Moscow

Keynote address by ILO Director-General Guy Ryder to the Plenary session of the International Conference on Decent Work

Statement | Moscow | 11 December 2012

I said in my opening remarks that President Putin had honoured the ILO by addressing our 100th International Labour Conference in 2011 and it was on that occasion that he extended his invitation to come to Russia to an international conference on Decent Work – and here we are today.

Your presence is testimony to the scale of the challenges before us and equally to what I believe must be a shared determination to stay true to the Decent Work agenda even, or especially, in this time of crisis. We need of course to create jobs – urgently and in large numbers – but they must be decent jobs.

This Conference gives us a chance to move forward together when there are so many signs in the world of work that we are simply standing still or maybe even going backwards. We need to read those warning signs.

For, as President Putin told the ILC, “In the twenty-first century, human labour cannot be regarded as just some impersonal cog in the production process, a faceless tool for achieving economic indicators.

I would go so far as to say that modern societies and economies will not develop normally and sustainably if human capital is not made the top priority, if we fail to create the conditions that will allow us to tap the creative potential of every individual.” That warning is particularly relevant to the circumstances in the world of work today.

Four years into the crisis which originated in the world of finance, it is the world of work which offers the most telling evidence of the damage done and the best measure of the tasks before us.

You know that global unemployment is still over 30 million higher than before the crisis and nearly 40 million people have dropped out of the labour force. 75 million young people are unemployed, which is 12 per cent of the world’s youth. Many enterprises are struggling, unable even to get access to the day-to-day credit that would normally provide them a lifeline.

Perhaps the most disturbing element as we meet here in Moscow is that there are really few signs of improvement in this situation and many indicators that things will get worse before they get better.

Just think of this. Since President Putin made his speech in Geneva 18 months ago we have not seen anything like progress or recovery. Can we afford another 18 months like that?

With global slowdown continuing and Europe still struggling with its deep debt and monetary problems, the prospects for jobs are not good unless there is a significant change in direction.

You have come from each of the regions of the world and you know that this crisis, while global, is having very uneven impacts.

Many developing and emerging countries including Russia have been able to maintain growth in differing degrees, and some of it substantial, even as the old industrialized world has continued to struggle to pull itself out of recession. Underlying the continuing effects of the financial crisis is continuing change of the global economy. The transformational process of globalization has not stood still as the crisis has unfolded.

Sometime very soon, maybe next year, the economic weight of the old advanced countries will become less than that of the newly emerging and developing world.

This combination of crisis and transformation has political, social and economic consequences. They can be seen particularly clearly, for example, in the behaviour of wages around the world. Let me take a second to talk about wages.

Globally real wages grew in 2011 although more slowly than before. But the real story lies in the differences that exist between the regions. The ILO’s figures show that in the developed world, real wages fell 0.5% last year while they continued to grow in Asia and in Latin America.

Looked at in the longer perspective, since 2000 developed country real wages have really only grown very slowly, at a cumulative total of 5 per cent compared to a global average of 23 percent. In Asia, meanwhile they have doubled and in China they have trebled.

Underpinning all of this is the long term shift of income from labour to capital. The labour share in national income has fallen from around 75 per cent in the late 1970s in developed countries to 65 per cent today and from 62 to 58 per cent in developing countries.

The fact is that wages are not keeping pace with productivity. The two have become de-linked. And this reality is contributing to major imbalances in the global economy, in countries and between them. It is also contributing to unacceptable inequality that we will need to address as we search for roads out of the crisis.

Dear Friends,

As Russia assumes the Presidency of the G20, there can be no more pressing priority than returning the global economy to a path of job rich growth. In fact that need has been recognized for at least the last three years but the international community has still to find a way of realizing it. As early as the G20 London Summit of April 2009, G20 Leaders pledged “unshakeable commitment to work together to restore growth and jobs.” And two months after that the International Labour Conference set out a blueprint for tripartite action for jobs in its Global Jobs Pact.

But looked at from today’s perspective the reality is that we have not made the progress that we wanted. So I really hope that this conference will tackle the key question of what we must do to get the world back to work. We cannot delay longer.

For these reasons I am very pleased that Russia has indicated its intention to place jobs and growth as a priority of its G20 Presidency. Moreover, at a time when financial stability and employment creation sometimes seem to stand in opposition to each other,particularly for some countries facing acute debt problems, it is very encouraging that Russia is making the all-important link between the financial sector and the real economy that it is supposed to serve.

Indeed it is worth underlining too that Russia itself has weathered the crisis with considerable success. Unemployment here, standing at 5.2 per cent, is below its pre-crisis levels. Growth remains strong and the financial situation appears satisfactory. All of this places the country in a good position to take up the tasks arising from WTO accession.

When President Putin addressed our conference last year he spoke of the need to modernize one job out of every three in Russia. Subsequently he has set the target of creating 25 million jobs in the country by 2020. This is a far reaching and ambitious vision for Decent Work in Russia. I hope that the renewed cooperation agreement that I will be signing later today with Minister Topilin and the Russian social partners will assist in its realization. And I would add too that the strength of social partnership in Russia today provides a powerful instrument to bring successful results.

At the international level the time has come to give concrete content to the longstanding ambition of achieving sustainable job-rich growth. The experience of the crisis shows very clearly that international cooperation has to have a central role.

If all countries seek to gain competitiveness by squeezing labour costs to export their way out of problems, nobody can benefit and all will end up worse off.

It is a matter of pure economic logic, there are no exporters without importers. Logic too that “competitiveness” is a relative concept. Competitive with respect to whom or to what?

The challenge facing the G20 is to build a programme of action for growth and for jobs to which each country is committed because it meets a domestic priority and which also contributes to collective international action that sets off a virtuous circle of recovery.
The challenge facing the G20 is to build a programme of action for growth and for jobs to which each country is committed because it meets a domestic priority and which also contributes to collective international action that sets off a virtuous circle of recovery.

That means that the onus for action is on surplus as much as it is on deficit countries.

As I highlighted earlier, the ILO has consistently argued that precisely because employment is such a central issue in all countries it is the natural organizing focus, the pole around international policy coordination can take place. It is the political priority of our time. I see a number of practical ways in which countries could act to boost jobs and set a course to make growth stronger, more sustainable and balanced.

I recognise that we have to be very realistic. These are immensely difficult and complex global economic times. They will require a level of international cooperation that exceeds anything the community of nations has yet achieved but which we caught a glimpse of in the early days of the crisis as the G20 came together to stave off global financial meltdown.

The advanced countries where the crisis began face a long road back from the mountains of debt built up during the bubble boom that burst in 2008. History tells us that recovering fully from a financial crash on the scale that we have experienced takes years and requires above all a fair sharing of the burden of the costs. There are some areas where individually and collectively countries can make a start now.

I see four policy priorities which can maximise the job content of recovery and could attract widespread support in many member states:
  • Supporting infrastructure as a source of jobs and future productive potential;
  • Promoting the start-up and growth of sustainable enterprises and particularly small and medium sized companies, and particularly through access to much needed banking credit;
  • Extending social protection, the economic as well as the social logic of which was confirmed when our Conference adopted an instrument on global social protection floors this year;
  • Finally, tackling now the all-important task of providing job opportunities for youth. The spectre which is today haunting Europe and the world’s labour markets is that of a lost generation of young people. So let me record my support for the youth employment initiative announced by the European Commission last week, which includes a guarantee of work, education or training for young people out of work for four months. It needs funding, it needs implementing and I trust it will be.
These areas for action correspond very closely to the areas of critical importance which I have put forward as a focus for ILO work in the future. I intend to develop further in the detailed proposals to the ILO’s Governing Body next March.

Change and reform in our organization the ILO will equip it to be a more effective partner of all of its member states, for all of you. The ILO’s role requires its own work to be of the highest quality, relevant and useful to you, our member states, in tackling these challenges. My colleagues and I are working hard so that the ILO is the partner and crisis-beating instrument that you want and need it to be.

Together, here in Moscow we can send out very important messages.

That whatever the difficulties the ILO stays firm in its commitment to social justice and to decent work. Because it is precisely these values, unchanging, which show us the way out of this crisis as they have out of past crises. That good jobs with proper social protection for all remain our permanent objective.

That social dialogue will be reinforced not rejected and that fundamental rights at work will not be renounced but will be respected.

Let us not miss our opportunity. Let us be equal to our responsibilities and let us stand firm by the values of our organization, the ILO.

I wish you a successful Conference.