G20, Beijing

ILO Director-General briefs G20 Labour and Employment Ministers on “Promoting Decent Work”

Declaración | Beijing, China | 13 de julio de 2016
Thank you Minister.

You have posed some challenging and important questions concerning the promotion of decent work in your issues notes.

I propose to focus on two issues.

First, wage setting mechanisms and how they relate to the G20 goal of inclusive growth that is strong, sustainable and balanced.

Second, the vital role of social protection systems in helping to eradicate poverty and investing in the productive capacity of the workforce.

Income from work – wages – makes up around two thirds of national income in most of our economies. Wages are the main source of household consumption, which in turn drives investment and growth.

Income inequality has widened for several decades in most of our economies as the gap in wages has grown and an increasingly larger share has gone to capital.

Not only has this undermined growth, but economists increasingly see it as a major factor that triggered the global financial crisis and resulted in a sluggish recovery.

Of course, the level of wages, and thus their distribution and share in national income is not determined at a macroeconomic level. It is the outcome of more or less decentralized processes between employers and workers and their organizations.

Evidence shows that broad coverage of collective bargaining contributes to a narrower distribution of income and more stable growth.

However, coverage has decreased in many countries in recent decades. While various reasons account for this, the decline of employment in large-scale industry has probably had the greatest impact.

Concerns about low pay, and wages lagging productivity, have led several countries to introduce or place greater reliance on various minimum wage setting mechanisms.

I am delighted to see that our Declaration includes a substantial annex on Sustainable Wage Policy Principles which encourages the G20 to expand the coverage of, and compliance with, minimum wage legislation and to take measures, adapted to national conditions, to promote collective bargaining.

This is most welcome. Requests for ILO advice on setting and enforcing minimum wages are running at a high level, so we have just launched a new online policy guide. Similarly, the way in which collective bargaining adapts to economic pressures and to changes in the structure of production in order to remain a viable wage-setting mechanism is a key topic as we think about the future of work.

On the second issue, I equally welcome the G20 focus on social protection. It remains a powerful policy tool in eradicating poverty and rebalancing the inequalities that arise in any market economy.

The Declaration Annex on Policy Recommendations for Promoting More Equitable and Sustainable Social Protection Systems highlights the multiple roles played by those systems. And just as the Annex on Sustainable Wage Policy Principles recognizes the need to closely align wage policies with social protection measures in order to promote sustainable growth in incomes, employment and labour force participation, there is of course concern about cost.

This is fair enough but we also need to see social protection as an investment. Social protection supports individuals throughout the life cycle – from birth, through childhood, in their years of productive employment, and then of course in retirement.

And lack of access to social protection constitutes a major obstacle to economic and social development, and is associated with high and persistent levels of poverty, economic insecurity and growing levels of inequality.

The fact is that poverty destroys individuals and communities and creates economic waste. Women and men who are hungry, in ill health or have a poor education – which are the characteristics of poverty – are also unproductive. And it is very likely their children will be too.

Building social protection systems that help alleviate poverty takes time and depends on the state’s capacity to distribute benefits efficiently and to tax incomes adequately and fairly. But we see many developing countries expanding their social protection systems as they reach for sustainable growth. And as well as looking at the viability of their own systems, I think the G20 can play a major role in supporting those countries in building social protection floors, which is called for both in SDG 1.3 and in the ILO’s own Recommendation No. 202.

To conclude, promoting decent work in all its dimensions is vitally important to maximizing the benefits to all our societies of globalization, of technological changes and of transitions to greener economies. As Ministers of Labour and Employment, you are all acutely aware of the need to strengthen job creation at the same time as coming to grips with powerful longer term structural shifts. And our Declaration I believe expresses this well and will be of great support to G20 Leaders.