ILO is a specialized agency of the United Nations

268th Session
Geneva, March 1997
Committee on Employment and Social Policy ESP


Preliminary report on a synthesis of ACC Task Force
country employment policy reviews


I. Introduction

1. At its 267th Session (November 1996), the Governing Body considered an Office paper on progress in country-level follow-up activities on the Social Summit in the field of employment, which provided details to date of the progress made in the policy review exercise in seven countries selected for the purpose.(1) In the paper, it was noted that the ILO had been called upon to chair the UN ACC Task Force on Full Employment and Sustainable Livelihoods, under whose auspices the above reviews were being carried out. It may be recalled that successful tripartite efforts at the Social Summit had already assured recognition of the ILO's leading role not only in relation to the goal of full employment, but also in terms of respect for core international labour standards. Carrying forward the commitment made, the Copenhagen Declaration and Programme of Action necessarily required the ILO, as part of the UN system, to take the leading role in the field of employment and sustainable livelihoods.

2. The ILO thus undertook to act as Coordinator of the ACC Task Force on Full Employment and Sustainable Livelihoods, and under its chairmanship, the Task Force agreed to carry out, as an experimental exercise, a series of country reviews for which responsibility was distributed among several organizations. The procedure for these reviews included, first and foremost, the full consent of the government of the countries being reviewed; close tripartite consultation and participation of the ILO's constituents; detailed analysis of policies on employment and sustainable livelihoods; a national tripartite seminar to discuss current policies and possible future reforms; and consideration of recommendations on how the ILO and the UN system could collaborate to support national efforts to promote employment and sustainable livelihoods. In order to encourage inter-agency collaboration, the Task Force agreed that the ILO would take lead responsibility in undertaking the review exercise in Chile, Nepal and Hungary, the World Bank in Indonesia, the UNDP in Zambia and Morocco and UNESCO in Mozambique. The ILO retained overall responsibility for coordination and preparation of a synthesis report for submission to the UN ACC meeting in April this year.

3. In November 1996 the Committee, in discussing progress in the country reviews, requested the Office to prepare a substantial interim report on the outcome of the country reviews, especially in order to reassess the role and modalities followed by the ILO in respect of the country reviews, and to ascertain how far ILO social values had found respect in the various country studies. This paper accordingly provides a preliminary account of the outcome of these country reviews; their progress; key issues and problems; and a broad set of policies, identified through the review exercise, that are likely to help countries move towards full employment and sustainable livelihoods. A few observations are also in order with respect to the future role of the ILO in follow-up on the country reviews, and with regard to the ILO's functioning with its constituents and the UN system at the country level.

II. Status of the country employment policy reviews

4. It is important to recall that the mandate of the ACC Task Force derives primarily from the Copenhagen Declaration and Programme of Action, and is to help governments give effect to the commitment made by heads of state and government at the Social Summit to promoting the goal of full employment. It may be further recalled that the Social Summit recognized the need to promote tripartite dialogue and social consensus in policy-making, and also called upon governments to "safeguard the basic rights of workers and, to this end, freely promote respect for relevant International Labour Organization Conventions, including those on the prohibition of forced and child labour, freedom of association, the right to organize and bargain collectively, and the principle of non-discrimination". These dimensions were duly incorporated in the ACC framework paper.

5. Prior to undertaking the country reviews, the full consent of the governments of the countries reviewed had been sought and obtained by the lead agency concerned. The ILO, for its part, carried out the reviews in Chile, Nepal and Hungary with the full support of the governments, and in consultation with workers' and employers' organizations, as well as the various country-level UN organizations. The reviews were conducted primarily by the multidisciplinary teams covering the respective countries, with support, as requested, from the technical departments. Local experts and researchers were also consulted. The reviews have all been completed, and national seminars, as stipulated in the review proposal, were held in Santiago (16 December 1996), Kathmandu (27 January 1997) and Budapest (31 January 1997). The national seminars, which brought together senior government officials and representatives of workers' and employers' organizations, international agencies and academia, provided a unique opportunity where the policy recommendations of the review were discussed, and the participants renewed their pledge to work together to carry forward the national commitment to full employment and sustainable livelihoods. The ILO also received pledges of support to work in collaboration with its constituents and the UN system in following up on the recommendations of the country review exercise.

6. The UNDP was the designated lead agency for the country reviews in Zambia and Morocco. The UNDP, on receiving the consent of each government, sent exploratory missions to the two countries to discuss the objectives and modalities of the review, and sought the partnership of the government, the social partners and various representatives of the civil society. The ILO, through its MDTs in Harare and Dakar, as well as the country office in Lusaka, and at the request of the UNDP, provided technical and logistical support in the conduct of the reviews. UNIDO provided contributions to the Zambia report. The country review in Zambia has been completed, and a national seminar was held in Lusaka (17 December 1996), in which representatives of the government, and of employers' and workers' organizations, the ILO and other UN agencies, NGOs and the research community participated. The country review report has now been revised to incorporate various comments and suggestions. The ILO has received a preliminary draft of the Morocco report from the UNDP and has provided comments on it. The draft was currently being revised, and at the time of writing the national seminar was scheduled for 24 February 1997.

7. The World Bank undertook to conduct the country review exercise in Indonesia, and completed a preliminary draft report in November last year. Meanwhile, in November 1996 the Governing Body, adopting the report of its Committee on Freedom of Association, noted its reference to the "serious and worsening infringements of basic human and trade union rights and violation of freedom of association principles in law and in practice" in Indonesia.(2) Moreover, members of the Governing Body also noted that the ACC country review on Indonesia was being coordinated by the World Bank, and the ILO secretariat was asked to draw the attention of the senior management of the World Bank to the above matters to ensure that they were taken into account in the country review report. The World Bank, so advised, has decided not to pursue the exercise further.

8. The country review on Mozambique, being conducted by UNESCO, had started late, and a preliminary draft was given to the ILO for incorporation into the ILO's preparation of the synthesis report. A national seminar to discuss the policy review report took place in Maputo (19 February 1997). At the time of writing, details of the outcome of the seminar and a revised draft of the country report were being awaited.

9. The ILO is currently preparing the synthesis report, for submission to the UN ACC, based on the available drafts of the country reports. The report will also briefly discuss the current employment and labour market issues facing OECD member countries. The following sections offer an interim assessment of the outcome of these country reviews, especially in relation to the issues, problems and policy considerations that emerged from the country exercise in respect of promoting employment, with full respect for workers' basic rights.

III. Key characteristics and issues

10. The reviews conducted by the ACC Task Force examined details of the key characteristics and issues pertaining to the employment and poverty situation in the individual countries. While some of these could be seen as country-specific, most of the issues and problems are broadly applicable to the sample of countries under review, albeit with varying degrees of relevance and acuteness. In this section, an attempt is made to put together some of the major employment and labour market problems and issues confronting the countries examined. It may be stated, at the risk of simplification, that many of these issues would tend to be relevant for a large number of countries that are striving to attain higher rates of growth, employment generation and poverty alleviation.

11. As stated earlier, the seven countries reviewed are at various stages of economic and social development. This is clearly revealed by their respective levels of per capita income (Appendix, table 1), the structure of their economy (proportion of sectoral shares in GDP, for example), the extent of poverty and underemployment, the growth of wage employment, job quality and working conditions, and the extent of the economy's participation in global trade and investment. Some of these features, and issues arising from them, are capitulated in the following paragraphs. On some country specifics, it may be recalled that Hungary represents an economy in transition, that Nepal represents a least developed, land-locked country with serious transit-related costs, and Mozambique is a country that was recently affected by conflict and civil strife.

12. Within the framework of the ACC Task Force exercise, the first key issue relates to the extent of unemployment, underemployment and poverty in the economies concerned. It is well known that in many developing countries, the open unemployment rate is usually very low (e.g. Nepal, Indonesia), largely owing to problems with the concept and measurement of unemployment. The major concern is the degree of underutilization (underemployment) of labour, which is very high and is often reflected in the incidence of poverty (Appendix, table 1). Thus, in Nepal, for instance, while the measured open unemployment rate is less than 5 per cent, underemployment is estimated at around 46 per cent, which incidentally is close to the poverty incidence in the country. Zambia and Mozambique also have a high incidence of poverty (more than 50 per cent) as well as a high degree of underutilization of labour. In some countries, it may be noted that the open unemployment rate was increasing during the 1990s: 10-12 per cent in Hungary, and around 20 per cent in Zambia and Morocco. Among the countries reviewed, Chile registered a significant fall in levels of unemployment, while it is stable in Indonesia. In point of fact, the current unemployment rate in Chile is about 6 per cent, although labour underutilization exists, and the degree varies considerably between regions and social groups. In any case, underemployment generally fell, which is shown in the declining incidence of poverty in Chile, as well as in Indonesia. In the other countries, the current high levels of underemployment and poverty indicate the long distance that needs to be covered to reach near full employment levels.

13. The relative shortfalls from the full employment norms appear to be closely associated with the rate of growth of the population and the labour force, as well as the structure of the workforce. In general, from the supply side, population and labour force growth are some immediate forces that tend to put pressures on the employment-generating capacity of an economy. With a relatively high population and/or labour force growth rate, and a concomitant lower per capita income, the spectre of a vicious circle of poverty tends to hold for such countries as Nepal, Zambia and Mozambique, where the population growth rate exceeds 2.7 per cent. In Chile and Indonesia, the population growth rate fell substantially over the past two decades, and one could possibly discern, in these two countries, the dynamic interaction between development and demographic variables. In the same countries (Indonesia, Chile), the labour force growth rate, however, increased owing to higher rates of female participation, although these took place largely in the less productive and remunerative sectors of the economy. The nature and extent of underemployment in the less developed economies also, in large measure, tend to characterize the structure of the country's workforce. A falling rate of un/underemployment is often found statistically associated with a declining proportion of labour in the agriculture sector (Chile), while high rates of underemployment seem to be sustained in the low-income, low-productivity agricultural sector. The latter, together with the informal sector in rural and urban areas, tend to provide the scope for work-sharing and other means of sustainable livelihoods for the bulk of the workforce. Individuals often take up two or three secondary jobs to cope and survive (Nepal, Zambia, Mozambique). Nepal has more than 90 per cent of its workforce in the rural areas. In Morocco, despite rapid urbanization and rural-to-urban migration, nearly half the population is still in the rural sector.

14. While high population growth countries experience low or declining growth of incomes and employment, the real determinants of growth and employment are on the demand side. Even from the small sample of country reviews, the positive relationship between output and employment expansion come out fairly clearly. Similarly, an inverse relationship between growth and poverty incidence is also evident. Thus, rapid economic growth rates in Chile and Indonesia, sustained for over a decade, led to major employment expansion. Wage employment grew at 5.5 per cent in Indonesia (7.5 per cent for females), while growth in Chile yielded more than one million new jobs in the economy (about 25 per cent of the workforce). In Morocco, sustained growth rates during the latter part of the 1980s caused poverty incidence to decline. In Nepal, employment growth was just adequate to absorb the yearly additions to the labour force, but not enough to take care of the existing large backlog of unemployment and underemployment. In Hungary, with substantial economic decline during the initial reform period, and a slow recovery in more recent times, employment levels fell by nearly 25 per cent during the 1990-95 period. In Mozambique, with a low per capita income base and growth levels, the poverty situation remains serious. In Zambia, real GDP declined over the early 1990s and led to increases in unemployment and poverty, both in the rural and urban areas. Thus, a key issue, observed in the country reviews and certainly present elsewhere, is that broad-based growth, especially when labour-intensive and sustained over a long period, is associated with a decline in unemployment, and subsequently in poverty.

15. Many developing countries, as well as those in transition, are struggling to generate and sustain the growth rate that is required to bring down the currently unacceptable levels of unemployment and poverty. While several factors are responsible, a key constraint relates to the country's ability to mobilize resources. Countries that are relatively rich in natural and human resources, such as Indonesia and Chile, and which have adopted growth-promoting policies, were able to grow relatively faster. It is also significant that the latter were equally able to mobilize both internal and external sources of development finance. Thus, in these countries, the rates of savings and investment registered substantial increases over the past decade, closely correlated with the fast rate of economic growth. In contrast, not only are current domestic savings and investment rates very low in Nepal, Mozambique and Zambia, but the gap between the two is also high, and is being financed through generous flows of concessionary loans and grants. Moreover, foreign direct investment (FDI) has been an important supplement to domestic investment resources and has given a boost to growth and industrialization in many countries (Chile, Indonesia); Hungary also has a high proportionate share of FDI. In contrast, FDI resources in the other countries are extremely low.

16. Formal-sector wage employment has hardly shown any increase, except in Chile and Indonesia where the modern manufacturing and services sectors have registered a higher share in employment. The manufacturing sector in Nepal accounted for less than 3 per cent of the employed workforce, and there has been hardly any job creation in the export sector. Public-sector employment, which earlier had a predominant share in formal-sector wage employment in the countries reviewed, has slowed down considerably in the recent past. Morocco's high public investment before the mid-1980s shrank considerably in the post-adjustment period, causing a stagnation in job creation in the sector. Zambia had a rapid growth in public-sector employment during the copper export boom, but subsequent declines in real GDP, largely attributed to declines in copper exports, led to a fall in public sector employment. The privatization drive, as part of adjustment policies, has also led to a decline in employment in previously state-led enterprises. In Hungary, there was a major decline in state-sector employment as a result of the sweeping political and economic restructuring that has taken place in the recent past.

17. As a consequence of the slow growth of jobs in the modern sector, most of the countries reviewed have witnessed an expansion in urban informal sector activities. The informal sector absorbed migrants from the rural sector, retrenched workers from the formal sector, and workers from the openly unemployed urban labour force which failed to gain access to formal wage employment. Employment in the urban informal sector, as a proportion of the employed urban labour force, was high, often more than 50 per cent, even in such fast-growing economies as Indonesia. While most of the informal-sector activities constituted low-income, low-productivity jobs, there were also many instances of micro-enterprises, which through subcontracting or otherwise demonstrated tangible contributions to output and employment (e.g. in Indonesia, Chile). Employment in small and micro-enterprises has also grown rapidly in Hungary with the shrinkage of the state sector. In Zambia, on the other hand, owing to sharp declines in urban modern sector jobs, a reversal of labour migration has been observed.

18. Gender inequality, both with regard to employment and pay, is observed almost universally. Female employment, although rising in many countries (Chile, Indonesia, Morocco) is still, as a proportion of the employed workforce, very low. In Nepal, 94 per cent of the female workers were in rural areas, operating largely in subsistence and household activities, and accounted for less than one-quarter of the organized labour force. Despite substantial increases in economic well-being in Chile and Indonesia, considerable gender inequalities are observed in terms of wages and employment opportunities. In Morocco, the overall participation of women in the labour force is low, although they constitute a sizeable proportion of urban scientific and professional workers. In Mozambique women accounted for less than 10 per cent of all wage employees.

19. The labour markets, especially in low-growth economies, not only reflect low-wage-employment growth and labour mobility, but are also characterized by precarious tendencies. Real wages have declined in all the countries reviewed, except Chile and Indonesia. In Hungary, real wages, in statistical terms, were nearly 20 per cent lower than six years ago. There has also been a substantial increase in the proportion of casual workers, either through subcontracted jobs or temporary employment in formal enterprises. This situation is observed also in Indonesia and Chile, where job growth has been fast but concerns have been expressed on the quality of employment. Youth unemployment is high (Zambia, Morocco), and unemployment of the educated, even in a low-skilled economy such as Nepal, draws attention to skills mismatches. Child labour is widespread in low-income countries (Nepal), and remains common in some of the growing economies (Indonesia). Bonded labour, though a small proportion of the workforce, is observed in the rural areas of Nepal. Ethnic minority groups and migrant workers tend to appear in the low-quality segments of the job market.

20. It must be noted that the vast majority of the workforce in the countries reviewed (except Hungary) is either in the agricultural or in the informal labour markets, and hence largely falls outside any regulatory framework. In the poorest countries, owing to the small percentage of organized workers, the regulatory framework itself is nascent and the degree of unionization is low. Insecurity of jobs, poor quality of employment and working conditions and lack of social protection are often found linked to lack of social dialogue and a sound industrial relations framework. Among the countries reviewed, four have yet to ratify the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), a fundamental norm concerning workers' basic rights (Appendix, table 2), although active consideration is being given by some others to ratifying it.

21. In some of the countries reviewed, there have recently been significant shifts towards political democratization (Hungary, Nepal, Zambia, Mozambique) and increasing trends, in all, towards a free-market economy. These tendencies, in principle, are likely to increase transparency in governance and lead to constructive social dialogue on the promotion of employment, productivity and social protection.

IV. Policies for promoting employment and sustainable livelihoods

22. The commitment to full, productive and freely chosen employment, reaffirmed by the World Summit for Social Development, also constituted recognition that the goal of full employment was a valid and attainable objective. At the Social Summit, the Programme of Action, which was devised to give effect to the above commitment, identified a number of key policies and programmes to promote employment and sustainable livelihoods. Critical among these was to ensure the centrality of employment considerations in economic and social decision-making. It must be noted that, despite the presence of widespread underemployment and poverty in many developing countries, the goal of full employment remains a valid policy objective, and a guiding principle for policy formulation. The resolution (and conclusions) concerning employment policies in a global context, adopted by the International Labour Conference at its 83rd Session in June 1996, also fully endorsed the objective of full, productive and freely chosen employment as laid out in the Employment Policy Convention, 1964 (No. 122) and identified a framework of policies in relation to developing, transition and industrialized countries.(3)

23. Within the context of a policy framework for attaining full employment, the ACC exercise examined in detail the policy measures adopted by the countries reviewed and the recent policy reforms introduced to enhance employment and sustainable livelihoods. As observed in the previous section, most developing countries, with few exceptions, face a daunting challenge in the move towards a full employment norm. Low-income, low-growth economies face critical resource constraints, are often structurally constrained, and are characterized by inadequate institutional and implementation machinery. While greater integration in the global economy -- and improvements in world economic systems to support the less developed economies -- would help support these economies to generate growth and jobs, the main responsibility for achieving higher levels of employment must lie at the national level. The country review exercise endorsed the position that sound national policies based on national conditions are required to ensure higher and sustainable levels of employment in an economy. An employment and sustainable livelihoods strategy must be carefully designed with the widest possible national consensus, involving employers' and workers' organizations and other representatives of civil society. Democratic policy-making, public accountability and tripartite dialogue is essential not only for the promotion of growth and employment, but also for their sustainability.

24. It is essential for a policy framework to be country-specific. Growth and employment objectives cannot be attained through any simple, standard prescriptions, and involve a complex interaction between economic and social policies. A set of policies that has proved successful in some countries may not bring success elsewhere. Bearing in mind that standard policy prescriptions cannot necessarily be applied, the following paragraphs provide a brief synthesis of the outcome of policy examinations conducted at the country level. The ACC country- level exercise tends to uphold that, while specific policies have to be tailored to individual country circumstances, a core set of critical policies cannot be ignored. These are outlined below, along with examples of some successes and failures drawn randomly from the sample of countries reviewed.

25. National policy planners, in undertaking a commitment to the goal of full employment and sustainable livelihoods, need to place employment considerations at the centre of their economic and social decision-making. Nearly all the countries reviewed have, in the past, assigned high priority in their development plans to the objectives of poverty eradication through increased employment generation. In many cases -- as in Nepal, which gave high priority to employment in its past five-year development plans -- this remained a pronouncement and did not result in concrete achievements. Indonesia, by contrast, had gone a long way towards meeting its employment targets for national and sectoral levels, as specified in its development plan. Chile registered high employment growth largely through a focus on growth with stability. Hungary's pre-transition commitment to full employment was carried out at the cost of extreme labour hoarding and low productivity. Thus a commitment to productive employment generation was pursued differently, with varying results. In the more recent period, almost all the countries have adopted policy reforms, with attention focused on stabilization and adjustment. While these policy reforms are indeed intended to generate growth and jobs, employment targets do not necessarily feature in them as a national commitment. Countries must continue to pursue an employment and sustainable livelihoods strategy based on social consensus and with realistic goals and priorities that can be attained within the potential resource framework of the individual countries.

26. Economies that need to generate and sustain a high rate of labour absorption, especially those in the developing world, need to pursue a sustained rate of GDP growth. This requires a sound, macroeconomic policy framework to ensure employment-intensive growth. A fundamental objective of the macroeconomic framework is the attainment of economic stability, which is essential for the promotion of domestic and foreign investment and enterprise development. The countries reviewed have all adopted stabilization measures, and have generally been able to reduce inflation rates and fiscal and current account imbalances. Such measures have often led to a reduction in aggregate demand and employment (Hungary, Zambia), and not all countries have been able to resume a sustained level of growth and employment. Chile and Indonesia are the exceptions. Macroeconomic stability is a necessary, but not a sufficient, condition for growth. Similarly, growth is necessary in order to contain imbalances. The difficulties may lie either in inadequate, or inappropriate, policies or in the severe lack of resources and other structural constraints. For the relatively poorer economies, such as Zambia, Mozambique and Nepal, major resource mobilization, domestic and foreign, would be needed to finance development.

27. Countries that have achieved growth with stability have also undertaken various structural adjustment and liberalization policies to encourage higher private sector participation and enterprise creation, as well as greater integration into the world economy. Morocco, Chile and Indonesia are countries that have adopted liberalization measures with a view to greater integration with global trade and investment and access to new technology. It must be noted that, while liberalization policies are required to raise domestic efficiency, it may adversely affect infant industries with growth and employment potential. In Nepal, liberal imports of consumer goods are threatening some of its nascent industries. Similarly, some of the small and medium-sized industries in Hungary require incentives and careful promotion. In many countries, such as Zambia and Nepal, policies that go beyond import liberalization -- for example, those aimed at the development of appropriate skills and infrastructure -- would be required to boost industries and exports that are often supply-constrained. Individual countries must attach appropriate weight to policies that make possible a greater shift of resources towards tradable goods, and induce firms to move into the export sector.

28. Apart from carefully designed liberalization policies, specific policies are needed to attract foreign direct investment (FDI), which could provide a boost to domestic investment and exports. Chile and Indonesia have been particularly successful in promoting FDI. Hungary, among the transition economies, has a high relative share of FDI. The policy lessons appear to underscore that FDI is not necessarily attracted to cheap labour, and is strongly associated with the availability of skills, high labour productivity, good transport and infrastructure facilities, in addition to economic and political stability. It is also important that, if incentives are provided in respect of FDI, they relate to the right sectors, industries and regions, that these generate appropriate links with the domestic patterns of industrialization, and ensure appropriate skills development. The ILO's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy can be a guide to appropriate national policy in this field.

29. Sectoral policies and reforms are equally critical, and these must be designed to reflect comparative growth and employment potential. In countries such as Nepal, Zambia and Mozambique, there is a clear priority in enhancing agricultural productivity and rural regeneration, both of which would require support policies, including major investment in infrastructure, such as irrigation and transport. While current liberalization reforms offer prospects to agricultural exports, small and landless farmers are unable to draw immediate benefits, especially when subsidies are withdrawn from agriculture. Non-farm and non-agricultural employment would help enhance employment and sustainable livelihoods in rural areas, but their growth and productivity are closely linked to a vibrant agricultural sector (Indonesia, Chile). Agriculture, especially the small farm sector, in the poorer economies, warrants a major public investment and other support policies. It may be pointed out that in Zambia and Nepal, the linkages between agricultural growth, sustainable livelihoods and preservation of the environment are very close, and call for preservation of natural resources. Environmental exploitation is observed in the agro-based exports of Indonesia and Chile. Environmental sustainability must command more weight in the public agenda, as well as in NGO activities.

30. As observed in the previous section, the informal sector, especially in urban areas, has expanded in the majority of the countries under review. While this sector is largely characterized by petty commodity production and trades with low productivity and incomes (Nepal, Zambia, Mozambique), it also contains a range of micro-enterprises which are sometimes relatively dynamic, and not always characterized by low returns (Indonesia, and other ASEAN countries). Broad public support and policies would need to differentiate between the two broad streams of informal activities. What is required in either case is the removal of unnecessary regulatory obstacles (positive non-intervention), providing greater access to credit, and measures to enhance skills, technology and productivity in the sector. It should be noted here that workers in informal-sector enterprises, and especially women, are largely unprotected, and often face unhealthy working conditions. These situations must be monitored, and a minimum of social protection extended. The long-term objective, however, would be to continue to help enterprises and workers increase their productivity and incomes, and generally reduce unemployment in the economy, and to ensure that wages and working conditions in the informal sector move closer to those in the formal sector.

31. Special targeted programmes would need to be continued and, in many countries, expanded to support the employment and incomes of the most vulnerable groups in the society. These target groups would, as in Nepal, Zambia and Mozambique, include the landless, women, and special groups such as demobilized soldiers (Mozambique). These programmes are broadly divided into those based on public works, and those that promote self-employment and micro-enterprises. Public works programmes have brought some success in Nepal and Indonesia, but have not necessarily led to sustainable employment. Self-employment schemes have not always reached their intended targets on account of excess demand for subsidized credit, which leads to problems of rationing and adverse selection. Large-scale implementation of both these programmes, and the effectiveness of such programmes in reaching the truly needy, need to be assessed. Support to the poorer sections of society needs to be complemented by social expenditure on health, education and skills development. Since most countries face strict fiscal discipline, careful expenditure switching and fiscal planning would be required to sustain such social support.

32. On the supply side, investment in human resources development would need to be designed and stepped up, especially in view of the fact that raising skills and labour productivity is a key means of sustaining growth and international competitiveness. This policy features dominantly in current policy thinking in Chile, Hungary and Indonesia, which are trying to diversify their export base towards higher value added exportables. But human resources development is equally a significant policy concern in the less developed countries. Nepal's current supply constraints are intricately related to low levels of skills among the workforce. The productivity of female workers is generally low, and can be certainly enhanced through specific education and skills programmes. However, the high rate of youth unemployment among school and university graduates had raised concerns over the mismatch of skills, implying that education and skills programmes should not only cater to quantity but also to quality and relevance. Resolving the mismatch through flexible training and retraining programmes would be one way to raise employment levels. The development of entrepreneurs and managers requires particular attention. By enhancing the entrepreneurial and management skills of men and women, especially in developing small and medium-sized firms, training policies and agencies could make a significant contribution to expanding employment. Also on the supply side, controlling population growth continues to be a major policy issue, especially for low-growth economies. High population growth in these economies results not only in lower per capita income, but also in an unsustainable labour force, a large proportion of which is already underemployed.

33. Gender discrimination needs to be seriously addressed, and integrated policies need to be devised to promote female employment. While in many countries, women's participation in the labour force has increased (Chile, Indonesia), they usually face discriminatory remuneration and occupy, disproportionately, low-income, low-skilled jobs. Lack of appropriate training in skills constrains their occupational mobility, although in some countries education and skills development have led to higher participation by women in high-productivity service-sector jobs (Chile, Morocco). Apart from economic factors, there are also social and cultural barriers to women's participation in wage employment. Though countries have introduced a range of policies, to support women's participation, especially in the field of training and education, these are often uncoordinated and lack a comprehensive policy focus on women's skills and employment promotion. What is needed is a coordinated, gender-sensitive policy framework, supported by necessary regulations, to promote gender equality in the economy.

34. The use of child labour must be progressively eliminated. The country reviews provide evidence of the use of child labour in several countries, especially in Nepal and Zambia, and also in the urban areas of Indonesia. Governments are, however, now increasingly aware of the many adverse effects of the use of child labour. The social partners, NGOs and the international community (including the ILO's International Programme on the Elimination of Child Labour) are involved in providing support to prevent the use of child labour and to withdraw children from hazardous work. While several measures are being taken to prevent the exploitation, and to support the rehabilitation, of child labour, a coherent strategy still needs to be worked out.

35. Labour market policies and reforms, especially with regard to issues of regulation and social protection, need to be designed with the widest possible consensus among the ILO's tripartite partners. The ACC country reviews observe that in attempts to redesign government intervention in labour markets there is an increasing shift towards greater decentralization and deregulation of labour markets, and that bargaining and consultations are taking place at the enterprise level (Chile, Indonesia, Hungary). The available empirical evidence shows that labour market flexibility and deregulation need to be viewed in the full context of economic reform and growth objectives, and designed in relation to specific labour conditions within a country. Thus, for example, while rising wages in Chile and Indonesia have not hindered their international competitiveness, in others declining wages have not led to any appreciable increase in jobs. While deregulation measures have reduced disputes, strikes and hours lost (Zambia, Nepal), equal concerns are expressed over job insecurity, lack of adequate protection (Indonesia), and alternative means of re-engaging the retrenched workforce (Hungary). Occupational safety and health is another area of major concern. Labour market flexibility needs to be carefully designed and monitored through tripartite consultation and collective bargaining. Firms in the organized sector could respond to stringent regulations by subcontracting, or by the use of temporary workers, which will distribute wages and job security more unevenly (as in the case of labour subcontracting in Chile). While a degree of labour market flexibility is necessary to support investment and job creation, lack of minimum economic and social protection threatens growth and sustainability. Long-term growth and stability is best fostered through a degree of flexibility and full respect for workers' basic rights.

36. The effectiveness of policies is judged by the extent of their implementation, which, in turn, depends largely on appropriate institutional structures and on the extent of consensus achieved in policy formulation. Inadequacies are particularly observed in institutional structures and management capabilities in the poorer developing countries (Nepal, Zambia, Mozambique). Workers' and employers' organizations are weak in these countries and require strengthening. In the transition economies (Hungary), wide-ranging reforms have been introduced to organizational structures, including employers' and trade union organizations, to meet the functional responsibilities of a democratic regime. Alongside the development of appropriate institutional structures, the establishment of a social policy framework to address critical employment and labour market issues would require full consensus between the social partners and other representatives of civil society.

37. Appropriate mechanisms and an information base need to be established to monitor the employment and labour market effects of economic and social policies. Many of the countries reviewed hardly have a basic information base to judge their employment and social performance. Nepal has yet to carry out a proper labour force survey; Mozambique, with hardly any national data systems, has a scattered, often city-based, information base. These countries must begin developing an effective monitoring device and information system to be able to analyse current situations and design appropriate future policies accordingly.

V. Role of the ILO

38. In the resolution (and conclusions) concerning employment policies in a global context, adopted by the International Labour Conference at its 83rd Session in June 1996, it was stated that the country employment policy reviews conducted as follow-up on the Social Summit should "assist all governments, with the fullest involvement of the social partners, in establishing an employment policy framework, in articulating this framework in institutional terms, and in the development of effective monitoring and evaluation machinery". It also stated that "each country review should include background and analytical work, the identification of key problems, an examination of the effectiveness of institutions with a role to play in job creation, the elaboration of policy recommendations and suggestions for convening a national employment summit".(4) These considerations were incorporated in the design of the country reviews.

39. As summarized above, the country employment reviews have provided a detailed analytical account of employment and labour market conditions in the countries concerned; reviewed the existing policy framework and, wherever it was found lacking, identified its limitations; provided various policy recommendations for pursuing full employment with full respect for workers' basic rights; identified gaps in data and devices for monitoring employment and poverty; and critically examined the framework of institutions and policy-making, advocating greater social consensus and transparency in governance. What are some of the broad lessons learnt from the ACC country review exercise, and what do these signify for the future role of the ILO in the field of employment?

40. The process has revealed that countries are intensely committed to pursuing the goal of full employment. This commitment has been heightened not only by the challenges of the global job crisis, and the Copenhagen Declaration, but more significantly by the increasing national awareness of the need to tackle unemployment and poverty on an urgent basis. Although many countries are far short of achieving near full employment, the goal itself features as a strong guiding principle in policy decisions. The social partners and various other representative bodies of civil society are more conscious of the need, and eager, to play their part in promoting employment and sustainable livelihoods.

41. The attainment of full employment is seen not simply as an economic target, but as a social goal. A commitment to full employment and the eradication of poverty is also a commitment to social justice. The Declaration adopted by the Social Summit incorporated a reference to ILO core labour standards when its signatories stated:

42. This now carries greater weight in national policy decisions. The emphasis on quality, not simply quantity, of employment is evident in the increasing awareness among planners of the need to abolish child labour and discrimination, etc. Similarly, on such contentious issues as labour market flexibility, there is now greater awareness that cheapening the cost of labour and worsening the conditions of work are poor alternatives to the expansion of human skills and productivity in developing international competitiveness.

43. The country review exercise has revealed that, while some countries have been successful in moving towards full employment targets, many are far short of it. The reviews have identified several constraints that prevent such countries from achieving better employment and growth performance. At the risk of some repetition, these constraints may be broadly stated as a low resource base; severe structural constraints (e.g. low skills of the workforce, low agricultural productivity); inadequacies of and distortions in the policy framework, as well as insufficient progress with regard to policy reforms; exogenous forces (e.g. ineffective participation in global trade and investment, high debt-servicing burdens); and the inadequacies of institutions and governance for the effective implementation and monitoring of policies. In so far as the above constraints adversely affect employment generation, quality of employment, and vulnerable groups and workers, the ILO must be prepared, in follow-up on the country reviews, individually and in collaboration with other agencies, to help its constituents address these constraints. Such assistance would focus on designing and formulating macroeconomic and labour market policies; identifying sectoral policies with maximum growth and employment potential, including through enhancing human resources, particularly with respect to the female workforce, and labour-based infrastructure development; encouraging policies to promote jobs through enterprise development and higher investment; designing effective special employment programmes for vulnerable groups; strengthening institutions, in particular the capacities of workers' and employers' organizations, so as to support the development of healthy social dialogue and a sound industrial relations system; and developing effective machinery for the evaluation and monitoring of employment and the labour markets.

44. The country reviews have brought together evidence to suggest that, in countries where employment has grown significantly, there may still remain serious concerns over the quality of employment, conditions of work, and gender discrimination, etc. The existence of child labour is frequently observed. While the Copenhagen Declaration and the ILO's own efforts to highlight such problems have brought increased attention to them, the country reviews underscore the need to strengthen efforts to promote the observance of basic international labour standards. The ILO, through its supervisory machinery for the application of standards and increasing technical and advisory assistance, should assist member countries to observe core labour standards, which would not only help sustain their economic and social progress, but also ensure the equitable distribution of the benefits of economic liberalization and globalization.

45. With respect to the various constraints identified above, several countries would require not only increased support from the ILO, but also a collective effort by the international community. The country review process thus provides a basis for the ILO to strengthen dialogue and cooperation with the UN-system organizations, including the Bretton Woods institutions, in promoting full employment, and to develop understanding among them of the relationship between economic and social issues, for example, in connection with the introduction of employment targets in stabilization and structural adjustment programmes. Such cooperation is particularly relevant in the case of countries facing critical constraints, such as the lack of basic infrastructure, an insignificant trade sector, low levels of foreign investment, or the severe cost of being land-locked.

46. The ILO's review exercises have demonstrated the significance and effectiveness of its Active Partnership Policy, especially in the articulation of the views of the social partners and the involvement of, and close interaction and collaboration between, the field structure and the technical departments. Furthermore, the social partners have reaffirmed their full support to the ILO in the conduct of the country-level exercise and in follow-up activities.

47. The present paper offers a preliminary assessment of the country employment policy reviews, based on which a synthesis report is being prepared by the ILO for submission to the UN ACC meeting in April later this year. The Committee will be kept informed of progress regarding the synthesis report and the outcome of the UN ACC meeting. Meanwhile, the Committee may wish to discuss the preliminary results of the country reviews and the experience of the ILO in coordinating the UN ACC exercise, and to specify issues which are relevant for the future work of the ILO, particularly with a view to preparing for the proposed International Consultation on Follow-Up on the World Summit for Social Development in 1999.

Geneva, 3 March 1997.

1. GB.267/ESP/1.

2. GB.267/7, paras. 358 and 371.

3. International Labour Conference, 83rd Session, June 1996: Resolution (and conclusions) concerning employment policies in a global context, paras. 4-8.

4. ibid., para. 24.

5. World Summit for Social Development: Copenhagen Declaration on Social Development, Commitment 3(i).


UN ACC Task Force country reviews:
Background statistics

Table 1. Poverty and unemployment
GNP per capita
Incidence of
poverty (%)
unemployment rate
Nepal 210 492 4.96
Chile 3 960 284 4.75
Hungary 4 130 334 11.07
Zambia 370 691 21.61
Morocco 1 130 151 16.04
Mozambique 80 708,* 7.21
Indonesia 980 143 4.44
1 1991; 2 1992; 3 1993; 4 1994; 5 1995; 6 1995/96; 7 1996; 8 around 1990; * Rural poverty.
The poverty incidence is based on a country-specific definition of poverty line and, hence, cannot be compared. The open unemployment rate does not capture the real extent of labour underutilization in the economy.


Table 2. Ratification of ILO fundamental human rights Conventions and of the Employment Policy Convention, 1964 (No. 122)
ILO Conventions Nepal Chile Hungary Indonesia Zambia Morocco Mozambique
Freedom of Association (C.87)     X   X   X
Right to Organise and Collective Bargaining (C.98) X   X X X X X
Forced Labour (C.29)   X X X X X  
Abolition of Forced Labour (C.105)     X   X X X
Equal Remuneration (C.100) X X X X X X X
Discrimination (C.111) X X X   X X X
Minimum Age (C.138) X       X    
Employment Policy (C.122)   X X   X X X

Updated by VC. Approved by NdW. Last update: 26 January 2000.