ILO Statement to the Second Committee of the 66th General Assembly

Employment and social protection are indispensable for balanced growth

Beyond just managing economic growth, inflation and public budgets, a broad range of policies must be strengthened to ensure a full recovery of the labour market.

Statement | New York | 11 October 2011
Mr. Chair,

The report of the Secretary General on the International Financial System and Development (A/66/167), provides a useful review of efforts undertaken to reform the international monetary and financial system as well as related challenges resulting from the financial and economic crises. While reform and repair of the financial sector is no doubt needed, we must clarify the intended aim and desired outcome of such reforms. The ILO has been advocating through various multilateral processes, including here at the United Nations, the IMFC and the G20, that a revamped financial system must support a convergence of macroeconomic, employment and labour market policies to rebalance the global economy so that growth is strong, equitable, job rich and sustainable. Structural change and increased investment is needed to address long-standing labour market deficiencies that led to the debt-financed crisis while improving both the quantity and quality of jobs.

Instability and lack of confidence in financial markets with speculative fluctuations is continuing to damage real economy growth prospects. The labour market remains fragile in most countries, with recovery in employment and wages still weak relative to economic output. Income inequalities are continuing to widen and have reached unprecedented levels in many countries. This is weakening aggregate demand and the financing of growth. It is also leading countries to an over-reliance on export-led development further widening internal imbalances. The slowdown of the world economy implies employment is growing at only 0.8 per cent, which is far less than the increase in the labour force. The prolonged and massive global jobs deficit is particularly destabilizing for families and communities unable to secure opportunities for decent work. It is undermining social cohesion, putting to waste the skills and talents of the younger generation and impeding growth and poverty eradication efforts.

Mr. Chair,

The way forward requires a much closer correlation between sound fiscal and monetary targets of macroeconomic policy together with employment, social and environmental policies. While the rate of growth, stable inflation and broadly balanced budgets are recognized as important targets for sound macroeconomic policy, employment targets set as close to full employment as possible, must also be established. It is equally vital to put in place measures that stimulate investment in the real economy through the promotion of productive enterprises that generate decent work, absorb informality and significantly reduce the space for unproductive financial operations.
The principles and objectives contained in the Global Jobs Pact provide a blueprint to deliver a more balanced approach to sound macroeconomic policies that respond to the realities of the real economy. It goes well beyond efforts to encourage a speedy recovery, but also strives to put employment permanently back in the centre of the international policy agenda. Efforts to enhance global cooperation to apply these range of policies must be redoubled and continue to be supported to ensure a full recovery of the labour market.

Employment and social protection are indispensable pillars of balanced growth and fundamental to creating the shift from a debt-driven model to an income-led model of development. Social protection has played a significant role during the crisis by protecting the poor and vulnerable in countries with policies already in place. Beyond the crisis, nationally shaped social protection floors have proven to be an effective tool for reducing poverty and inequality while sustaining aggregate demand. Fiscal investments in national social protection floors must continue to be supported as part of national development strategies.

Mr. Chair,

To counter the downward pressure on the world economy and consolidate recovery towards strong, sustainable and balanced growth, policies and reform efforts must give priority to the real economy. Such efforts should aim to sustain investment, savings and consumption based on high levels of productive employment and decent work, rather than merely looking at single aspects of financial sector stability. Careful consideration must also be given to ensure that the pace of fiscal consolidation is not only compatible with the state of the economy but that it is also socially responsible. Abrupt, socially costly austerity measures are hurting people who have no responsibility for the crisis and are endangering growth of the real economy, which provides the only foundation for future solvency.

In sum, without a jobs recovery, overall economic recovery will remain in jeopardy.

I thank you.