Working together out of poverty No miracles, just decent work

Every day tens of millions of people around the world seek their own way out of poverty through a simple act: they go to work. For many, however, their efforts are not enough to escape the poverty trap. What people need are jobs - and a fair chance of getting a decent one. On the occasion of the International Day for the Eradication of Poverty in October, the ILO urged that steps be taken to deal with the global poverty problem. This issue of World of Work highlights some of the options that people may use to work their way out of poverty.

GENEVA - When it comes down to the basics, what people want aren't miracles, but decent work. So said ILO Director-General Juan Somavia on the International Day for the Eradication of Poverty.

Today, poverty remains a huge issue worldwide. Nearly half of the world's 2.8 billion workers and their families live on the equivalent of US$2 or less per person, per day.

What is the scope of today's poverty situation and what can be done about it? Several of the ILO Director-General's recent reports have focused on this theme ( Note 1). Here, in question and answer format, World of Work asked Mr. Somavia to outline the issues and propose some measures for addressing them.

There is a growing feeling worldwide that the rich are becoming richer and the poor are getting poorer. Do you share this view?

Juan Somavia:
Nearly half of the world's workers are unable to earn enough to lift themselves and their family members above the $US2 a day poverty line. This is roughly the same total as in 1994 - but it now accounts for just under half of the world's labour force, compared to 57 per cent at that time. With the exception of sub-Saharan Africa, all other developing regions have seen a decline in the share of working poverty in total employment. China and its East Asian neighbours show the most dramatic decline. This is welcome progress but, for example, even if India's strong growth and poverty reduction performance in 2000-2005 continues, it will still take a century to catch up with today's high-income countries. On the other hand, inequality within countries is increasing. Of the 73 countries for which data are available, 53 representing more than 80 per cent of the world's population have seen inequality rise, while only nine have seen it narrow.

Is poverty only an issue in the developing world?

Juan Somavia:
No. The average poverty rate, defined as less than half of median incomes, for 20 OECD countries in 2000 was 10.6 per cent. This is higher than the level in the mid-1990s when the average was 10 per cent. Poverty rates were above 15 per cent in Ireland, Japan, Turkey and the United States, and above 20 per cent in Mexico. Child poverty rose in the 1990s and progress in reducing old-age poverty slowed.

Do increasing income inequalities go hand in hand with rising wage inequalities?

Juan Somavia:
Inequality has risen dramatically in most transition economies and has also grown sizeably in some Latin American countries. The picture is mixed in Asia, where some countries have managed to reduce income inequality; but others, such as China and Sri Lanka, have witnessed sharp increases. Gross earnings inequality - measured over the employed population - has increased on average in OECD countries, for which data are available.

The widening dispersion of wages and concerns over poverty amongst more vulnerable workers has focused attention on minimum wage systems. A number of countries have made remarkable efforts to extend minimum wage protection to workers who were previously not covered. These include: South Africa's inclusion of domestic and farm workers in 2000-2001; Bolivia's extension of the minimum wage to agricultural workers in 2005; and China's inclusion of domestic workers in 2003.

Still, many of the world's poorest people live from subsistence farming. How extensive is this sector and what can be done to improve the situation?

Juan Somavia:
With three-quarters of the world's poorest people living in the rural areas of developing countries, improved productivity, incomes and working conditions in farming are vital to development. Reducing extreme poverty is thus to a large extent a question of improving the earning power of agricultural workers and small farmers, together with developing non-farm employment opportunities in rural areas. In addition to investment in infrastructure and education, breaking rural poverty traps requires a major effort to develop collective organizations of workers and small farmers, such as cooperatives.

To what extent can social security contribute to reducing poverty and inequality?

Juan Somavia:
A number of developing countries have in recent years introduced basic pensions or child benefit schemes financed from the general exchequer which are proving to be a powerful means of combating poverty. Strong evidence of positive experience comes from countries as diverse as Brazil, Mauritius, Namibia, Nepal and South Africa. Although these countries show the way in combating poverty through social security mechanisms, only one in five people in the world has adequate social security coverage. The other four need it too, but somehow must manage without. This is why the ILO launched a Global Campaign on Social Security and Coverage for All to encourage the extension of social security coverage as a means for combating poverty and social exclusion.

What else can be done to reduce poverty worldwide?

Juan Somavia:
A major effort is needed to improve productivity, earnings and working conditions in order to reduce working poverty that affects nearly half of all the workers in the world. We live in a time of opportunity and uncertainty in which some of the barriers that have prevented women and men from fully realizing their capabilities are coming down, but in which good jobs that provide the foundation of security to build better lives are increasingly difficult to find. The need to reduce absolute poverty and narrow income gaps is widely accepted in both developed and developing countries as essential on moral grounds, as well as a means to fight the underlying causes of social, economic and political instability. Elections in all parts of the world are frequently won and lost on the issue of jobs.

How can we integrate the ILO's Decent Work Agenda with strategies for poverty reduction and a fair globalization?

Juan Somavia:
Our Organization has a mandate to support governments and employers' and workers' organizations in their efforts to achieve the goal of decent work for all. And in a world where the international influences on work and labour markets are becoming ever stronger, the ILO, through the engagement and commitment of its constituents, could make an important difference to the way the world of work changes in the future. However, translating the goal of decent work for all into practice requires a range of policies that stretch beyond the main areas of expertise of the ILO and its constituents. Decent work as a global goal requires a concerted approach by the entire multilateral system, with the ILO playing a major role in facilitating the integration of the Decent Work Agenda into strategies for poverty reduction and a fair and inclusive globalization.

International Day for the Eradication of Poverty Message by Juan Somavia, Director-General of the International Labour Office, 17 October 2006

For many, however, their efforts are not enough to escape the poverty trap. People living and working in poverty aren't asking for miracles, they want opportunity and results – a fair chance at a decent job. Let us mark the International Day for the Eradication of poverty by resolving to deliver on the core democratic demand of women and men for the dignity of work and dignity at work.

The absolute number of working people who earn US$2 a day or less for themselves and their families stands at the same level as it did 10 years ago. Today, that's about 50 per cent of the global labour force. In Africa, the number of those living on less than $1 a day has nearly doubled in the last 25 years. In addition, the bulk of new jobs is being created in the overcrowded informal economy where working men and women eke out their livelihoods at low productivity and, consequently, low earnings. Despite global growth, the disconnect between growth and decent jobs is widening income inequalities, fuelling social tensions, and placing obstacles in the way of the global effort to eradicate poverty.

If we want different results, we need different policies.

As Secretary-General Kofi Annan said: "We must re-evaluate our approach, and place job creation right next to economic growth in national and international economic and social policies... when discussing macroeconomic policies there should be an institutionalized reflex which constantly asks, "What can this do for jobs?"

The international community is beginning to mobilize to ensure that economic growth translates into decent work for women and men.

At last year's UN World Summit, heads of State and government resolved to make fair globalization, full and productive employment and decent work for all a global goal and a national reality. They recognized it as an instrument for achieving the Millennium Development Goals – particularly poverty reduction.

Following up on a practical level, the recent high-level Ministerial segment of the Economic and Social Council (ECOSOC) sent a strong message for the UN system to come together to promote quality employment. The ILO's specific contribution includes Decent Work Country Programmes which were singled out by ECOSOC as part of a "more coherent and pragmatic United Nations approach to development".

Let us resolve to pool our efforts to transform the growing awareness of the vital role of employment for poverty reduction into concrete policies, programmes and investments that have a positive impact on people, their families and the communities in which they live and work.

Note 1 - See Changing patterns in the world of work, Report of the Director-General to the International Labour Conference, 95th Session 2006, International Labour Office, Geneva; Working out of poverty, Report of the Director-General to the International Labour Conference, 91st Session 2003, International Labour Office, Geneva.