Public policies for Decent Employment (focus on macro-economic, trade & labour policies)

 High GDP growth rates in most Asian countries have not led to any significant employment generation  Unemployment: In 2007: 87 million, by 2010: 92 million.  Even where employment grew, it was mostly precarious jobs - as a result, about 60% of the region’s workers are working poor & in vulnerable employment.  Asian Labour force 1.5% annually – to avoid an increase in unemployment, region needs to create about 28 million jobs each year

majority of people in informal economy – growing employment in informal sector essentially means economy not creating decent jobs. Why are ‘our countries’ failing to create decent jobs?

Some Features of Asian Economies  Export led development model – dependency on external markets (EU, US & China) – highly vulnerable to external shocks - small domestic markets  Underemployment & vulnerable employment high – majority working poor (earn below $1.25/day)  between % people earn livelihoods in the informal economy, majority in smallholder agriculture – where productivity is low  Migration for employment 6% annually, with increasing flows within Asia itself

Average tax rates in Asia and the Pacific (percentages)

Public spending on social protection, by world region (percentage of GDP) Source: ILO–SECSOC estimates

The challenge therefore is… How to make decent employment central to economic and social policies and to national development strategies?

The role of state in employment creation  The crisis and its employment effects have once again brought the role of the state in employment creation strongly to the forefront due to massive losses of jobs in the private sector:  What is the role of the state? Overall employment policy and strategy State role in creating an enabling environment Direct role in employment creation 8

Actions need to be taken on several fronts –  Macro economic policies  Fiscal and monetary policies  International trade & investment policies  Labour & social policies

need to move towards a more balanced & broader set of objectives for macro economic policies  Traditional focus of macroeconomic policies: - adjusting interest rates to control inflation, curb budget deficits to achieve fiscal balance, and aim for current account surpluses.  Have these policies promoted sustained economic growth? Price stability? Higher exports?  These have tended to restrain aggregate demand (and employment), kept wages below productivity and failed to insulate countries from repeated crises.

Main focus:  for economic & social stability, developing countries need development & expansion of domestic markets – this implies Decent Work & respect for fundamental labour standards. - this will also help in domestic resource mobilization, change the nature of FDI & promote investment Need to remember – Economic growth is necessary BUT NOT sufficient condition for Decent Employment

Fiscal & monetary policies  Why should sectors that create employment be taxed more than capital intensive sectors that employ lesser people? (review tax policies in your country)  What incentives can be designed for new wage employment created by industry? Fiscal & Bank credit.  Incentives/conditions for local value addition by FDI/ MNCs

International Trade & Investment policies – areas of concern  Obligations under TRIMS;  NAMA – Non Agricultural Market Access – reduce tariffs & non-tariff barriers – at stake industrial development needs, employment & livelihoods in developing countries –  Agriculture sector liberalization ( need for rural development & food security of developing countries, high tariffs, export subsidies and domestic support by EU & US) ;  TRIPS ( Trade-related aspects of intellectual property rights )- Public health & domestic development issues ;  Services sector liberalization ( covers almost all sectors and movement of personnel - skilled)

Implications of New Trade Policies  Shift from development cooperation to free trade;  One size fits all  One size fits all kind of policies - Open markets for trade, investment & capital flows, Privatization of the economy; no performance requirements on FDI, employment flexibility  More competition between unequals; Equality of “access” (to international trade) does not mean equality of “opportunity”; [unequal capabilities lead to unequal outcomes]  Adverse impact on development & employment – many developing countries will be forced to remain providers of natural resources and low value–low technology products;

Providing decent & productive work requires  Ensuring that macroeconomic policy supports goals of price stability, growth & employment promotion.  Promoting investment is one key factor. Other key factor is improving factor productivity through Skills upgrading of workforce Investment in infrastructure Credit policy, especially for small & medium units Social protection programmes for workers Education policy Integrated & coordinated poverty reduction programmes

Public policies on employment creation 16 Examples  Bolsa Familia in Brazil - financial assistance provided to about 11 million families - contributed to a dramatic fall in inequality and a reduction in poverty  National Rural Employment Guarantee programme in India – provides 100 days employment guarantee to adult member of any rural household (minimum wage?). – improved rural incomes, bargaining power of rural labour

Providing decent & productive work requires  measures to ensure that wages keep pace with productivity & minimum wage policy that seeks to promote living wages  Upholding of core labour standards/fundamental rights at work – should be the social floor to be respected in the country – and should also be part of the CSR policy of the employers  Social Protection: No employment without Social Security contribution – will prevent vulnerability of workers & at the same time provide Government with valuable domestically raised investment capital.

Providing decent & productive work requires  Govt should set job creation targets (formal sector decent jobs) within a given time frame, rather than setting reduction goal in overall unemployment rate (reduction in open unemployment rate is not a reliable indicator about whether decent employment is created or poverty has reduced).  Policies for improving productivity, business climate & working conditions in agriculture, services & construction – where most new employment is likely to be generated

Providing decent & productive work requires  Financing needs of attaining the targets – this requires increasing tax net (What is the tax to GDP ratio in your country? - not enough to meet the employment creation and poverty reduction targets?)  Revising interest rate policy (high interest rates hurt employment and poor people while doing nothing much to control inflation)  Education for All initiative (in view of poverty- education nexus)

Challenges for Universal Education - how to ensure participation by poor in the education & training system? - Costs of schooling? Factors behind high drop out rates? Incentives for the poor? For the girl child? Targeted scholarships? - quality of education? Education infrastructure? Teachers qualifications? Salaries? - Need for increasing public expenditure on education (investment in education as proportion of GDP? whatever is allocated, even that is not efficiently utilised. - Management of decentralized education system – role of central v/s local authorities  Technical & Vocational Training – links with labour market, business? Focus needed also on informal economy jobs – entry requirements

So, what are TUs saying? Answer does not lie in Protectionism  Ensure Justice, Equity and Democracy in the new global order;  Need for role of State and public regulation of business and international trade;  Review of Free Trade – to re-focus on the objectives of Devt, Empl. & Poverty reduction – multilateralism rather than bilateralism.  Respect for basic International Labour Standards for promotion of Decent Work;  Representation & Participation of TUs in economic and social policy matters;

22 ILO Goal: Promoting Full, Productive and Decent Employment Reflected in: the 1944 Declaration of Philadelphia the Employment Policy Convention, 1964 (No. 122), the Global Employment Agenda (2003) the Declaration on Social Justice for a Fair Globalization (2008) the Global Jobs Pact (2009)

ILO instruments for promoting Decent Employment – Guidance provided by: ► Employment Policy Convention, 1964 (No. 122), and Recommendation No ► Employment Policy (Supplementary Provisions) Recommendation, 1984 (No. 169). ► Employment Promotion and Protection against Unemployment Convention, 1988 (No.168), and Recommendation No. 176 ► Employment Service Convention, 1948 (No. 88), and Recommendation No. 83; ► Private Employment Agencies Convention, 1997 (No. 181), and Recommendation No ► Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, 1977 (amended 2000).