ILO Global Employment Trends 2012 Global unemployment estimated at 200 m + 27 m since the crisis started 400 m new jobs would be needed on top of those 200 m to provide productive jobs for all = 600 m jobs missing 900 m workers below the US$ 2 a day poverty line

I LO Global Employment Trends 2012 Unemployment predicted to rise to 206/209 m 2016 Global unemployment rate 6% 29 m fewer people working in 2011 than expected In OECD countries if we add to unemployed those who have stopped seeking employment we go from 8.5 to 9.6%

Young workers (15-24) 2011 – 74.8 m unemployed (+ 4 m since 2007) Unemployment for young people 3 times higher than adults 6,4% young people given up the hope to find a job (number of those who withdraw from labour market in constant rising) Youth disproportionally high among working poor

ILO Global Employment Trends 2012 Employment-to-population ratio declined sharply during crisis: from 61,2% (2007) to 60,2% in 2010 (the largest since data have been collected from 1991) 900 m working poor Extreme poverty: 456 m below the US$ 1,25 a day. This is the only data where improvement was found until 2008 due to East Asia/China growth (reduction of 158 m since 2000), but slowdown since m working poor than expected pre-crisis + 55 m workers and fam. below US$ 2 a day than expect

Implications of ‘neo-liberal’ policies Shift from development cooperation to free trade - Open markets for trade, investment & capital flows: one decision maker = Capital; More competition between Unequals - High income countries have more than 80% of the world incomes, receive more than 3/4 th of the foreign investment and 3/4 th of the world trade is between them. But also within countries: 99% vs. 1 % (USA) Equality of “access” equality of “opportunity” unequal capabilities  unequal outcomes Withdrawal of ‘State’ from its economic & regulatory role; (markets Know the best, will self regulate )

Consequences for the world of work Labour flexibility & changing nature of employment relationships – precarious work for youth & women Implications of flexibilization for workers rights (right to organize, union formation, collective bargaining, social security, skills acquisition, wages, safe work, labour laws) _________________ Redistribution of income towards the rich (privatization, tax policies) – on the theory that rich invest, will promote growth led to Growth yes but widening inequalities - decline in labour’s share of GDP

Population & Wealth Shares by Region (2000) the richest 10% own 85% of the global assets (2000). 50% of the world population owns less than 1% of the global assets. Source: UNU-WIDER

Global Economic Crisis: few lessons for developing countries Over dependence on exports & western markets For economic & social stability - countries also need domestic markets – how to develop & expand domestic & regional markets? Reduce widening inequalities: need for wages & incomes policy in the country to ensure equitable sharing in growth/productivity Labour standards & development: role of right to organize, collective bargaining & social security

Main causes of the crisis Financialisation of the economy which has made investments in productive capacities unattractive, which has made the real economy vulnerable to shocks in the financial markets and which has made the real economy pay for the financial market distress Strong focus on an export-led growth as opposed to growth of domestic markets, which has led to vulnerabilities (including dependence on a few products or a few markets) Growing income inequality which has impacted aggregate demand, growth and sustainability of growth The lack of quality of growth, caused by a lack of attention for industrialization, higher value added production and the need to create vibrant and diversified domestic production and demand 9

ILO responses to the crisis the Global Jobs Pact, based on an integrated approach across the four decent work pillars: Employment and social protection measures, underpinned by International Labour Standards and based on social dialogue 10

Decent Work to be achieved thru actions on 4 pillars productive employment & sustainable enterprises Standards & basic rights at work social protection/ social security for all Promotion of Social dialogue, Collective bargaining key + Gender and non-discrimination as cross- cutting issues

So, what is Decent Work? Work that is productive, gives fair income, security in the workplace & social protection for the family, equal opportunities & treatment, better prospects for - personal devt & social integration, freedom to organize & participate in decision making concept of decent work encompasses both concept of decent work encompasses both individual and collective dimensions (C 87 & 98)

GJP Employment creation : Measures to maintain jobs and avoid dismissals such as shorter work hours (worksharing) and work/training initiatives Boost demand and maintain wage levels Macro-economic policies that stimulate productive investment and aggregate demand through fiscal and monetary policies Investment in infrastructure, promote green production and industrial policies for the creation of productive employment across sectors Promotion of public investment and employment schemes 13

GJP Social protection : Social protection softens downturns because it reduces the negative effects of a recession on aggregate demand Social protection floors especially in developing countries Horizontal and vertical extension of social security Extending duration and coverage of uneployment benefits Adequate coverage for temporary and non-regular workers Minimum benefit guarantees and cash transfers Avoid deflationary wage spirals Minimum wages (statutory or through collective bargaining) 14

GJP International Labour Standards: Basis for decent work: respect for fundamental principles and rights at work; Enabling rights: Freedom of Association and Collective Bargaining Standards are relevant in times of crisis: Employment policy; wages, social security; the employment relationship; termination of employment; labour administration and inspection; migrant workers; labour conditions in public contracts; occupational safety and health; working hours; social dialogue mechanisms Promotion of the ILO MNE Declaration 15

GJP Social dialogue : Establish and use social dialogue mechanisms especially in times of crisis at all levels Consultations on economic and social policies Promote (extension of) collective bargaining Strengthen labour administration and labour inspection 16

GJP All four areas are interrelated and should be jointly implemented In addition, root causes to the crisis need to be addressed to prevent another crisis or prolonged recession In particular addressing growing inequality, pushing back precarious work, regulating the financial sector, stimulating domestic markets and innovation and shifting to a low carbon economy 17

What is needed? A Workers’ view Stimulate aggregate demand: Public investments in infrastructure, education, services and productive capacities which creates demand and jobs Fiscal policy to stimulate demand and investment (progressive taxation, financial transaction tax)) Monetary policy to stimulate demand (low interest rates) Social protection floors Promote collective bargaining and extension of collective bargaining 18

What is needed? Regulate the financial sector: Regulate/prohibit/eliminate risky investment and systemic risks Tax financial transactions: promotion of financial transactions tax (FTT) Limits on bonuses Change incentives system in finance Capital controls to avoid impacts on vulnerable economies 19

What is needed? Restore workers’ rights and workers’ power: Promote organising Promote collective bargaining and extension of collective bargaining Promote secure employment Reduce precarious and triangular employment relationships 20

What is needed? Rebalancing of international trade: Promote domestic markets and demand especially in big exporters Promote local production in big importers 21

What is needed? Investment in productive capacities: New role for the state to stimulate investment and production Develop industrial policies with horizontal and vertical approaches Promote innovation and green economies as part of industrial policies 22

What is industrial policy? A range of policies aimed at inducing structural change/industrial development. These are necessary for take-off and long term growth, and include: Policies affecting « infant industry » support of various kinds Trade policies Science and technology policies Public procurement Policies affecting foreign direct investments Intellectual property rights The allocation of financial resources

What are some of the successful elements of industrial policy? The role of the state is key in driving the industrialization process Focus on high quality activities (increasing returns) characterized by dynamic imperfect competition and not on low quality activities characterized by perfect competition Risks have to be taken to be successful The need for investments in education and innovation (public research centers) Selective-targeted policies need to have some sort of control mechanism (such as export targets, local content requirements)

What are some of the successful elements of industrial policy? Experimentation and innovation are essential Comparative advantages can be created Access to cheap (domestic) finance for infant industries National ownership of the industrialization strategy is important Trade liberalization can lead to deindustrialization Tariff policy is not the only industrial policy instrument but can be a determining one when it comes to protecting a sector or industry 25

Some experiences Peru: “the inefficient industrial sector in Peru nonetheless created a wage level that was about twice as high as what today’s globalized economy is able to deliver in Peru”. Mongolia:“Half a century of industry building in Mongolia was virtually annihilated over a period of only 4 years, from since the country had opened up to the rest of the world, almost overnight, in 1991.” Mexico: “Mexican real wages dropped drastically as the NAFTA agreement slowly decimated traditional “complete industries” while increasing the simple assembly (maquila) activities. The increasing return industries died out in order to give birth to constant return activities, thus primitivizing the national production system.” 26

Work should lift you out of poverty, Not keep you there what changes are needed in development & labour policies for promoting decent work?

ILO/IILS research Warnings: Labour market deregulation leads to more redundancies without supporting job creation Weakening of collective bargaining is likely to provoke a downward spiral of wages thus prolonging recession Job instability: human tragedy and waste of productive capacity Investment deficit: high un-invested cash amounts and more volatile investment which has increased precarious jobs Social unrest index increased in 57 out of 106 countries especially in Europe, Middle East, North Africa and Sub-Saharan Africa No clear link between labour market reforms and employment levels Actually, adequate employment regulations tend to be positively associated with employment within the range where the majority of countries lie 28

ILO/IILS Research Alternative approach: Socially responsible approach to fiscal consolidation is needed Strengthen labour market institutions so that wages grow in line with productivity Increase minimum wages Implement core labour standards Access to credit for enterprises plus possibly lower taxation for firms that emphasize investment and job creation 29

ILO/IILS research Social observatory to forecast employment trends and calculate employment impacts of proposed policies Global governance to be improved to provide stable level of global demand Boost investment and jobs (activation policies for youth, social dialogue for consensus and confidence building) Strong well-designed labour market institutions:collective bargaining; well designed employment protection; training 30

Lessons from the ‘crisis’ for economic & social stability at home - countries need development & expansion of domestic & regional markets/domestic consumption - how to do this? Wages - main source of domestic consumption - but wages lagging behind productivity & wage share in GDP declining - plus no social protection for the majority  need for wage policy & social protection floor aimed at reducing inequalities, keeping wages in line with productivity, to increase disposable incomes, avoid debt financed consumption & promote sustainable growth

Wages & labour Standards led growth Are labour standards only a question of ‘rights’ of workers? What role does Wage policy, FoA, CB & Social Security/social protection play in economic development?

Business is our business! Reclaiming democratic and transparent decision making and rules: -Financial markets: stop to the shareholders mantra, regulation, FTT, redistribution including for public sector needs -- Multinationals: regulation, CBAs and GFAs, value chains for development (ex. EPZ, Zara)= ILO MNE Declaration -Markets need to be socially embedded (national and local communities, workers, indigenous people)

Some issues to reflect upon Has the global economic crisis affected employment & wage developments in your country? Any examples? How has government responded? Is there a system of minimum wages in your country? What are the factors taken into account while setting it? List out the main problems you see in the Employers behavior in regard to collective bargaining with the union? What are the ‘means’ available to unions to enforce workers rights? What are the factors that prevent unions from playing more effective role in dispute resolution & collective bargaining? (focus on drawbacks in law, capacity of unions, role of authorities) – give specific examples Which is the government response to TU claims? Which alliances your union is making for progress in workers’ rights? Data on your country: 1) Minimum wage 2) Wage share in GDP – trends, 3) median wages in your country