Committee on Employment and Social Policy
FOURTH ITEM ON THE AGENDA
Economic and financial crises:
ILO policy and activities
Report on the Informal Tripartite Meeting at the Ministerial Level
on Economic and Financial Crises -- ILO Action
(Geneva, 9 June 1999)
1. The Meeting was chaired by Mr. Alhaji Muhammad Mumuni, Minister of Employment and Social Welfare of Ghana and President of the 87th Session (1999) of the International Labour Conference.
2. Mr. Somavia, Director-General of the ILO, introduced the topic of the Meeting and Mr. Hultin, Executive Director of the Employment Sector, summarized the discussions. Twenty-seven ministers and other representatives of governments, as well as workers' and employers' organizations addressed the Meeting.
3. The Meeting was convened to discuss the ILO's work in relation to economic and financial crises and was partly based on the discussions and conclusions of the Governing Body Symposium on the Social Impact of the Asian Financial Crisis held from 19 to 20 March 1999.(1) Highlights of this Symposium were also discussed in the ILO Director-General's Report to the International Labour Conference, Decent work.(2)
4. Apart from providing a structured review of key topics and reflecting the views of different participants, this Report aims at identifying issues that need to be elaborated upon in the future work of the ILO.
5. The discussions at the Meeting can be grouped under three themes --
6. A number of Workers' representatives expressed their approval for the establishment of institutions with supranational powers (Economic Security Council (ESC), Tobin tax). Several speakers wanted the ILO to be involved in the decision- making process of international financial institutions, and all speakers supported better coordination between international institutions dealing with various aspects of financial crises. Securing the social aspect in the international institutional set-up was considered crucial by all speakers. It was stressed that women should be better represented in international institutions.
7. Several speakers from Africa urged the ILO to give high priority to the relief and cancellation of international debt in developing countries. They explained how the burden of debt -- originating from colonial times and inherited from non-democratic governments -- had aggravated the democratization and restructuring process, and hence had made societies more vulnerable to political and financial crises. Other speakers also addressed the need for restructuring and democracy to avoid financial crises.
8. Opinions on the promotion of social dialogue varied somewhat from the Workers' and Employers' points of view. Workers' representatives underlined that it was essential for social dialogue to be permanent and not something that suddenly appeared after a crisis: it should be holistic, and cover all aspects of the labour market. The primary purpose of such dialogue was to secure workers' rights, decent working conditions and economic safety for the unemployed. According to Employers' representatives, the primary purpose of social dialogue should be to facilitate the adjustment to changing markets in the world of work in order to remain competitive, instil confidence, and create new jobs and prosperity, resulting in improved social and living conditions.
9. The majority of speakers urged the ILO to initiate the establishment of international guidelines and to act as a forum, or help in the creation of forums, where relevant actors could agree on international frameworks and guidelines concerning debt, employment and social policies.
10. Many Government representatives requested the ILO to go one step further and develop employment strategies, either global or regional strategies or strategies for individual member States. Employers' representatives stressed the importance of enterprise development in these strategies. However, not all participants supported the suggestion on international employment strategies.
11. The ILO's advice on social and employment policies was highly appreciated by participants. However, it was suggested that technical assistance was further needed in the areas of trade union capacity in social dialogue, enterprise management and productivity; the ability of governments and civil services to widen their horizons in social and labour matters; and linkages between the formal and the informal sectors, regional integration, etc.
12. The ILO was also urged to conduct research and analysis to identify the economic causes, effects and moral consequences of economic and financial crises and to develop case studies on the implementation of international labour Conventions and Recommendations and on social safety nets.
13. As a result of the limited time for discussions, comments were kept at a general level. Speakers did not elaborate on the idea of the ESC or the Tobin tax (implementation, administration, collection and distribution of the tax revenue). The Workers' representatives did not elaborate on the questions concerning resources at the international, national and/or enterprise level for social dialogue, or on the desired social architecture that they believed should precede structural adjustment. Employers' representatives, who had argued that wealth created by enterprises must precede the creation of social architecture, did not elaborate on the questions of wealth distribution at the international, national and/or enterprise level. Speakers who had requested ILO studies on the causes and effects of financial crises did not refer to the missing elements of existing research that needed to be elaborated upon.
14. A difference of opinion emerged on the desirable powers of international financial institutions: some believed that financial institutions could control and change the functioning of financial markets, while others considered the influence of existing international institutions already too powerful.
15. The issue of an Economic Security Council (ESC) was raised by Mr. Jonsson, Workers' adviser of Sweden.
16. Mr. Duron, Workers' representative of Honduras, called for "a new international financial architecture which can control or radically change the behaviour of worldwide financial markets" and suggested "the Tobin tax on short-term capital flows and speculative money operations". He added that it was "fundamental to confront all market players with the cost and consequences of their actions".
17. Mr. Duron referred to the Merill Lynch and Cap Gemini report which explained that "despite the financial crises, the richest countries increased their wealth by 12 per cent last year and the rich countries of Asia and Latin America, or rich people living there, had protected their capital by exporting it and had then reimported it by means of fixed-income securities".
18. Mr. Hultin noted that the lack of transparency was one problem that contributed to crises, and that global governance resulted logically from this lack of transparency.
19. A number of participants considered the powers of the IMF and the World Bank to be too extensive. Mr. Adu-Amankwah, Workers' representative of Ghana, argued that "the international financial institutions have become international ministries of finance and economic planning for many African countries". According to Mr. Karani, Government representative of Papua New Guinea, "the IMF and the World Bank appear to promote agendas which have no considerations of a given time or locality". He added that "the IMF and World Bank have been pushing for reforms and changes and other terms and conditions which we know have the potential for high social costs".
20. Even those participants who advocated a consolidation of powers between international institutions expressed dissatisfaction with the current policy of such institutions. Mr. Duron argued that "nearly all of the financial shocks of an international nature have occurred following an irrational movement by, or on the part of, the Bretton Woods system, whose main characteristic is the irrational behaviour of deregulated financial markets". "To put it more clearly" he added, "we cannot accept that speculation is rewarded by high interest rates and that capital (for this speculation) is guaranteed by means of the aid plans of the Bretton Woods institutions, while social dialogue and social policy have to clear up the debris which is left after searches for a quick profit".
21. Many participants seemed to share the belief that involving the ILO in financial decision-making at the international level would correct the perceived defects of both structural adjustment and coping with financial crises. Mr. Jonsson argued that the ILO had a central role in securing a social dimension both in policies relating to international financial institutions and governments.
22. Mr. Somavia explained the means available to the ILO to assist national authorities and organizations to reach adjustment programmes which correspond to national aspirations and preferences:
One of the important contributions that the ILO can make is in terms of the approach that a country takes to [formulating and implementing their structural adjustment programmes] in terms of who the actors are. I am increasingly convinced that if countries addressed the process of defining a structural adjustment programme with a tripartite vision, this would only enhance the capacity of the country as a whole to have a better structural adjustment process, and particularly, in terms of the direct negotiations that need to take place on this, because the unity of the country through the productive sector in these processes is something that I think is very important. The ILO policy support can be at the request of individual countries, which would be the only way that we could work. I see it at two levels. Some opinion on our part of the overall balance of the adjustment package and how well are the economic and the social objectives being balanced, the social impact of the macroeconomic objectives, alternative ways of reaching the same macroeconomic objective with lower risks of unemployment, with lower risk of enterprises going broke, with the capacity to reserve and to maintain certain minimum resources for education, for health. The overall balance of the package is one area in which the ILO could be helpful in thinking about these issues. The other is specific policy recommendations in the areas in which the ILO has a competence and has a mandate.
23. There was wide support for Mr. Somavia's view on the need for --
24. Mr. Somavia described current and future arrangements between the ILO, the IMF and the World Bank:
I have requested that the ILO be invited as an observer to the Interim Committee of the Fund. The Interim Committee is a meeting of over 20 finance ministers that meet twice a year in April and October. That request has been accepted, and, in fact, the possibility of the ILO to be consequently present at those meetings is now a reality. I believe that this is an important evolution in the institutional means with which the ILO can move forward. And obviously, in this time, I have raised the issues of the social questions within structural infrastructure adjustment programmes.
Something similar is going on with the World Bank. It also has to do with participating in the Development Committee in the World Bank, and consequently being able to be part of the thinking in terms of the types of projects to be promoted, and the manner in which World Bank projects can in fact promote the full strategic objectives of the ILO. I believe that we have to think towards a future that includes very strong cooperation between the ILO and the World Bank. The World Bank has moved, in the last five years, very clearly into much greater sensitivity to social issues and social questions, and that is, I believe, a very welcome evolution. The World Bank has resources that the ILO cannot draw on, and there is a natural linkage to be made between a Bank that moves towards greater understanding of social issues and an institution that for 80 years has been working on social issues. This again is something that we need to develop and work together on in the future.
25. Participants referred to their recent experience with technical cooperation and financial aid received from the various international institutions and hoped that better coordination would eliminate the perceived shortcomings, which were incompatibility, inconsistency, sluggishness and imbalance.
26. According to Mr. Jatiya, Minister of Labour of India, the Asian crisis revealed that multilateral agencies dealing with social and economic issues were acting independently and were giving different policy prescriptions to national governments, without trying to harmonize the conflicting positions. He hoped that the ILO would "have a view of the design of the macroeconomic policies at the international level" and welcomed "the efforts of the ILO to have continuous dialogue and cooperation with the multilateral agencies promoting investment and trade".
27. Mr. Ahmed, Minister of Labour, Manpower and Overseas Pakistanis, stated that the international response to the Asian crisis was:
... sluggish, uncoordinated, prescriptive and unimaginative ... Many would say the cure was worse than the disease. The human suffering brought about by the crises mostly got lost in the statistics. The ILO can play a role in providing early warning of an impending crisis by appropriately utilizing the World Employment Report, which evaluates current and future trends, thus revealing the strengths and weaknesses of various economies and labour markets. The ILO can thus play a role in pressing for timely policy action to avoid financial, economic and social crises in the future.
28. Apart from the imbalance between economic and social aspects, international action was also criticized for favouring the interests of rich countries. Mr. Zahran, Government representative of Egypt, insisted that international financial institutions should review the manner in which they promoted economic reforms in developing countries, which were vulnerable to rapid capital flows. He reminded participants that although industrialized countries spoke of the need for market economy, the liberalization of markets and privatization etc., they also spoke of imposing new conditions on their economic and social relations with the developing world in order to protect their own interests. Mr. Zahran urged for coordination between the ILO and other UN agencies to promote an integrated and global vision of the development process in conformity with the Declaration and Programme of Action adopted by the Copenhagen Summit.
29. Women participants stressed the need to involve more women in international forums dealing with economic and financial crises, as women were more vulnerable than men to the social consequences of crises.
30. Ms. Dovydeniene, Workers' representative of Lithuania and Ms. Mayombo, Government representative of Gabon, pointed out that in Eastern Europe and Africa more women than men were affected by the social outcomes of financial crises, such as unemployment, atypical forms of work and poverty.
31. Ms. Kasungu, Workers' representative of the United Republic of Tanzania, requested the ILO to support women participation in ILO conferences. She stated that "Since participation of women is as important as capacitating women, we are requesting the ILO to initiate programmes to support the participation of women delegates in ILO conferences, because currently quite a number of women are left outside under the pretext that governments cannot pay for the delegates to come to these conferences."
32. A number of other participants focused on the need to strengthen international structures and organizations that supported female membership in society. Mr. Owuor, Employers' representative of Kenya, requested the ILO to consider strengthening rural organizations to assist women who comprised the majority of the population in rural areas in Africa. He suggested that forming cooperatives was one way to strengthen women's ability to survive in a hostile environment.
33. Speakers from Africa urged the ILO to give high priority to the relief and cancellation of international debt in developing countries. They explained how the burden of debt -- originating from colonial times and inherited from non-democratic governments -- had aggravated the democratization and restructuring process, and hence, had made society more vulnerable to political and financial crises. Other speakers also addressed the need for restructuring and democracy to avoid financial crises.
34. Ms. Missambo, Government representative of Gabon, pointed out that her country was still very dependent on two raw materials -- petroleum and wood. Although Gabon needed to invest in the production of refined goods, the reimbursement of debt reduced investment capacity and hence reduced the capacity to create jobs, which in turn had led to unemployment (especially youth unemployment) and poverty.
35. Mr. Machungwa, Government representative of Zambia, used his country as an example to demonstrate why many programmes in Africa were failing to achieve anything:
In Zambia, we are heavily constrained by international debt. In 1998, for every single dollar we spent on medicines and health services, we spent three dollars on debt servicing. We must continue to service the debt to remain in good standing and to be able to obtain assistance towards further structural adjustment. Clearly, it is very difficult under these conditions to devote resources to employment creation and social progress. The unfortunate part is that most of these debts and loans which are burdening our countries were obtained by the dictatorial regimes which were given loans based on, among other things, political and ideological considerations of expediency and advantage to the lending countries. Democratization and transparency are becoming integral parts of many governments in Africa. Unfortunately, these efforts are doomed because of financial debt. We wish to call upon the ILO to use its voice and its credibility to explain to the financial world community and lender nations that social and economic progress and social justice will only be possible if these countries are given a new lease of life.
36. Mr. Adu-Amankwah, Workers' representative of Ghana, reminded developed countries that their past and present policies predisposed African countries to economic and financial crises:
The origins of the crises are rooted in the very nature of many African economies: economies that were drawn into the orbit of the world market as colonial markets, dominated by primary commodity production and dependent on colonial powers for imports of finished products. In the years after independence from direct colonial rule, African countries have not been able to restructure their economies to serve essentially the needs of their populations. The weakness of African economies made them particularly vulnerable to oil shocks and to falling commodity prices. The emergent crisis was deepened by politics of exclusion and dictatorships, civil conflicts that have dislocated millions and destroyed employment, bad weather and famine.
37. Mr. Duron, Workers' representative of Honduras, and Ms. Kasungu, Workers' representative of the United Republic of Tanzania, elaborated on the issue of debt relief and cancellation. Mr. Duron spoke on procedure:
First, we should have a debt moratorium to relieve the countries from this race for profit, which is imposed by international lenders. There should also be continuing support by the IMF, despite this debt moratorium. Of course, since banks categorically turn down the idea of a suspension of payments, it would be very effective to have ongoing financing by the IMF for those countries that have declared a moratorium. Secondly, it would be highly recommendable to open a discussion and create procedures to renegotiate and cancel part of the debt in foreign currencies.
38. Ms. Kasungu urged the ILO to work within the international community to cancel international debt in Africa and to ensure that the funds accrued from this cancellation were used for:
... the alleviation of the burden on the shoulders of women, and employment creation, especially for young people ... The other important issue is that the international community makes sure that the current initiatives of debt cancellation bring positive results, that they are not diverted to buy military equipment and intensify military conflicts. The World Health Organization should really seriously intensify its efforts in starting health programmes, especially HIV/AIDS programmes, because this is now a global crisis. We are losing a lot of educated, capable youths that the whole world will depend on. I do not know what we are going through for the next millennium without having really addressed this issue seriously, and I believe that the ILO has not taken a lot of initiative in this area, and that it is high time it does so.
39. Opinions on the promotion of social dialogue varied somewhat from the Workers' and Employers' points of view.
40. Mr. Cho, Employers' representative of the Republic of Korea, expressed dissatisfaction with the insufficient cooperation of trade unions in efforts to implement a structural adjustment programme. He pointed to the labour-related matters, which partly caused the financial crisis, the positive employment measures established by the Government in the aftermath of the crises, and the fact that without jobs created by enterprises, there would be no solution to the unemployment problem. Mr. Cho argued that:
... the crisis was caused by weak financial institutions, lack of a transparency, heavy burdens of debt in the business sector and so on. I agree, these were some of the causes. However, in Korea's case, there is another seldom-mentioned reason for this crisis, which we cannot overlook. That is a labour-related matter -- a rigid labour market with wage raises much higher than productivity-increase rates, and adverse industrial relations. Owing to these factors, the economy began to lose its competitive edge, and foreign investors started to leave Korea. That is why international financial institutions recommended that the Korean Government enhance labour market flexibility and make efforts to maintain industrial relations. In order to cope with the economic crisis, the Government quickly came up with the following measures: the allocation of US$22 billion between 1998 and 1999 to support the employment policy and reinforce the social safety net, and the establishment of the Tripartite Commission for Social Dialogue. However, in the course of implementing these measures, the Government is now faced with a serious dilemma. Trade unions, which are strongly opposed to structural adjustment, have withdrawn from the Tripartite Commission. Under the critical situation of the economic crisis, the unemployment issue is now at the top of our agenda. Various solutions are suggested to address this task, for example, work-sharing, active labour market policies, public works for the unemployed and so on. But, in fact, the fundamental solution to unemployment problems lies not in employment protection for redundant workers, but in the creation of jobs. Now, the question is, who creates the jobs? The answer is very simple with no argument. It is the enterprises. Therefore, enterprises must survive. For this, we should, among other things, create a business environment conducive to a sustained price development.
41. Mr. Brett, Workers' representative of the United Kingdom, challenged the Employers' view, arguing that "it is fine to have social dialogue in response to a crisis, but maybe people do not want a dialogue when you did not talk to them for all the years you did not have to. Social dialogue is therefore not something that comes along after the crisis. It has to precede it".
42. Mr. Rampak, Workers' representative of Malaysia, confirmed Mr. Cho's statement that "enterprises create jobs" but added that "this does not mean a passport for enterprises to exploit workers ... Employers must accept workers as social partners, they must accept workers as partners in the enterprise". Mr. Rampak also stressed that social dialogue between the social partners should take a holistic approach and consider prevailing national labour legislation, core labour standards, labour market mobility, labour force participation, training policies, the informal sector, women workers, child labour, migrant workers, labour competitiveness, wages systems, wage disparities, safety nets, productivity assessment, occupational safety and health, and labour flexibility, in order to successfully adapt to the continuous technological change brought about by globalization.
43. Ms. Dovydeniene, Workers' representative of Lithuania, suggested extending the dialogue between workers and management to a transnational level, since crises are international and enterprises are multinational. She explained that:
... the crisis in Russia affected about 25,000 employees in Lithuania. Probably, some of these jobs could have been saved with better worker/management dialogue and better dissemination of information. So, I want to stress the importance of collective bargaining and the development of necessary capacity to undertake transnational collective bargaining with multinational enterprises.
44. Mr. Jonsson, Workers' representative of Sweden, wondered how one could expect workers to accept structural adjustments when they did not even have unemployment protection.
45. Mr. Riesco Salvo, Employers' representative of Chile, considered all economic players including "employers, financiers, investors and workers" to be responsible for enhancing confidence in the economy and assured that "the top priority in this restoration of confidence must be given to social dialogue which will enable working conditions to adapt to a crisis".
46. In his synthesis, Mr. Hultin described two aspects of employment creation: "One is the enterprise, and especially in rural areas, the cooperative development aspect of employment creation. The other is the human skills development aspect of employment creation. Human capital and individuals need to be equipped with appropriate skills."
47. The majority of speakers urged the ILO to initiate the establishment of international guidelines and to act as a forum, or help in the creation of forums, where relevant actors could agree on international frameworks and guidelines concerning debt, employment and social policies.
48. Mr. Neykov, Minister of Labour of Bulgaria, expressed his desire that the ILO initiate a conference on the restoration and development of the Balkan region:
Those responsible for finding a way out of this crisis are not just the governments of the Balkan countries, but also the countries of the European Union and other developed countries. All of us have a duty to pursue a new policy in the Balkans. I believe that this policy should be based on a stabilization pact for the Balkans. I am sure that the success of this stabilization pact is impossible without the active cooperation of the ILO. A conference with the broad participation of ILO, the World Bank, the rest of the Bretton Woods system and other organizations, including of course the European Union, could be of invaluable assistance. It would be a high honour for Bulgaria if such a conference could take place in Sofia. I am convinced that a new policy for the Balkans is a new and important challenge to the ILO.
49. Mr. Somavia assured that "ILO was present from the very start in the efforts of the international community to support reconstruction in the Balkan region".
50. Mr. Nordmann, Government representative of Switzerland, called for the elaboration of common principles for social policies, applicable by all international agencies, to be adopted at the special session of the General Assembly concerning follow-up on the World Summit for Social Development.
51. Mr. Pityana, Government representative of South Africa, considered the development of a common international approach as the main challenge facing the multilateral system:
We need greater cohesion and convergence in policy responses to economic and financial crises. The world is in a better position than ever before to determine a common approach of circumventing and mitigating some of the ills of globalization. I say this because the crisis has brought to question the widely accepted archetypal economic theories and policies. Everyone, including our friends in the World Bank and the IMF, agrees on the importance of social safety nets. They should be a part of the basis for the convergence that we urgently need in these times of uncertainty and volatility.
52. Several Government representatives requested the ILO to take one step further and develop employment strategies, either global or regional strategies or strategies for individual member States. Employers' representatives stressed the importance of enterprise development in these strategies. However, not all participants supported the suggestion on international employment strategies.
53. Mr. Zahran, Government representative of Egypt, reminded participants that "the February 1999 meeting of the Group of Fifteen had called on the International Labour Organization to adopt a global employment strategy". Mr. Idris, Minister of Manpower of Indonesia, stated that it was time "for the ILO to formulate and initiate a comprehensive employment strategy within its mandate".
54. Mr. Cho, Employers' representative of the Republic of Korea, considered that "the ILO's activities should be focused on promoting productive employment through sound enterprise development strategies".
55. Mr. Jatiya, Minister of Labour of India, viewed the ILO's role as both international and national in the formation of strategies:
The ILO's task is not only to recommend policies and measures to cope with the immediate social consequences of the current financial crisis, but also to formulate a comprehensive employment strategy with a long-term purpose. This strategy should be designed to stimulate employment creation, especially in developing countries. The Organization should also emphasize the role of cooperation among member States in formulating a comprehensive employment strategy, and the Office should prepare the necessary documentation for guidance of member States. At the national level, a comprehensive employment strategy should be formulated in consultation with workers' and employers' organizations. An adequate framework for this consultation is provided in ILO Convention No. 122.
56. Mr. Anand, Employers' representative of India, expressed reservations on international strategies: "We have had the experience in my own country, following the crises in other areas, that the social safety nets cannot be of a universal character, one net for a global world."
57. The ILO's advice on social and employment policies was highly appreciated by participants. However, it was suggested that technical assistance was further needed in the areas of: trade union capacity in social dialogue, enterprise management and productivity, the ability of governments and civil services to widen their horizons in social and labour matters, and linkages between the formal and the informal sectors, regional integration, etc.
58. Mr. Pityana, Government representative of South Africa, called for "qualitative advice on employment and social policy". Mr. Li, Government representative of China, listed the following key areas of consultancy: "improvement of employment services and the social security system, employment creation and strengthening training".
59. Mr. Adu-Amankwah, Workers' representative of Ghana, urged ILO technical cooperation to strengthen trade union capacity to engage in social dialogue with other social partners and international financial institutions; to support trade unions in their efforts to organize the informal sector, both urban and rural; and to position trade unions so that they could secure social protection.
60. Employers' representatives also focused on the informal sector in their requests for technical cooperation. According to Mr. Owuor, Employers' representative of Kenya, "the ILO can assist its constituents in organizing programmes of action to promote linkages between the formal and informal sectors through retraining, subcontracting arrangements and providing micro-credit schemes, together with other donors". Mr. Owuor also encouraged the ILO to continue its efforts on regional integration: "In this respect, I take cognizance of the ILO's assistance to the three East African countries of Kenya, Uganda and the United Republic of Tanzania in sponsoring the East African Economic and Social Forum, at which consideration is being given to the harmonization of social and economic policies in the three East African countries."
61. Many speakers agreed that training was of the utmost importance for ILO action programmes. Employers' representatives requested additional training for management, especially in small and medium-sized enterprises (SMEs), labour ministers, officials in labour departments, and workers who were most vulnerable to economic and financial crises.
62. Mr. Owuor stated that "the ILO should continue to provide its expertise to employers' organizations in the areas of management training and productivity in order to promote the competitiveness of our industries". Referring to the Job Creation in Small and Medium-Sized Enterprises Recommendation, 1998 (No. 189), Mr. Salvo, Employers' representative of Chile, stressed the need for technical cooperation and technical assistance for SMEs, which would create most jobs. Mr. Anand, Employers' representative of India, was concerned about the narrow perspective of labour ministers and officials towards the world of work:
Experiences that the officials of labour ministries in different countries have are very compartmentalized and very narrow. I think there is room for the education of the officials of the labour departments on a long-term basis, whether in Turin or in the regions, and the ILO should train the officials of labour ministries in all countries with the new approaches.
63. Mr. Somavia stated that the Office intended to develop and apply its capabilities to respond rapidly as well as effectively in order to be in control of events, and that this was the reason for proposing InFocus programmes on capacities of the ILO.
64. The ILO was also urged to conduct research and analysis to identify the economic causes, effects and moral consequences of economic and financial crises and to develop case studies on the implementation of ILO Conventions and Recommendations and on social safety nets.
65. Mr. Dahlan, Employers' representative of Saudi Arabia, hoped that the ILO could play an important role in conducting studies and research "so that we can define the causes and the reasons for these crises and to have a direct vantage-point view of the situation … We must also direct employers' organizations' activities into this field so that they can develop productivity and increase incomes".
66. Mr. Neykov, Minister of Labour of Bulgaria, underlined that the moral effects of a financial crisis should be as important as the economic effects:
We have seen that in various parts of the world, crises have different effects, not just economic but also moral. In our countries we see businesses closing, we see a decline in investment activity, we see rising unemployment. Furthermore, I can already see in individual sectors of society that people are beginning to close their eyes to the crises and to ascribe the crisis itself to the standards of the ILO, and in fact this has lent impetus to the development of the shadow economy. This is only one example of the way the crisis has a broader impact than might at first sight appear. I believe that all of us ... would be grateful if the ILO were to study the consequences of the global financial crisis.
67. Mr. Brett, Workers' representative of the United Kingdom, stressed the role of research in the attempts to prevent crises:
It is pretty academic to a person who is starving whether that starvation is a mismanagement of the financial system, a crazy conflict between countries, created where no conflict should exist, whether it is ethnic or whether it is the misfortune to live in a country that gets battered by a hurricane, or in a country which is subject to disastrous floods. The reasons may be different, but the results are the same, and it seems that the rapid response we are talking about must be measured with preventive action as well. And it is true that you probably cannot at this stage do more than predict where a hurricane will happen, and then only at short notice. But frankly we did have in the Asian crisis a number of signals in advance, but we were not able to move quickly. So we are very supportive of a rapid response team and we are also very responsive to a proposal to analyse the past and see how we can be better in our preventive action.
68. Mr. Somavia assured that "as a first step towards enhanced ILO capacity, I intend to review the impact of the ILO's efforts to mitigate the social consequences of crises of all kinds in recent years, whether in Central America, sub-Saharan Africa or Cambodia, as well as through our follow-up on the Asian financial crisis".
69. Finally, Mr. Somavia listed a number of questions on which this review should bring answers:
Geneva, 24 September 1999.