Address to the World Islamic Economic Forum, Session on Creating and Innovating Jobs for the Future - Roles of Governments, Business and Training

Mr/Madam Chair,

Ladies and Gentlemen,

It is a great honor for me to address this distinguished audience. Mr. Juan Somavia, Director General of the International Labour Office, has asked me to convey to you his best wishes for a productive and successful Forum. Unfortunately he is unable to be here because of the International Labour Conference, which is currently taking place in Geneva .

This forum is an excellent and very timely initiative. And this session addresses some of the most important challenges that we face.

Today's challenges

Let me start by giving you my message, simply and clearly; today, we are facing a massive jobs deficit. It is a problem that calls for action, not just words.

The situation clearly varies from country to country. But I am going to focus on six large Asian economies; Afghanistan , Bangladesh , Indonesia , the Islamic Republic of Iran, Malaysia and Pakistan . Together they have a total population of approximately 650 million people.

These countries face some common challenges.

First is unemployment. In 2006 about 7 per cent of the total workforce of these counties was unemployed.

Second; young women and men aged 15-to-24 bear the brunt. They are three-to-five times more likely to be unemployed than adults. What is more, youth unemployment is rising. A decade ago the rate was just under 12 per cent. In 2006 it was almost 18 per cent.

Third; in some countries many children are still exposed to hazardous work. It is cruel irony that such child labour continues to exist alongside youth unemployment and underemployment.

Fourth; despite robust economic growth in recent years, more than 60 per cent of employed people still work in the informal economy. This usually means low quality, unproductive, poorly paid jobs, with little or no social protection.

Fifth; although poverty has declined it has not fallen enough. Close to 20 per cent of workers and their families still exist in what is widely recognized as extreme poverty – less than US$1 per person per day. Almost 70 per cent are on less than US$2 a day. More must be done to lift the working poor out of poverty.

Six; gender gaps remain significant. 2006 figures show only 45 per cent of working-age women in the labour force, compared with 84 per cent of working-age men. Women are also more likely to be unemployed than men, and those in work often earn less than a man would.

There are other challenges – but because they are difficult to quantify it does not mean they are less important. For example, workers skills, working conditions, rights at work, labour-management cooperation and social protection.

Looking ahead to 2015

Job creation and skills development are two of the most important issues facing governments and business.

There are many reasons for this: demographic and labour force changes, technological progress and increasing global competition. Here are a few points for you to consider.

You have young populations. More than 30 per cent are under 15. Today’s children are tomorrows workers, entrepreneurs, innovators, leaders, and of course parents. How well we prepare them for work and life will shape our future economic, social, political and technological development.

Before 2015 you need to create about 75 million more jobs just to match the growth of your labour forces. That’s a 27 per cent increase.

Urban populations are expanding rapidly. In Malaysia and the Islamic Republic of Iran more than 65 per cent of the population is already living in towns and cities. So urban job creation is particularly important.

The service sector is becoming the main source of job creation and will become the largest employment sector in many countries by 2015. Employment in agriculture is expected to fall. This represents a major structural economic change.

Alongside this structural shift, improving the quality of the workforce is becoming an increasingly important driver of competitiveness, as businesses and economies look to move up the production value chain.

Meeting these challenges will take a carefully formulated, well-executed response from policymakers and the business community.

The role of governments

Economic growth is a precondition for job creation. But often, it is not itself enough. What you need is both rapid growth and employment-rich growth. This is why governments around the world have placed employment issues at the heart of their national economic and social policies.

Creating an attractive investment framework that helps businesses grow and generates good jobs can create a virtuous circle. Once that circle is established, it can benefit an entire society, or economy. But putting the pieces together to create the circle in the first place is not always easy.

Another major challenge is the difficulty of creating a good environment for businesses; in particular helping those struggling to rise out of poverty to create micro-enterprises, or to make the transition from the informal to the formal economy. Factors include encouraging investment, supporting enterprise creation, discouraging informality, promoting good governance, respecting workers’ rights and promoting viable social protection policies.

Identifying the best approaches to suit national and local circumstances is key and the ILO stands ready to support you in this.

Role of Business

Businesses also have a key role to play. They are on the “front-line” of job creation since private enterprises typically account for a large share of total employment. They are also drivers of innovation, economic growth and development.

To survive and thrive businesses need to be competitive. And to increase their competitiveness, they need to become more productive. Workers play a crucial role in this.

Improved labour productivity allows for higher profits at the same time as increased competitiveness. Just as importantly, better productivity allows firms to increase workers’ wages and job quality while at the same time improving their overall cost competitiveness. This is a win-win situation – the so called ‘virtuous cycle of productivity. It means that workers, companies and the broader economy all benefit.

For the 180 million workers in the region living on less than US$2 per day, the virtuous cycle of productivity growth provides an important route out of poverty — remember, these so-called working poor don’t lack jobs. Rather their problem is low productivity and the resulting poor levels of pay.

But this virtuous cycle is not automatic. If competitiveness is to be sustainable then the benefits must trickle down. That means the business community needs to accept its social responsibilities, and face them in a creative and innovative way. For example:

Promoting respect for workers’ rights and viable social protection systems;

Realizing, and using, the enormous potential of women and other disadvantaged groups

Role of training

Another area where the private sector can make an important contribution - along side governments - is skills and training.

First; it is essential to get the basics right. Young girls and boys need access to quality education. More investment in primary, secondary and higher education is needed to create the workforce of tomorrow.

This is largely a matter of public investment, setting priorities at the national level. But employers also have a key role to play, especially in bridging the gap between the educational system and the business sector.

Second; both governments and companies need to ensure that workers are equipped with the skills that are in demand in today’s economy, as well as with those that will be needed tomorrow. Every day jobs are being created, but they are also being destroyed. Workers who lose their jobs because of these competitive pressures must be able to re-train so that they can learn skills that give them a better chance of finding more work, and continuing to make a valuable contribution to their societies. Providing workers with quality training opportunities and access to lifelong learning is an essential way to boost long-term productivity.

Ladies and Gentlemen,

I have highlighted some of the challenges to create more and better jobs. These issues are real. They need to be tackled effectively if your countries are to achieve equitable and lasting economic development.

The ILO is happy to work closely with its member States to meet these challenges. We do it through a programme of co-operation, all of which focuses on the goal of decent work for all. You will note that there is a clear synchronization between this decent work goal and the virtuous circle of economic growth and social justice that I have outlined.

Last year, at the ILO’s Fourteenth Asian Regional Meeting, our members agreed to promote the goal of decent work for all with an Asian Decent Work Decade. Its aim is to support programmes and policies to create more and better jobs. These include some priority areas such as migrant workers, youth employment, productivity and competitiveness and social dialogue. We are also implementing co-operation programmes covering occupational safety and health, training and skills development, industrial relations and labour migration, among other things.

To conclude, the message I would leave you with is that the realization of decent work has an important part to play in achieving your national goals of balancing economic and social development.

We all know the enormous potential of your countries. The reservoir of creativity, talent and energy is there. Your ideas, leadership and action can set us on a way to making good on the key demand of your people for security, hope and dignity that delivers both decent work and economic prosperity.

Thank you