Commission for Social Development

Forty-fifth Session

2^nd & 3^rd Meetings* (AM & PM)

Commission for social development opens current session

 

with focus on promoting full employment

 

Strong Economic Growth in 2006 Did Not Result

In Substantial Reductions in Unemployment Rates, Says Under-Secretary-General

The Commission for Social Development opened its forty-fifth session at Headquarters today aiming to tackle the “jobless growth” phenomenon, a troubling paradox which has left Governments, international organizations and anti-poverty activists alike searching desperately for effective remedies to offset the increasing inability of economies to create enough decent and productive jobs in a climate of unprecedented global economic growth.

With the United Nations estimating that some 195 million men and women were unable to find work in 2006, and that 1.4 billion people -– half the global workforce –- held jobs that did not pay enough to lift them above the $2-a-day poverty line, the 46-member Commission is devoting the first in a series of two-year action-oriented implementation cycles, which will include a review and a policy segment, to “promoting full employment and decent work for all”.

Along with its consideration of the growing conditions of job insecurity and instability that workers are experiencing worldwide, the growing ranks of self-employed and the rapid growth of the service sector, the Commission is expected to discuss trends in youth employment, and to continue its follow-up to the Copenhagen Declaration and Programme of Action, adopted by the 1995 World Summit for Social Development.  It will also review the Madrid International Plan of Action on Ageing, five years after it was adopted at the Second World Assembly on Ageing.

Highlighting sobering statistics from the recently launched United Nations World Economic Situation and Prospects 2007, Under-Secretary-General for Economic and Social Affairs, José Antonio Ocampo, said that strong economic growth in 2006 had not led to substantial reductions in unemployment rates.  Global performance in promoting employment remained disappointing, with women and youth continuing to suffer higher rates of unemployment and underemployment.  Further, older workers, persons with disabilities, indigenous peoples and migrants faced increasing insecurity in the workplace and shrinking opportunities for decent work, he said.

“First and foremost, it is necessary to make the full and productive employment and decent work for all a central objective of international policies and national development strategies,” he told the Commission, adding that it was also important to create enabling national and international environments.  Given that the majority of the poor in developing countries relied on the informal economy for their employment and survival, policies on formalization should weigh the advantages and disadvantages, as well as the degree of intervention.  Finally, the social orientation of employment and poverty reduction strategies should be strengthened to target marginalized and vulnerable groups, he said.

Keynote speaker Les Kettledas, Deputy Director-General in South Africa’s Department of Labour said that the world was facing myriad decent-work “deficits”, characterized by high and exploding numbers of unemployment and underemployment, poor quality and unproductive jobs, unsafe work and insecure income, rights that were denied, and gender inequality.  Economic growth was failing to translate into new and better jobs that would lead to a reduction in poverty, he said, arguing that, in the current jobless growth environment, questions like what was meant by “decent work,” and if such a thing was even achievable in an era of globalization characterized by liberalization and deregulation, demanded to be confronted.

Although he mainly focused on South Africa’s experience, Mr. Kettledas’ call to action was a global one.  “Decent work goes hand in hand with productivity growth -- the engine of economic growth -- that enables working men and women to earn enough to lift themselves out of poverty,” he said.  Ensuring full employment and decent work for all would improve people’s lives and result in more balanced and sustainable growth.  For Governments and countries, getting there meant rethinking and refocusing macroeconomic policies to ensure that they recognized employment creation as a core objective, and setting targets for job creation.

“Social development is not merely a desirable option -- it is a necessity,” newly elected Commission Chairman Mehdi Danesh-Yazdi ( Iran) said in his opening statement.  Development was considered critical to ensure that people, not economic interests, remained the central focus of overall development efforts. But concern continued to emerge about the costs to society when integral links between poverty eradication, promotion of full employment and fostering of social integration were ignored.  Failed efforts to advance those inclusive goals led to inequality of opportunity and made one generation after another fall into poverty.

With those challenges in mind, he recalled that the commitments made at Copenhagen -- reaffirmed at the 10-year review in 2005 -- had charted a course to reverse continued marginalization of major parts of the world’s population.  “Let us continue, together with our partners in civil society and the wider United Nations system, to strengthen the basic pillars of Copenhagen and the principle of shared social and economic prosperity,” he said.  “Let us strive to address the alarming realities of powerlessness that shape the lives of ordinary people by ensuring that they are at the centre of development efforts.”

Reporting on yesterday’s Civil Society Forum on “Employment Working for All: Partners in Innovation”, Sister Burke, Chairperson of the NGO Committee on Social Development, stressed the participants’ deep concern about the increasing pattern of jobless growth and poverty.  “This is a situation in every part of the globe which cries out to be addressed,” she declared.  “It is due time to integrate full and productive employment and decent work throughout the international agenda,” she said, adding that civic actors working daily with the jobless poor wanted to join the United Nations efforts to alleviate poverty by promoting decent work.

In other business, the Commission elected two Vice-Chairpersons, Joyce Kafanabo (United Republic of Tanzania) and Volodymyr Pekarchuk ( Ukraine).  The Bureau also decided that Vice-Chairperson Hedda Samson (Netherlands) –- elected earlier along with Francis Lorenzo (Dominican Republic) -- would also assume the responsibilities of Rapporteur for the Commission’s forty-fifth session.

The Commission adopted its agenda for the session, and Chairman Danesh-Yazdi announced that the body would, on 13 February, take up, under “emerging issues”, youth employment:  impact, challenges and opportunities for social development.  Johan Schölvinck, Director, Division for Social Policy and Development, Department of Economic and Social Affairs, introduced the reports before the Commission.

The Commission wrapped up its work today with a panel discussion on “macroeconomic policy for full employment and decent work for all”, led by experts Marion Williams, Governor of the Central Bank of Barbados; Mustapha Nabli, Chief Economist and Director, in the World Bank’s Social and Economic Development Group on the Middle East and North African Region; and Jean-Paul Tricart, head of the Unit for International Affairs in the Directorate-General for Employment, Social Affairs and Equal Opportunities of the European Commission.

Though they spoke from regional experience, they broadly agreed on the need to create a more enabling macroeconomic environment and that more emphasis needed to be given to internal domestic markets and that consideration of labour market flexibility and growth of labour productivity needed to be weighed alongside considerations of the level of employment.  They also highlighted the importance of the technology explosion and its impact of full employment, and stressed that macroeconomic policies should aim for greater employment creation and reductions in poverty levels, largely through maintaining low inflation rates, and increasing and utilizing more efficiently resources allocated to social development.

Delegations participating in the discussion agreed that sound macroeconomic policies, accompanied by a balanced national development agenda, could create the conditions for high economic growth rates and social development needed to promote full employment, poverty reduction and social integration.  Some stressed the need to ensure balanced trade policies, and that overall policies should be adopted which promoted an enabling economic environment, including, among others, appropriate policy and regulatory frameworks, transparency, adequate infrastructure and a developed financial sector.

The Commission will reconvene tomorrow at 10 a.m. to begin its general debate.  In the afternoon, it will hold a panel discussion on “labour, mobility, youth and families”.

Background

The Commission for Social Development met this morning to begin its forty-fifth regular session, which is expected to take up the issues of employment, ageing, disability and youth among its issues of discussion, under the main theme of “Promoting full employment and decent work for all” (for background information, see Press Release SOC/4722 of 1 February).

Statements

Commission Chairman MEHDI DANESH-YAZDI ( Iran), in his opening statement, said that social development was not merely a desirable option -- it was a necessity.  Social development was considered critical to ensure that people, not economic interests, remained the central focus of overall development efforts.  Concern continued to emerge, however, about the costs to society when integral links between poverty eradication, promotion of full employment and fostering of social integration were ignored.  Failed efforts to advance those inclusive goals led to inequality of opportunity and made one generation after another fall into poverty.

The commitments made at Copenhagen in 1995 -- reaffirmed at the 10-year review in 2005 -- had charted a course to reverse continued marginalization of major parts of the world’s population.  Yet still today, young people without privilege and wealth struggled to get a foothold in the labour market, he stated, and older persons enjoyed less and less security for a lifetime of work.  In some countries, 80 per cent of persons with disabilities were without work, and indigenous peoples and migrants continued to face discriminatory treatment in the labour market.

He said that, on a broader level, in today’s increasingly interdependent world, many societies, instead of reaping the benefits of progress, were experiencing alarming increases in the discrepancies between the rich and the poor.  That was reflected in the number of the unemployed, which globally stood at around 195 million and climbing.  Another aspect was the share of capital in total income, which was on the rise, while wages and worker benefits were on the decline.  The gap between rich and poor was also reflected in the “casualization” of the workforce, the abundance of labour supply and even greater mobility of capital.  Clearly, those were not isolated trends, and it was important not only to review them, but also to address their root causes.

The priority theme for this and next year’s session of the Commission, “Promoting full employment and decent work for all”, had received a boost from the World Summit Outcome, he said.  The Commission’s work had been also enhanced by the Ministerial Declaration adopted by the Economic and Social Council (ECOSOC), which acknowledged that opportunities for men and women to obtain productive work in conditions of freedom, equity, security and human dignity were essential to eradiate poverty and improve social and economic well-being.  During the session, the Commission would also commemorate the adoption five years ago of the Madrid International Plan of Action on Ageing.  He also wanted to give special recognition to the adoption of the Convention on the Rights of Persons with Disabilities by the Assembly.

“Let us continue, together with our partners in civil society and the wider United Nations system, to strengthen the basic pillars of Copenhagen and the principle of shared social and economic prosperity,” he said.  “Let us strive to address the alarming realities of powerlessness that shape the lives of ordinary people by ensuring that they are at the centre of development efforts.”

Under-Secretary-General for Economic and Social Affairs, JOSÉ ANTONIO OCAMPO, said that the 2005 World Summit had put full and productive employment and decent work for all at the forefront of the United Nations development agenda.  Last July, the high-level segment of the Economic and Social Council had also focused on that critical objective and had produced an action-oriented Ministerial Declaration.  And, of course, a decade ago, the World Summit for Social Development at Copenhagen had made a major conceptual contribution in stressing the central role of employment in achieving both poverty eradication and social integration.  It was thus fitting that the Commission for Social Development, an integral part of the ECOSOC family, would devote its first two-year “implementation cycle” to promoting full employment and decent work for all.

Global performance in promoting employment continued to be disappointing, he continued.  According to the International Labour Organization (ILO), the number of people unemployed worldwide had increased from 140 million to 195 million over the last decade.  The United Nations World Economic Situation and Prospects 2007, launched last month, showed that strong economic growth in 2006 had not led to substantial reductions in unemployment rates.  Employment growth had been disappointing in developing countries, even in light of their strong economic performance over the past three years.  Unemployment not only remained persistent, but was growing in many, if not most, developing countries.  While present in the agricultural sector, where most people worked in the poorest countries, underemployment had also been growing rapidly in the urban sector, in both low- and middle-income countries.  For millions of workers, that meant that new jobs, mainly in the informal sector, lay far below any adequate measure of productive work.  A total of 1.4 billion people still did not earn enough to lift themselves and their families above the $2-a-day poverty line.

Women and youth continued to suffer higher rates of unemployment and underemployment, he said.  Older workers, persons with disabilities, indigenous peoples and migrants also faced increasing insecurity in the workplace and shrinking opportunities for decent work.  The world saw increasing income inequalities, including those between skilled and unskilled workers, as well as regional and urban-rural gaps.  There was slow progress in closing the gender gap in employment, wages and working conditions.  Labour market changes and adjustments due to intense global competition were taking place worldwide.  With the diminishing bargaining power of labour, the declining role of organized labour alongside growing informality, and still weak or weakening social protection systems, the labour market environment had become increasingly insecure.  Half the world’s population still did not have access to social protection.

First and foremost, it was necessary to make the full and productive employment and decent work for all a central objective of international policies and national development strategies, he said.  It was also important to create an enabling environment at the international and national levels.  At the international level, globalization had increased the interdependence among countries, leaving countries limited policy space to increase employment on their own through more expansionary macroeconomic policies.  Better coordination of macroeconomic policy among countries was, therefore, needed.  In developing countries that had managed to become part of global production systems, through off-shoring and outsourcing, it was important to arrest any “race to the bottom” in labour standards.  At the same time, participation in those systems was, for many countries, an important way to attract investment and employment and to increase technological capacities.

At the national level, policies that supported investment, growth and entrepreneurship were also essential, he said.  Measures to remove any policy discrimination against the agricultural sector were needed, as well as programmes to enable small agricultural producers to take advantage of opportunities provided by growth.  Measures to promote the small-enterprise sector, including cooperatives, were likely to raise employment growth and improve distribution of income.  Active labour market policies were needed, including re-training for displaced workers, job search assistance and other measures to facilitate labour mobility.  Such programmes could be enhanced by strengthening social dialogue on economic reform and on measures to improve the functioning of labour markets, while preserving essential protection for workers.

Improved social security systems were key elements of a comprehensive approach to eradicating poverty and improving equity.  It was also necessary to address the differential impact of such schemes on the family and particularly on women.  Given that the majority of the poor in developing countries relied on the informal economy for their employment and survival, policies on formalization should weigh the advantages and disadvantages, as well as the degree of intervention.  Finally, the social orientation of employment and poverty reduction strategies should be strengthened to target marginalized and vulnerable groups.  The challenges to promoting full employment and decent work for all were daunting, but not insurmountable, and he was confident that the Commission’s deliberations would contribute to the efforts to reach that key development goal.

Turning to the review of relevant United Nations plans and programmes of action, he said that the fifth anniversary of the Second World Assembly on Ageing, which had taken place in Madrid in 2002, coincided with the beginning of the first cycle of the review and appraisal of the Madrid International Plan of Action.  That appraisal was expected to reveal, through a “bottom-up” participatory exercise, as well as other methods, the first-hand results of national efforts to address the challenges and opportunities of ageing.  That first cycle, in 2007-2008, would also help to determine priorities and concrete measures for its further implementation.

The report of the Secretary-General on the follow-up to the World Programme of Action for Youth addressed the progress achieved and the constraints that young people faced in relation to their participation in the world economy, as well as the progress achieved by the Youth Employment Network and an update on the status of national action plans for youth employment.  The report, with its focus on “Youth in the global economy”, bore directly on the session’s priority theme.  He also highlighted the adoption of the Convention on the Rights of Persons with Disabilities by the General Assembly last December -- the first major human rights treaty of the twenty-first century.

Introducing the Commission’s agenda item on follow-up to the World Summit for Social Development and the twenty-fourth special session of the General Assembly, JOHAN SCHÖLVINCK, Director, Division for Social Policy and Development, Department of Economic and Social Affairs, said three reports had been submitted for the item, including one on the priority theme, “Promoting full employment and decent work for all” (document E/CN.5/2007/2), which focused on key developments and trends in employment and decent work over the past decade and their impact on poverty eradication and social integration.

Highlighting some important facets of the report, he noted that, despite growing economic trends, overall unemployment had increased during the past 10 years, with notable jumps in sub-Saharan Africa and Asian countries still experiencing consequences of that region’s 1997 financial crisis.  The relative size of various economic sectors had also shifted during the 1990s.  While the industrial sector remained about the same, agriculture had declined and the service sector had grown.  He added that another important trend revealed in the report was the movement of people and jobs, both internally and between borders.  In all, employment had become less secure -- there was more informal employment, self-employment and short-term contractual employment, and a competitive global marketplace had left even the formal employment workplaces with fewer benefits.

On links to poverty eradication, he said the report found that some of the major economic trends were actually creating roadblocks for poverty reduction initiatives.  There was mounting evidence that economic growth was less effective at reducing poverty when inequality was on the rise.  Also, trade liberalization, in the absence of other policies, did not necessarily lead to higher growth, and might in fact decrease welfare in the short term.  He added that, even though Poverty Reduction Strategy Papers (PRSPs) had become key national poverty reduction road maps in many countries, few of those strategies addressed employment and social protection policies directly.

On links to social integration, he said, among other things, that the report had found that, in many respects, the world was less integrated today than it was in 1995.  Older persons, youth, indigenous peoples and persons with disabilities suffered disproportionately from negative trends in employment such as flexible labour markets, short-term contractual agreements and overall employment insecurity.  And despite the attention given to women’s employment status, women’s earnings were substantially lower than men’s, and men and women remained largely segregated in the workplace.

He went on to highlight some of the important features of the other reports before the Commission, including, among others, on the major developments in the area of ageing in the nearly five years since the Second World Assembly on Ageing.  That report (document E/CN.5/2007/7) noted the tremendous challenges facing the world’s rapidly ageing populations and observed that the active participation of older persons in society was impossible without protecting their rights and fighting against age-based discrimination and making concerted efforts to empower them.

Regarding “follow-up to the World Programme of Action for Youth to the Year 2000 and Beyond,” he said the relevant report (document A/62/62-E/2007/7) covered not only employment but also highlighted pertinent issues such as globalization, education, poverty and hunger -- all critical determinants of the availability of work and sustained livelihoods for youth.  He noted that, in response to the Assembly’s call two years ago, the Secretariat, in collaboration with relevant United Nations programmes and agencies, had established a broad set of indicators for measuring progress towards implementation of the Programme of Action for Youth.  That had been a first step on the long road to establish data on a set of quantifiable core indicators that could enable stakeholders to measure youth development over time and compare progress within and between countries.

Reporting on yesterday’s Civil Society Forum, “Employment Working for All: Partners in Innovation”, Sister BURKE, Chairperson of the NGO Committee on Social Development, said that the Forum’s participants had decided to use much of the coming intersessional period between this year’s and next year’s meetings to identify effective practices in the priority area of full and productive employment and decent work that could be presented as recommendations for policy consideration during the Commission’s forty-sixth session.

She went on to emphasize civil society’s deep concern about the increasing pattern of jobless growth and poverty.  “This is a situation in every part of the globe which cries out to be addressed,” she declared, adding that, without decent work, people lived in great poverty without the ability to provide for the basic needs of those they loved -- their families and children.  They also experienced a greater impoverishment -- the dehumanizing experience of being without dignity or a sense of worth.  Sighting recent figures from the ILO, she said that some 195 million men and women were unsuccessfully looking for work in 2006, and some 1.4 billion -- half the global workforce -- worked without earning enough to lift themselves above the $2-a-day poverty line.

“It is due time to integrate full and productive employment and decent work throughout the international agenda,” she said, telling the Commission that grass-roots organizations working daily with the jobless poor wanted to join the United Nations efforts to alleviate poverty by promoting decent work.  With that in mind, she said that a comprehensive development strategy for poverty reduction should encompass employment and income-generating policies; social dialogue and the participation of people living in poverty, unemployed or living on subsistence wages; protection from the risks associated with the loss of income; and efforts to ensure the right to organize and bargain collectively for decent wages and working conditions.

She introduced the NGO Committee’s current Survey of Effective Practices in Employment and Decent Work, which underlined the long-term nature of effective efforts for people to reintegrate into their respective societies and labour markets in different regions and among varied populations within regions.  Expressing disappointment that the Commission’s previous session had not ended with a negotiated outcome text, she said that the community of non-governmental organizations wanted to see the Commission’s forty-sixth session produce a strong, negotiated outcome backing the key themes from Copenhagen, particularly addressing employment and decent work as a means of alleviating poverty and promoting social integration.

Keynote Address

LES KETTLEDAS, Deputy Director-General in the Department of labour of South Africa, said that the world was facing various decent-work “deficits”, characterized by high and exploding numbers of unemployment and underemployment, poor quality and unproductive jobs, unsafe work and insecure income, rights that were denied, and gender inequality.  Economic growth was failing to translate into new and better jobs that would lead to a reduction in poverty.

He said the 2004 Extraordinary Summit of the African Union in Ouagadougou, Burkina Faso, had observed that employment played a critical role in the full realization of individuals and societies.  Whilst employment could further social integration, it could also lead to exclusion by limiting access to jobs.  Income too low to satisfy basic human and social needs created marginalization and submission, creating individuals who became “rich in poverty”.  Many people in South Africa fell in that category.  The ILO report “Working out of Poverty” had observed that poverty was a vicious circle of poor health, reduced working capacity, low productivity and shortened life expectancy.  Poverty was a trap, and for society it was a curse.

The South African economy had been going through structural change, with a decline in the gross domestic product (GDP) share of agriculture and mining and increase in services, with parallel developments in employment.  Since 2004, growth had exceeded 4 per cent per year, and the economy had been creating employment.  However, employment growth was not keeping pace with the growth in the labour force.  Other problems included the casual and short-term nature of most jobs created, low wages and poor working conditions.  There was also migration from neighbouring countries, some of them economic refugees with the necessary skills.  Like other countries in the developing world, South Africa had implemented various measures to alleviate poverty, promote full and productive employment and realize decent work, guided by the Millennium Development Goals of halving poverty and unemployment by 2015.

As a member of the ILO, South Africa had strongly advocated the decent work agenda, he continued.  Decent work went hand in hand with productivity growth -- the engine of economic growth -- that enabled working men and women to earn enough to lift themselves out of poverty.  The decent work agenda was guided by important strategic objectives, which included the rights to work, employment, social protection and social dialogue.  Attainment of those objectives would result in a more balanced and sustainable growth for the countries involved and betterment of the lives of the people.

South Africa’s labour legislation since 1994 had encompassed all the objectives outlined in that agenda, he said.  Following a review of the country’s labour laws, amendments to the Labour Relations and the Basic Conditions of Employment Acts had been introduced, making the laws more sensitive to job creation and addressing unintended consequences of the earlier legislation.  From 1999 to 2004, the Government had vastly improved the position of workers in the country, trying to balance security in the workplace with flexibility, to ensure that the overall performance of the economy in terms of job creation and investment was not negatively affected.

Sectoral determinations had been introduced to improve the position of vulnerable workers, covering workers in the private security sector, domestic workers, farm workers and workers in the wholesale and retail sectors.  A national programme of action was also being developed to address the challenges of child labour.  Good practices and technical assistance guidelines had been promulgated for the employment of people with disabilities and for the management of key aspects of HIV/AIDS in the workplace.  The country had not only introduced new legislation and institutions to protect workers’ rights and seek to empower them with skills, but also continued to promote social dialogue and create true consensus with all social partners.  In October 1998, a Presidential Jobs Summit Agreement had been launched to address the socio-economic challenges facing the country.  The constituencies in the National Economic Development and Labour Council had resolved to act in concert to create jobs, stable and fair industrial relations, respect for worker rights, and sustainable development.

In June 2003, the Growth and Development Summit Agreement had been launched, seeking to address the investment challenge, create more jobs and decent work for all, advance equity, develop skills, create opportunities, extend services, and promote local action.  He added that the Government had also launched the National Skills Development Strategy in an attempt to radically transform education and training.  Many young men and women had been trained, and some of them had been placed through the programme.

While the situation had improved, those initiatives had not made a drastic impact on poverty and unemployment, he continued.  To address that situation, the Government had launched an Accelerated and Shared Growth Initiative, whose main objective was to halve poverty and unemployment by 2014.  The project had identified the main constraints -- some of them also identified in the Secretary-General’s report -- including the shortage of skilled labour, lack of information and communication technology infrastructure, barriers to entry and limited investments.  To provide further impetus to the skills development strategy, a Joint Initiative for Priority Skills Acquisition had been launched, seeking to identify urgent skills needs and quick and effective solutions.

Realization of full employment and decent work would require a closer relationship between social and economic policies, he said.  That would require “a rethink of the macroeconomic stabilization targets, so that we create fiscal space to finance development, foster investment and employment growth.” Macroeconomic policies must take into consideration not only financial targets, but also their social impact.  For Governments and countries, it meant rethinking and refocusing their macroeconomic policies to ensure that they recognized employment creation as one of their core objectives and set targets for job creation.  That did not call for a new commitment from States.  During the Geneva special session of the Assembly, a commitment had been made “to ensure that macroeconomic policies reflect and fully integrate, inter alia, employment growth and poverty reduction goals”.  The session also recognized that countries would need to “reassess, as appropriate, their macroeconomic policies with the aim of greater employment generations and reduction in poverty levels, while striving for and maintaining low inflation rates”.

“We have not done well since these commitments -- the challenges still remain daunting,” he said, adding that a recommitment was needed.  The labour market policy framework should, in support of the macroeconomic framework, be able to facilitate the matching of supply of and demand for labour, in the face of the changing market trends and work restructuring.  He could not overemphasize the importance of full employment and decent work for all and was encouraged that the issues of employment and decent work were now being taken seriously by such institutions as the United Nations and ILO.  There were many other multilateral institutions, however, that still needed some convincing, and it was necessary to explore how to bring them on board.

Commenting on the keynote address, the representative of Germany (on behalf of the European Union) emphasized the importance of the information presented by Mr. Kettledas for future discussions on social development issues within the European Union, both at the regional and national levels.

Also stressing the relevance of questions raised, the representative of the Dominican Republic highlighted agricultural reforms and transfer of knowledge among the problems that needed to be addressed to generate opportunities for decent work.

Panel Discussion

Opening the discussion on the role of macroeconomic policies in employment generation, Mr. OCAMPO, who monitored the meeting, said that those policies related not only to fiscal and monetary policies and exchange rate management, but also influenced general conditions under which the economies functioned.  The economists were now deeply divided as to whether social goals should figure as an explicit objective of macroeconomic and central bank policies.  In the middle of the twentieth century, Keynesian economics had provided an alternative growth model from a social development perspective, recognizing that Government expenditure played a key role in generating employment.  That approach was no longer favoured.  However, countries needed to reconcile their macroeconomic policies with the social needs, including employment.

The first of this afternoon’s panellists, MARION WILLIAMS, Governor of the Central Bank of Barbados, said monetary policies in most countries tended to focus on price stability and inflation reduction, but monetary policy in developing countries had to do much more.  Global integration was inexorably taking place, with or without Government intervention.  Hence, domestic macroeconomic policy choices could not be independent.  With increasing financial liberalization, the number of monetary policy choices was narrowing, since direct intervention to influence credit and interest rates was increasingly frowned upon by international financial institutions.  Central banks could also encourage confidence in the economy.  Low, stable inflation rates stimulated growth in employment and protected the national income.  Also contributing to employment generation were their trade policies, exchange rate regimes and fiscal policy.

In the Caribbean, central banks saw their role vary widely, tending to adapt their policies to national development, she continued.  There were also regional arrangements between Governments, private sector and employers, trying to mitigate the impact of inflation and offset the competitive market forces to ensure that wages were realistic, allowing firms to hire more people.  Central bank policies could stimulate trade and attract capital through exchange rates, thus also favouring employment.  However, she advocated caution in that regard, citing the example of South-Eastern Asia, where the efforts to attract capital in a completely open environment had led to volatility and resulted in a financial crisis, increased unemployment and lower wages.  The countries of the Caribbean, like many developing countries, needed open markets.  However, that too could put pressure on the Governments’ ability to spend.  Therefore, countries needed to manage their external exposure.

Today, productivity improvements and increases in technology tended to have an adverse impact on employment, she said.  Economies had become more dependent on externally-determined technological changes and external sources of productivity enhancement.  The social effects were more strongly felt where growth in the labour force exceeded growth in demand for labour.  Developing countries needed to adapt to new technologies, using them for new business development.  Governments could increase public sector expenditures, where underutilized capacity was evident, or where there were opportunities to benefit from building infrastructural capacity.

She also addressed the nexus between growth rates and employment, saying that domestic policies must aim to maintain adequate rates of economic growth, investing in productive capacity, raising labour productivity and securing adequate demand for domestically-produced goods and services.  There could, however, be a conflict between increased employment and higher labour productivity, as a result of a reduced quantity of labour necessary to produce a given level of output.  The demand for domestically produced goods and services should be matched with productivity improvements and investments in productive capacity at home, or else the influx of imported goods would be an added foreign exchange cost.

Productivity improvements could generate greater opportunities, depending in part on the economic environment, she said.  When the environment was unfavourable, macroeconomic policy priorities needed to be modified, so that growth could generate new employment opportunities.  Output of goods and services needed to expand faster than productivity for employment to increase.  Also, in the absence of new policies to assist low-income families, one could expect increasing poverty in the countries experiencing slower growth and poor performance with regard to employment creation.  The type and composition of growth also mattered for employment.

Panellist MUSTAPHA NABLI, Chief Economist and Director, in the World Bank’s Social and Economic Development Group on the Middle East and North African Region, said that, although the countries in the region under his purview were heterogeneous, they had shared many development similarities until very recently.  Through the 1950s and 1960s, development models had been centrally planned with heavy State intervention, inward-oriented, with economic and social policies geared towards redistribution of equity.  That approach featured sweeping nationalization of industry, banking and trade, which resulted in a massive public enterprise sector and a diminished role for the private sector.

It also relied heavily on a social contract between the Governments and the people they represented, manifested largely in a variety of mechanisms to distribute oil or oil-related wealth to the population in exchange for a limited voice in decision-making.  And while that model had generated significant growth, he said it also had significant flaws, including the excessive dependence on oil as the engine of growth and employment throughout the region.

That was true for non-oil producing States, he added, noting that those States depended on oil revenues in the form of labour remittances of workers employed in the Gulf, foreign aid from the Gulf, and other capital flows form the region.  One of the main flaws of the model was that it created a high expectation among citizens for guaranteed jobs.  But when oil prices collapsed in the 1980s, the model derailed as oil and oil-related revenues plunged, and Governments unsuccessfully struggled to maintain the redistributive commitments, which led to worse macroeconomic balances, dramatic declines in consumption and investment and, for the first time, unemployment began to emerge as a serious problem.

As oil revenues evaporated and deficits rose, high unemployment eventually gripped the region, he said, stressing that, looking ahead, it was necessary to realize that his region, now in the midst of an oil boom, needed to learn from the past.  Among other things, it needed to demonstrate financial restraint, build substantial liquidity through external oil reserves, and pay down debt.  Oil exporters must also pursue common strategies for diversifying oil wealth into foreign assets.

JEAN-PAUL TRICART, Head of Unit for International Affairs in the Directorate-General for Employment, Social Affairs and Equal Opportunities in the European Commission, said that the international community faced a considerable challenge in fulfilling its employment and decent work for all commitments.  The 2005 Summit and the ECOSOC Ministerial Declaration had affirmed priorities in that respect, and the current session would help to keep the momentum.  Creation of decent work and full employment was crucial for poverty eradication and social development.  The European Commission intended to actively participate in those efforts, contributing to the promotion of decent work and calling for mobilization of all European Union policies and programmes, to better promote decent work both inside and outside the European Union.  All European institutions supported the Commission’s proposals.

Building on the European Union experience, he stressed that the objectives of economic competitiveness and social justice had to go hand in hand.  Committed to promoting prosperity and solidarity, the European Union had adopted a fundamental strategy -- known as the Lisbon Strategy -- whose motto was to promote growth and jobs.  The Union had adopted a policy framework aimed at achieving the goals of stability and sound public finances, while promoting the goals of employment and social cohesion.  In particular, the 2005 reform of the Stability and Growth Pact had given the Union surveillance framework for fiscal policy a broader perspective, so that economic and budgetary policies could set the right priorities for economic reforms, innovation, competitiveness, strengthening of private investments and consumption in phases of weak growth.

Improved governance of the budgetary surveillance process was part of the Union’s efforts towards achieving the Lisbon Strategy objectives, he said.  The European Employment Strategy proposed an adequate policy mix, taking into account different starting positions in countries and regions.  It also stressed investing in skills and human resources development and encouraged a life-cycle approach to work.  It also insisted on improving the opportunities for all, in particular people at risk of discrimination and social exclusion.

The European Union and its Member States were increasingly discussing how to better combine flexibility and security in the labour market, he continued.  Social protection, if well designed, could increase performance of the economy, as well as mobility of labour.  It also played a major role in combating poverty.  It was, therefore, important to improve the coverage of social protection as over half of the world population had no social protection at all.  Another important element related to social dialogue, which helped to reach consensus on reforms, which aimed at improving the labour market, while preserving protection for workers.

Turning to the ILO decent-work agenda, he stressed the importance of decent work in an open trade regime, saying that it was incorporated in the European Union trade policy.  The Union also sought to strengthen the contribution of its development policy and external aid to employment, social cohesion, better governance and decent work, and to reinforce the cooperation and policy dialogue with regional and international organizations.  That also applied to the coordination of the programming of the external assistance of the Union.  Promotion of decent work also required efforts to address the informal sector to improve the working and living conditions there.  The Commission was stepping up its efforts to improve the measurement of undeclared work, identify its causes and encourage mutual learning across Member States.  The success of the decent-work agenda rested on its appropriation by countries and regions concerned.  Therefore, the European Commission supported national decent-work programmes or equivalent road maps.

Mr. OCAMPO summed up the experts’ presentations noting some common themes, including that social protection and social dialogue could have positive impacts on employment, the importance of allowing room for cyclical monetary policies to counter financial swings, the need for coherent financial and macroeconomic policies with employment generation as a key aim, and the realization that the structural conditions of economies did have an impact on employment.

When Member States took the floor, questions were raised concerning, among others, on the expanding role of central banks within developing countries; whether widespread youth unemployment in some regions was exacerbating “brain drain” in those areas; fears that the technology boom would lead to the eradication of certain jobs particularly in the service sector; and the need to stop the downward spiral of decent work standards in a climate of increasing competition.

Several speakers, who focused on their national experiences in the area of employment generation, raised issues related to education, gender equality, the need for reinforcing social protection and economic policies towards employment generation.  On the matter of new information and communication technologies, one speaker stressed that the issue was not just about “losing jobs” but about how to prepare labour forces to deal with the new jobs that information technology was creating.

On the role of central banks in the Caribbean region, Ms. WILLIAMS said that some participation was in the area of facilitation.  By example, she said such banks would launch initiatives and schemes but not “own” them or derive any benefit from them.  On the query that “robots” would soon be taking over the jobs of nurses and other service workers, she said she hoped that technological advances would lead to leaps in training.  That was to say that, as more computers went online, more analysts and operators would be trained to run them.  So, following the speaker’s example, while there might eventually be fewer nurses, there would hopefully be more jobs-created fields to support the new technology.

Also responding to questions on the speed of privatization and its affects on employment, Mr. NABLI said that the critical issue was building investment and ensuring the growth of the private sector that actually produced jobs.  To another question, he stressed the need to ensure that policies should allow exchange rates to be adjusted to counter trade shocks.  If that was not the case, countries would find such shocks difficult to manage.

He went on to note that the labour force in the North African and Middle Eastern region was currently the largest in the world, so creating jobs to satisfy the demand was a huge challenge and was a major focus for the World Bank.  He said jobs needed to be created by the private sector because regional Governments could not now create productive jobs, nor did Governments have the fiscal space to create huge numbers of jobs.  The Gulf countries must also diversify their economies into areas beyond oil.  All that hung on putting in place education and training policies that adequately provided the workforce with knowledge to handle the new jobs if and when they were created.

Mr. TRICART said that sound employment policies could be considered a social investment.  They also served as an important factor in enhancing economic performance.  The Lisbon Strategy had been successful in improving policy coherence among various players, promoting national programmes covering both social and macroeconomic policies in an integrated decision-making framework.  Social dialogue was a key dimension in that regard, as well.  It was also essential for improving countries’ adaptability and identifying areas for future cooperation.

Several speakers agreed that sound macroeconomic policies, accompanied by a balanced national development agenda, could create conditions for economic growth and social development.  Policies should promote an enabling economic environment, including good governance, appropriate regulatory frameworks, and an adequate infrastructure.  It was pointed out that, in formulating policies, specific conditions of a particular country should be taken into account.  It was also important to combat corruption and promote transparency.  Several participants in the debate also said that elimination of poverty was essential for promoting a favourable economic environment.

A representative of an international trade union confederation stressed the need to assess the social impact of policy interventions to improve the fiscal environment.  For example, many of the World Bank privatization projects had led to displacement of workers, and adequate social transition measures were needed, including social protection and compensation for workers.  The employment and social impacts of transition should avoid displacing large numbers of workers.

It was also important to address the issues of developing countries’ foreign debt and eliminating agricultural subsidies in developed countries, a speaker said.  Solidarity among countries was needed towards that end.  Also addressed in the debate were the issues of human development, measures to address the negative impact of development on the environment, import controls and measures to attract investment.

A speaker emphasized the need to create an environment conducive to creation of jobs in the private sector.  Among other issues, a question was also raised as to how developing countries could stand up to large transnational corporations, which pursued macroeconomic policies from the position of obtaining maximum profits, taking advantage of cheap labour in developing countries.

Responding to questions, Ms. WILLIAMS agreed that, in an increasingly globalized environment many employment problems could not be addressed solely at the national level; indeed, international decision-makers must become more actively involved.  She also applauded the example given by the representative of India, which had some years ago identified a coming job growth upsurge in the technological fields, had recently identified another upswing in job opportunities in the pharmaceutical field, and had created policies that would promote education and training in those areas so that the population would be ready to take advantage of those opportunities when they arose.

Mr. NABLI said the issue of sequencing of policy interventions was very important.  Overall, the first thing was to create the proper macroeconomic environment; then Governments could address other issues.  Mr. TRICART said both the European Union and the Organisation for Economic Cooperation and Development (OECD) now backed social protection as an important part of a coherent employment policy package.  He stressed that such coherence and mutual reinforcement of policies and programmes was needed in order to ensure full employment and decent work for all.

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*     The 1^st Meeting was covered in Press Release SOC/4702 of 22 March 2006.

For information media • not an official record