Growth and employment in the post-2015 development agenda

Statement by Aurelio Parisotto, ILO Policy Integration Unit, delivered to the Briefing on growth and employment in the post-2015 development agenda in New York on 13 December 2012.

Statement | New York | 17 December 2012
Aurelio Parisotto, Senior Economist, ILO Policy Integration Department
Good afternoon to everybody from Geneva.

It is my privilege to contribute to this discussion. You know that the topics of growth and employment are of special concern to the ILO. We feel we have a special responsibility to assist our constituents and stakeholders in those areas. So, we responded with great enthusiasm to the proposal of UNDP to team up in leading the post-2015 consultation on these topics.

I should say that we are working together quite effectively.

I should also mention that we very gratefully acknowledge the support and the commitment of the Government of Japan to this discussion and to the action that will follow and to which we are all looking forward.

I will touch upon three points in my presentation, which in my view represent distinctive outcomes of the expert exchange we had in Tokyo last May.
First, I will recall briefly the discussion we had about the long-term implications of the current growth and employment situation. The conclusion I will suggest is that there is a clear need for a new policy drive. Past policies relying on trickle down from economic growth alone are not sufficient to cope with the challenges of the post-2015 world.
In the new agenda, measures for growth, employment and social protection should be upfront and better connected.

Secondly, I will recall some broad policy lessons; without mentioning in detail any specific set of measures, but mainly to convey the sense of optimism that came up. A positive sensation that although the challenges are great, there are solutions; solutions that have been tested and tried and had success. To stretch perhaps my argument, I could say that there appeared to be some new policy wisdom, of great relevance to the post 2015 debate.

Finally, skimming again from the expert discussion in Tokyo, I’ll bring up some themes, areas where there are deficits in jobs and livelihood that should be addressed as a matter of priority. This might be important on the route to the post-2015 framework. At the same time, at the end of a complex and exciting process of consultations and discussions, a decision will have to be taken about the priorities for a new set of development goals. What should be put on the table that makes most sense?

1. Growth and employment outlook beyond 2015

Let me start with a brief account of the outlook for growth and employment up to 2015 and beyond.

I do not want to repeat any figure about declining GDP growth rates, growing unemployment, stubborn poverty or widening inequalities. We live in a difficult and prolonged global economic downturn that is having long-lasting implications.

What I would mainly emphasize is how cyclical factors and structural changes are likely to combine to exacerbate the effects of weak labour markets over the foreseeable future.
Let’s look at the economic cycle. The advanced economies of the US, Europe and Japan seem set on a low-growth path for quite some time. Global macroeconomic imbalances between surplus and deficit countries persist. Financial deleveraging is not progressing. According to the IMF, the global stock of debt is still unchanged in spite of years of severe fiscal austerity. Hardly any progress has been made in mitigating the volatility of financial markets and commodity prices.

Persisting economic instability and a low-growth scenario will affect in particular those countries that are more vulnerable and where poverty is widespread. Even the largest and more resilient emerging economies that are more likely to decouple and where progress in reducing poverty has been greater, even those economies might see the large numbers of their near-poor - those who have just made it out of poverty - exposed to the risk of falling back into a poverty trap as a result of an unstable global economy.

The experience of the global financial crisis is pointing to the need to broaden the scope of the development agenda beyond the focus on humanitarian assistance for the poorest. Although people can be lifted out of poverty through aid and social transfers, they remain vulnerable and their livelihoods precarious unless there are wider conditions for inclusive and sustained growth.

What about the job scenario? Employment recovery will lag behind the slow recovery in output. In addition, a number of structural trends will make the effect of job shortages even more acute. Restructuring and changes in jobs within and across countries and sectors will result from the growing demographic divide, from labour-saving technological innovation, from the changing geography of production within global supply chains and from factors such as urbanization and climate change.

Well beyond 2015, the failure to address dislocations and deficits in the quantity and quality of jobs caused by cyclical instability and large structural restructuring will make the transition to a sustainable and inclusive development path difficult. Failure might even derail the process, affecting the ordered political conditions that are needed for development to happen.

I should mention one important additional contribution that has emerged since the meeting in Tokyo. The World Development Report 2013 on "Jobs" has pointed out clearly how a job agenda is transformational. The ILO and I think most of the experts that were in Tokyo, including our World Bank colleagues, could not agree more. Decent jobs are critical for social and political stability and are the most sustainable means of poverty eradication. Development indeed happens through jobs.

So, if development occurs through jobs, a project of transition toward inclusion and sustainability must be anchored in stronger policies for jobs and livelihoods, leveraging to the fullest extent the many development spillovers that those policies produce.

2. Policy matters

Let me move to my second point, about policy.

The MDGs provided a small number of goals and targets, but left the issue of the policy means to achieve those targets outside of the framework. A critical element of the post-2015 debate is the effort at a policy rethink, to avoid oversimplified approaches.

I think there emerged a consensus among the experts in Tokyo that the policy solutions are largely known. National experiences brought a host of good examples on how to enhance inclusiveness, improve livelihoods and foster employment generation.

That solutions exist does not mean that they are easy. Very often, they imply packaging different sets of economic and social measures. Sustained employment generation, for instance, does not derive from better labour policies or new labour regulations but from their interaction with macroeconomic, financial and investment policies. To tackle the trade-offs between those policies and the different political interests at play is probably the greatest obstacle.

Solutions are also not linear. Many assimilate the development process as one of solving institutional dilemmas and bottlenecks, close to the situation often described as “crossing the river by feeling the stones”. In other words, the policy process is country-specific and path-dependent, it depends on the specific circumstances of a country, the main example being the harsh initial conditions of the poorest countries.

Some rough implications for the post-2015 debate:
  • the need to revise old policy mantras
  • the importance of space for national approaches and for learning from trial and error
  • the need for a sensor role, a radar role for civil society, private sector and workers in driving change. You need to feel where the slippery stones are in order to cross the river and you need feedback to know you are still in the right direction; I should acknowledge the contribution we had in Tokyo by experts from trade unions, employers’ organizations and NGOs
  • to sum up, national policies and national actors will be the main drivers of the required shift to inclusive and sustainable development. The international assistance that can be mobilized through a new set of voluntarily agreed development goals can play a smaller but important role at the margins, if it takes into account the modalities of the policy process: to identify where there are the most important spillovers; to acknowledge the need to take into account different initial conditions, for instance weak productive capacities; to support enabling rights in order to allow for real participation in policy-making.

3. Issues of jobs and livelihoods for the post-2015 framework

Finally, are there priorities among priorities? Issues relating to jobs and livelihoods that should be addressed with urgency?

I’d like to mention a few, using as a compass the indicators for employment and decent work included in the current MDG framework. Those indicators might be upgraded but are an important point of departure.
  • The number of the working poor worldwide has not decreased, if we exclude the countries of East Asia. Reducing their number is still a major development priority.
  • Vulnerable and informal jobs still prevail in the labour market of developing countries and are closely linked to working poverty. We agreed in Tokyo that tackling informality is possible through a mix of positive and normative measures.
  • The numbers of unemployed young people is growing alarmingly. Measures of youth unemployment included in MDG8 have been increasing in most countries. NEET indicators, numbers of young people that are not in education or in employment are even more alarming. Skills development and training, hiring subsidies, public employment programmes are some of the policy tools at hand.
  • Women's participation in the labour market is improving, but is still lagging behind in many regions, as shown by indicators on women's share of paid non-agricultural employment. There are vast development spillovers accruing from facilitating equality of opportunity on the job market.
  • Finally, reducing the vulnerability of livelihoods through social protection floors comprising basic income support measures and essential health care is another priority: the role of social protection in enhancing growth and resilience is one of the most striking elements of the new policy wisdom.
To conclude, let me take one step back.

In 2000 the Millennium Declaration set forward a vision of a peaceful, prosperous and just world and called on global solidarity to realize such vision. The reality is that economic growth in the past decade was neither inclusive nor sustainable. The MDGs in many respects were a pragmatic reaction to the failure to convert the conclusions of the Copenhagen Summit into a solid global social agenda. We learnt from the MDGs that global solidarity is not a large asset: we have only a limited stock of it. But if targeted and properly used, it can be effective.

In crafting a new set of development goals, we have to use that asset very wisely. Not to do it to move towards a better balance between economic and social goals through a strong emphasis on jobs would be to miss an important opportunity.

 Go to the www.worldwewant2015.org web pages for the thematic consultation on Growth and Employment.