at least 300 million jobs globally over the next five years just to maintain a pre-crisis level of unemployment.

ILO Online: In some quarters, there is a perception that we may be seeing the first signs of economic recovery. Do you think the worst is over?

Raymond Torres: There may be some signs of recovery – the so-called “green shoots” – which are welcome developments. But the strength and timing of a recovery are subject to uncertainty. It is also important to make a clear distinction between economic recovery and labour market recovery. Judging from previous crises, we know that employment returned to pre-crisis levels only four to five years after economic recovery, on average. Long-term unemployment which takes hold is also very difficult to reverse and wages of workers take time to return to previous levels. Taken together, all these elements point to a persistent global jobs crisis for the next few years – unless concerted action is taken to create new jobs and save existing employment.

ILO Online: What about social protection?

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Raymond Torres: As unemployment grows, millions of additional workers are losing social protection. This problem is particularly acute in developing countries where social protection is often minimal, but even in emerging economies and a number of developed countries, coverage is limited in several areas. According to the ILO's Social Protection Database, the number of people receiving unemployment benefits increased on average by 53 per cent between May 2008 and February 2009 for a sample of 19 emerging and industrialized countries. In the OECD countries, including the US, private pension funds lost, on average, more than 20 per cent of their value in 2008. For four-fifths of the rest of the world, however, this isn't an issue, as they have no social security or unemployment benefits at all.

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ILO Online: But rescue packages have been introduced in a number of countries; aren't these measures working?

Raymond Torres: Most developed country governments have put in place a two-pronged approach to promote economic and employment recovery: targeting aggregate demand through fiscal stimulus and low interest rates, and targeting the financial sector to repair balance sheets and restore credit flows. As of April 2009, 32 countries had announced fiscal stimulus measures (out of a sample of 40 countries reviewed by ILO). Approximately USD 2 trillion has been committed globally – with close to 90 per cent from G20 nations. Planned spending in 2009 accounts for approximately 1.4 per cent of global GDP – notably less than the 2 per cent global stimulus recommended by the IMF. But the economic outlook for 2009 and 2010 has deteriorated significantly since these measures were designed and implemented Furthermore, employment and social policies represent only 10 to 15% of the total stimulus packages. While it is commendable that countries have announced and implemented stimulus efforts, there needs to be additional focus on employment and social measures in order to address the human dimensions of the crisis and mitigate the adverse impact on people and families.

ILO Online: How will all this affect individuals and societies?

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Raymond Torres: We have already seen signs of social unrest stemming from economic malaise because of the crisis. The consequences for personal and family well-being, the welfare of societies, the stability of nations, and the credibility of national and multilateral governance are incalculable. Not enough attention has been paid to this human reality in policy-making. We must approach the crisis with a basic sense of solidarity within and among countries, and pay adequate attention to the human dimension, as the G20 in London has called for.

ILO Online: What are the ILO proposals to be examined at the International Labour Conference?

Raymond Torres: Right now we need to focus on two key objectives: employment creation and social protection. These two elements need to be at the heart of recovery efforts. These are the basic elements of the Global Jobs Pact which the Director-General of the ILO is proposing for discussion at the annual Conference. As the Director-General said in his opening address (3 June) to the Conference, a global jobs pact would imply a commitment by the ILO tripartite constituency to make employment and social protection a central element of all economic and social policies. It implies tackling the crisis with a productive vision of promoting investment and enterprises, social protection and job creation and an agreement on common policy approaches, eventually leading to national and international programmes.

ILO Online: So what’s next?

Raymond Torres: We are at a defining moment. The Conference will discuss these issues - a Jobs Summit on 15-17 June will bring the voices of heads of state and government, vice presidents, ministers of labour, worker and employer leaders and other top economic and labour experts into the equation. And when all is said and done, as the Director-General has made clear, much will depend on the success of overall economic and social policies and stimulus packages adopted by countries and a functioning financial sector. Our immediate task is to fashion a strong tripartite agreement on a Decent Work Response. We believe that putting people first has to be the priority.