Addressing the Employment Aftermath: an ILO approach Stephen Pursey Director, Policy Integration and Statistics Department, ILO

Crisis Scenarios for Unemployment In January ILO offered three scenarios for unemployment and working poverty between 2007 and end The worst case at that time, based on IMF forecasts of global growth of 2.2%, was for a rise of around 50 million. ILO worst case was based on projections of what would happen if worst impact on unemployment of recent past repeated simultaneously in all developed economies and half worst impact in other regions. The impact on working poverty is perhaps better indicator of overall labour market under performance in developing and emerging economies. Now heading for worse than our previous worst case with global growth forecast at minus 1.3% for 2009.

Working Poverty Scenarios Middle case scenario for working poverty for 2008 was that those 5% above poverty line would fall below and in 2009 those 10% above would fall below. The worst case assumption was 10% in 2008 and 20% in The numbers falling in two scenarios below $1.25 would be 93 and 203 million. And below $2, 77 million and 176 million. Working poverty is adults unable to earn enough to keep themselves and family above per capita poverty lines.

Growth and (Un)employment In four years from when global growth was around 5% per year world unemployment rate declined from 6.3% to 5.7%. Working poverty declined from around 30% at $1.25 and 50% at $2 levels to nearly 20% and 40% respectively. Since world labour force grows by about 45 million per year it seems we need a global growth rate of around 4% or more to hold unemployment and reduce working poverty.

Prospects for Recovery in Employment Every year below 3-4% growth will add to unemployment and most likely working poverty. Prospects for 2010 and beyond are for a weak recovery heavily dependent on financial normalization. Rogoff and Reinhart found that employment can take 5 years to get back to previous levels after financial crises.

Two Challenges Containing the damage to individuals, families and society. Accelerating the recovery of the labour market – getting a faster pick up and/or a more jobs intensive recovery.

Can we dramatically expand the coverage of social protection? Preventing a rise in severe poverty during a deep and possibly long period of labour market slack implies stepping up programmes that get a basic income to families in need. Minimum old age and disability pensions and cash transfers to families with children seem to have the biggest poverty impact with the lowest transactions costs.

What employment policies could make recovery more job rich? Employment Intensive Infrastructure Investment – roads, flood protection, water conservation, renewable energy sources, waste management, low cost housing, sanitation, etc Micro, small and medium-sized enterprise support Skills development Youth employment schemes Improved public employment services

Rights and Dialogue If jobs crisis is long and deep, processes of policy formulation and implementation may be as important as the policies themselves Anger and tension is likely to mount, not without justification. Respect for basic rights and mechanisms of dialogue need to be strengthened to help find constructive solutions to problems

A globally inclusive recovery Weaker countries will find it difficult to mount social protection and jobs initiatives needed But richer countries have their problems too How do we get commitment to international resource transfers for social protection and jobs? International cooperation for jobs is preferable to protectionism but may be harder to organize

An ILO Global Jobs Pact ILO Governing Body has started discussion of a decent work crisis response approach – a global jobs pact – to be developed at June global conference. It would be based on the ILO’s main policy tools and constitute its contribution to national decision- making and international crisis policy coordination. Aims to increase international cooperation mechanisms to ensure that vulnerable countries have resources to take counter cyclical measures. E.g through maintenance and enlargement of aid flows.