G20 employment policy experts meeting examines the consistency between economic and labour market policies

In view of the upcoming ministerial meetings, labour experts met on 7 April in Paris to address labour market and policy coherence challenges in the G20 countries.

News | 15 April 2011

The Organisation for Economic Co-operation and Development (OECD) and the International Labour Organization (ILO) contributed a statistical overview of labour market challenges, which are substantial in all G20 countries. While some of these challenges have arisen during the crisis and recovery, others, already rooted in the pre-crisis period, reflect longer-term structural issues that require further policy action.

While well underway, growth varies significantly across and within the G-20 countries. The intensity of the global downturn – as measured by the change in peak-to-trough real GDP levels during 2008/9 – was severe in many G-20 countries with sharp declines in output. China, India and Indonesia avoided drops in output but nevertheless experienced a major slow-down in GDP growth. The economic recovery, which started in the mid to late 2009 in most countries was rather modest in many advanced economies, while more vigorous in the emerging G-20 economies, with the exceptions of the Russian Federation and South Africa. In particular, Argentina, Brazil, India, Indonesia all experienced a cumulated pick-up in GDP around 10 per cent or more from the trough, while the pickup in China and Turkey was 22% and 16%, respectively.

Among the challenges and priorities ahead, experts agreed that youth employment, weak overall employment growth and policy coherence need to be addressed with urgency. Philippe Egger of the ILO presented policy options.

Youth employment

Youth, as they face both cyclical and structural joblessness reaching a record high of over 81 million unemployed at the end of 2009, is a common challenge among G20 members. Youth are over-represented among workers in temporary contracts and precarious employment. The problem is particularly acute in high income countries where it is imperative to prevent the emergence of a ‘lost generation’ of youth whose employment prospects have deteriorated considerably in the wake of the global crisis.

Income support to the unemployed, tied with job-placement activities and training programmes would prevent young workers from exiting the labour market, while supporting and securing active job search. Apprenticeships and labour contracts – without solving the job quantity and quality required – could be also used as incentives to promote job-to-job transitions, improve job quality and security.

Labour market participation

The crisis has demonstrated that macroeconomic policies can have a large impact on employment, especially if mismatched or deployed as an exclusive solution. Long-term unemployment, persistent informal employment and a disparity between skills and jobs in many sectors are just few of the obstacles to reaching full and productive employment.

Some countries have already shifted toward active labour market policies, integrating them to national contexts. South Africa, for example in its recently unveiled New Growth Path, puts the creation of decent work at the centre of its economic policies.

Skills development, wages and social protection policies, advocated by ILO’s Global Jobs Pact, have also proven efficient in developing sustainable growth models. But market and social policies alone are insufficient to increase productive employment creation, a prerequisite for improving the overall quality of employment and achieving decent work for all. A more comprehensive policy approach is needed.

Policy coherence

Global leaders have repeatedly agreed in the past two years on the importance of building an employment-oriented framework to secure future economic growth. This can only be achieved through greater policy coherence among and within countries and international institutions.

Active labour market and innovative policies, no matter how well-designed, cannot solve alone current challenges, such as inflation targeting or ensuring fiscal balance. They should be considered in the broader perspective of long-term macroeconomic and employment strategies. A shift towards domestic demand, as a source of growth especially in developing countries, could also be opening new ways of making development strategy more supportive of a higher rate of employment creation.

The backbone of the “Framework for Strong, Sustainable, and Balanced Growth” launched by the G20 leaders in 2009 in Pittsburgh is the Mutual Assessment Process, through which G-20 countries identify objectives for the global economy and the policies needed to reach them. Its new approach of collective policy action could help create most needed jobs and increase sustainable growth.

Experts in Paris agreed that international institutions should draw on ILO labour standards and Global Jobs Pact policies in their post-crisis and structural analysis and also when implementing policy actions. The work ahead requires a greater focus on job-creating growth, with social protection and social dialogue as key elements in the process.

More information available at the G20 webpage.