Higher social standards could drive economic recovery

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Social measures such as fair pay for workers and financial support for the unemployed are helping to protect jobs and underpin economic recovery worldwide, experts claimed at an international conference in Brussels yesterday (11 October).

Rather than harming competitiveness, high social standards could be making a positive contribution to growth.

Measures such as fair pay for workers and financial support for the unemployed should therefore be seen as vital conditions for economic recovery in both advanced and emerging economies.

This was the main thrust of the message that was delivered by Raymond Torres of the International Labour Organisation (ILO) at the conference in the Belgian capital yesterday.

Torres, director of the International Institute for Labour Studies at the ILO headquarters in Geneva, was invited to give the keynote address at the International Forum on Decent Work, organised by the Belgian Presidency of the European Union.

He told delegates that the 'Decent Work Agenda' promoted by the ILO is providing valuable guidance to national governments around the world as they develop their social policies.

Both developed and developing countries are looking for ways to stimulate growth and provide decent jobs for their populations in the context of a challenging global economic climate.

Policies saved or created 20 million jobs

By implementing policies consistent with the 'Decent Work Agenda' and the 'Global Jobs Pact' that was agreed at the International Labour Conference in Geneva in June 2009, countries have been able to avoid ''an even worse jobs crisis,'' said Torres, who claimed that around 20 million jobs have been saved or created as a result of such policies.

To give a concrete example, Torres pointed to job maintenance policies such as reduced working hours in factories faced with lower demand, which have helped to limit job losses in several countries including Germany, the Netherlands, Argentina and Mexico.

Many countries are providing financial support and skills training for the unemployed, as a way to mitigate social hardship while also keeping people in touch with the labour market.

Brazil has increased minimum wages by 5% and strengthened its social protection systems. Meanwhile, India has extended the availability of financial support to unemployed workers.

China is often mentioned as an example of an economy where fast growth has been achieved on the basis of low wages and weak workers' rights. However, Torres reported that the People's Republic has expanded its social protection systems in recent years. A new employment contract law has been in force since 2008, and this has been instrumental in helping to avoid any decline in wages or working conditions.

Domestic demand is key to growth

According to ILO economists, paying fair wages to workers and giving financial support to the poorest members of society are necessary for maintaining strong levels of demand, because people can then afford to buy everyday essentials such as food, clothes and housing.

Torres explained that emerging economies can stimulate demand and ensure more sustainable growth by providing ''well-designed social protection'' and making sure that that ''wages grow in line with productivity''.

Strong domestic demand is crucial for achieving balanced growth that is less dependent on exports, explained Torres.

In the aftermath of the economic crisis, emerging economies cannot just rely on income from exports to traditional net-importers such as the USA and some European countries, where public spending cuts and other fiscal austerity measures are likely to result in decreased levels of consumer demand in the next few years.

Joëlle Milquet, Belgian vice-prime minister and minister of employment and equal opportunities said that the Belgian Presidency of the EU is committed to promoting the external dimension of the Union's employment and social policies, and strengthening the implementation of the ITO's Decent Work Agenda.

She considers that global socio-economic governance is ''indispensable'' and ''strategies for sustainable long-term growth must integrate employment as well as the social dimension''. Following the first ever meeting of G20 employment ministers (in Washington, DC on 20-21 April 2010), Milquet believes that such meetings should take place on a regular basis.

László Andor, the EU commissioner for employment, social affairs and inclusion, also addressed the conference in Brussels on 11 October. He told delegates: ''We need to make sure that an economic recovery goes hand in hand with a recovery in employment. And we need to make sure that employment and social issues – including job quality, skills development and poverty reduction – remain at the heart of national and global economic strategies to ensure strong, sustainable and balanced growth."

Andor noted that the ongoing financial and economic crisis "has shown that now, more than ever, we need integrated and coherent policy approaches to address the complex economic and social challenges we face". The European Commission considers that international organisations such as the OECD, the ILO, the World Bank and the WTO all "have a key role to play in focussing multilateral crisis efforts on strategic initiatives".

"We need to make sure that fiscal consolidation is both growth-friendly and employment-friendly" said Commissioner Andor. "Achieving this delicate balance is one of the EU's main challenges. We face the difficult task of preventing structural unemployment against a background of fiscal austerity measures that are necessary for maintaining macro-economic stability."

Decent work is a term that was coined by the International Labour Organisation (ILO) in a June 1999 report.

Decent work is founded on four pillars which require an integrated approach: productive and freely chosen employment, rights at work including the core labour standards, social protection and social dialogue.

The Commission's 'decent work' Communication of 24 May 2006 is in line with core labour standards defined by the ILO. The aims include supporting the right to join a trade union, the freedom to collective bargaining, the fight against forced labour, child labour and modern forms of slavery.

In December 2006, the Council approved Commission proposals aimed at reinforcing welfare protection, equal opportunities and social dialogue at home and abroad (EURACTIV 04/12/06).

In July 2008, the Commission published a report on the EU's contribution to the promotion of decent work in the world.

 

  • Dec. 2010: 3rd ASEM (Asia-Europe Meeting) Labour and Employment Ministers' Conference (Leiden, The Netherlands).
  • June 2011: International Labour Conference (100th session in Geneva, Switzerland).

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