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.