The onset of the global financial crisis in 2008 caused massive increases in unemployment, and pushed millions of workers into vulnerable employment or back into poverty. Nevertheless, the implementation of well-designed employment and social policies by a number of countries paved the way for a sustainable recovery. Such policies were central to putting a floor to the global financial crisis in those countries, and kick-starting a recovery. As a result, millions of jobs were either saved or created and the impact of the financial crisis on labour markets was far less critical.
This new report by the ILO shows how well-designed employment and social policies can now play a crucial role in both boosting job creation and making economic growth more solid and equitable.
The volume, which gathers research carried out by the ILO over the past two years, provides concrete examples of these policies from a large number of countries throughout the developed, emerging and developing world. It also shows that such a policy approach is consistent with fiscal stability and the goal of reducing public debt in the medium term.
While a job-centred strategy is both desirable and possible, implementing it requires careful tailoring to the needs of each country, for which social dialogue is essential. It also calls for coherence with macroeconomic policy settings, notably an efficient financial system.
According to ILO Director-General, Juan Somavia, the volume shows that the “policies for economic growth which have prevailed over the past three decades need a rethink”.
Some of the specific findings are as follows:
- Unlike what is often expected, well-designed social policies can create new opportunities for business investment and economic growth. The volume provides several examples of such successes, especially from emerging economies like Argentina, Brazil, China and India and explains how they have come about.
- Countries where debt accumulation had been excessive like Greece, Spain, the UK and the US face the double challenge of supporting employment while facilitating structural transition. Certain employment, social and skill policies are of paramount importance in this regard.
- Before the global crisis, some Arab countries faced significant income inequalities, largely the outcome of a growth process which benefited mainly certain groups. The problem was not bad education or lack of employment programmes. Rather, deficiencies in product markets and lack of social dialogue seem to have played a more important role in reducing the ability of these countries to respond to the crisis and avert social unrest.
- Financial reform would greatly aid job recovery, according to the report. These favourable effects will manifest mainly in the medium to long run. This, combined with resistance to change from the financial profession may contribute to explain why reforms do not happen.