ILO Statement to the 49th Commission for Social Development

Closer relationship between social development and macroeconomic policy is needed for sustainable growth

For too long, pursuing macroeconomic policies alone has had limited success in creating the conditions necessary for rapid and sustainable growth.

Statement | New York | 10 February 2011
Mr. Chair,

In 2004, the report of the World Commission on the Social Dimension of Globalization expressed concern that “deep-seated and persistent imbalances in the current workings of the global economy are ethically unacceptable and politically unsustainable”. Today, perception of unfairness and frustration continue to grow alongside rising unemployment, which is presently around 205 million, growth in income inequalities with roughly half of the world’s population living on the equivalent of US$2 a day, and increasing incidences of natural disasters which are rolling back decades of hard-won gains. This slow and unstable progress requires us to rethink and retool how the sustainable development framework based on economic, social and environmental policies, may be better integrated into the work of this Commission in order to more broadly enhance and implement its social policy advice.

At the outset, we must recognize the need to establish a much closer relationship between social and labour market developments and macroeconomic policy. For far too long, macroeconomic policies alone have had limited success in creating the conditions necessary for rapid and sustainable growth, job creation, increased productivity and wages, reduction of poverty and social integration. This proof is witnessed in the current high levels of unemployment which stand in stark contrast to the recovery seen in order key macroeconomic indicators such as global GDP, consumption and world trade, all of which recovered from the crisis by 2010. Not only is the labour market stressed due to crisis-led unemployment, but many economies are not even creating enough jobs to absorb the growth in the working-age population. These persistent challenges have in turn led to a deterioration in social development. In this regard, we note the encouraging progress made in the outcome document adopted by the 2010 MDG Summit which underscores the important of “adopting forward-looking, macroeconomic policies that promote sustainable development and lead to sustained, inclusive and equitable economic growth, increase productive employment opportunities and promote agricultural and industrial development”. The Commission could continue this momentum to ensure that employment is not considered a residual or merely a sector policy a the margins of economic policy. Full employment and decent work must become a key macroeconomic objective alongside low inflation and sound fiscal measures in order to achieve a more stable and balance growth and support poverty eradication.

Mr. Chair,

Recognizing that the impacts of climate change are already upon us and the importance of moving towards a low carbon economy, it is equally important to clearly understand the social impacts of this transition and link good social policy with good environmental policy. ILO experience demonstrates that well designed environment related investments are beneficial for employment overall. However, we acknowledge that there will be shifts in the labour market that lead to job losses in the short term. To offset these losses, a coherent framework is needed to ensure a just transition to a low carbon economy with decent work at the center which includes strong social protection policies, together with the promotion of sustainable enterprises, economic diversification and capacity building. Without an equitable sharing of the costs and benefits of environmental protection within and between countries, neither poverty eradication nor social justice can be achieved.

Mr. Chair,

The linkages between the three pillars of sustainable development help us to understand more deeply the role of social protection in forging inclusive growth and poverty eradication. Poverty takes many shapes and therefore, requires us to go beyond the measurements of income and asset holdings, to encompass non-monetary dimensions and rights. Ensuring a basic level of social protection is a human right and an economic necessity. This growing recognition is perhaps why the Social Protection Floor Initiative has come front and center in poverty eradication discussions today. The importance of social protection lies in its ability to interrupt the high levels of risk and vulnerability which often contribute to sustained chronic poverty. Many developing countries have successfully taken measures to build their nationally defined social protection floors or have introduced elements thereof. The results of programmes in these countries show us that the impact of the social protection floor on poverty, vulnerability and inequality can be dramatic, and it can be progressively affordable even in LDCs. Expanding social protection for all through the implementation and expansion of a basic social protection floor is not just good social policy, it is good economic policy. It can produce a virtuous cycle among incomes, aggregate demand, expansion of markets and job creation. The social protection floor has been identified in the MDG outcome document as an area in need of scaling up. This Commission could play a role in ensuring that this important policy plank is expanded and we look forward to continued discussions during the emerging issues segment.

Mr. Chair,

This Commission has a long history of providing quality social policy advice. We trust that support for the social protection floor will be added to this good advice. We also note that the Commission may enhance the implementation of its policy advice by intentionally and overtly defining the linkages between sound social policy and sound economic and environmental policy. By embracing and operationalizing the UN’s sustainable framework, the Commission can help promote policy coherence and support a more sustainable development path that is responsive to the challenges of the 21st century.

I thank you.