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Evidence on the impact of the economic crisis on jobs and the policy response challenge: The ILO Glo


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Title: Evidence on the impact of the economic crisis on jobs and the policy response challenge: The ILO Glo

Evidence on the impact of the economic crisis on
jobs and the policy response challenge The ILO
Global Jobs Pact
  • José Manuel Salazar-Xirinachs
  • Executive Director, Employment Sector
    International Labour Organisation
  • Geneva, Switzerland

  • Global Trends
  • Global Scenarios
  • Policy issues and the ILO Global Jobs Pact

I. Global Trends
Global Employment Trends, 1998-2008
Global unemployment trends by sex 1998-2008
II. Three Global Scenarios
  • 1. Unemployment
  • 2. Working Poor
  • 3. Vulnerable employment (own account workers and
    unpaid family workers)

  • Scenario 1 Optimistic Scenario. based on the
    observed long-term relationship between GDP
    growth and employment at the individual country
    level (employment elasticities, calculated
    separately for men and women). This provides the
    lower bound.
  • Scenario 2 Intermediate takes the largest drop
    in GDP observed in each country since 1991 and
    its impact on unemployment and applies this
    relationship in 2009 assuming it happens in all
    countries simultaneously. It is not a long-term
    relationship, but a projection on the basis of a
    particular "crisis" year in each country
    (calculated separately for men and women).
  • Scenario 3 worst case scenario. Does not use the
    relationship between GDP growth and unemployment.
    It is constructed taking the largest percentage
    point increase in the unemployment rate observed
    in each country in any one year and applies it to
    each country in 2009 in comparison to 2008. In
    other words, the scenario shows what would happen
    if the worst observed impact on the unemployment
    rate would repeat itself simultaneously in all
    countries (calculated separately for men and
    women). This scenario is not based on the
    historical relationship between economic growth
    and employment, so it is not affected by the
    revisions in GDP growth rates.

Global unemployment scenarios 2009
Global female and youth unemployment scenarios
2009 Working Poor ScenariosMethodology
  • Scenario 1 Projects trends up to 2007 to 2008
    and 2009 based on the IMF estimated growth rates
    (Nov 2008).
  • Scenario 2 assumes that individuals that are on
    the fringe (just above the poverty line by 5)
    will fall back into extreme poverty in 2008. 10
    above for 2009.
  • Scenario 3 assumes that individuals that are
    just above the poverty line by up to 10 in 2008
    and by up to 20 in 2009, will fall back into
    extreme poverty.

Global working poor - Scenarios (USD 1.25)
Global working poor - Scenarios (USD 2)
Global vulnerable employment scenarios 2009
  • In 2009 the financial and economic crisis will
    hit labour markets in both developed and
    developing countries, creating a jobs crisis,
    potentially affecting social stability in many

III. Policy issues and the ILO Global Jobs Pact
Present situation
  • Developed countries
  • A vicious circle of negative interactions between
    financial markets, product markets, trade and
    labour markets.
  • Job losses lead to lower consumption, which
    lowers industrial confidence, which leads to less
    investment, which results in more job losses
  • Developing countries, multiple transmission
  • Reduced trade flows
  • Decline in commodity prices
  • Reduced liquidity and tightening of credit
  • Reduced flows of remittances
  • Drop in FDI
  • Declining flows of ODA

Present situation
  • Credit crunch continues
  • Confidence not restored yet
  • Trade-FDI continue to contract
  • Labour market and social impacts not receiving
    sufficient attention
  • Neither is the development dimension

A Global Jobs Pact
  • A set of principles to provide an agreed basis
    for policy responses
  • A policy package that recognizes that
  • The causes of the crisis are interconnected
    (financial, lack of aggregate demand, trade,
    labour markets), so the solutions should also be
  • The crisis should be looked from perspective not
    only of restoring growth but also of social
    justice and fair globalization
  • The more central employment and social protection
    are in expansionary policies, the greater the
    economic stimulus
  • A commitment to solutions which are local as well
    as global, coordinated, development oriented,
    people-centred, inclusive, urgent.
  • A type of fiscal stimulus that is focused on the
    achievement of productive employment and decent

Principles of the Global Jobs Pact
  • Need to ensure the flow of credit to consumption,
    trade and investment
  • Use of fiscal and wage measures to stimulate
    domestic and global aggregate demand, while
    avoiding wage deflation
  • Extending social protection and unemployment
  • Focusing on the needs of the most vulnerable
  • Supporting and sustaining productive and
    profitable enterprises
  • Implementation of the fundamental principles and
    rights at work
  • Avoiding trade protectionism
  • Social dialogue within and across borders
  • Maintaining development aid and providing finance
    to low income countries to cushion the impacts of
    the crisis

Integrated Policy Package
  • Coordinated fiscal stimulus to maximize the
    global multiplier effect on aggregate demand.
  • Credit needs to be restored and the financial
    system mended and properly regulated.
  • The labour market and social dimensions of the
    crisis need to be addressed nationally and in
    global cooperation efforts to mitigate the
    impacts on people.

An Operational Decent Work response Key policy
  • Fiscal Stimulus packages that make decent work a
    cornerstone of the recovery
  • Emergency employment-intensive public works
  • Emergency support to sustain and restructure
    enterprises and sectors, and stimulus for sectors
    with strong job generation potential, including
    green jobs
  • Employment and labour market policies, including
  • Measures to promote alternatives to layoffs,
    support re-employment and for new entrants to the
    labour market (work sharing, training, job search
    assistance and placement, temporary tax/subsidy
  • Measures to support to self-employed and the
    informal economy
  • Strengthening of public employment services
  • Social protection programmes for crisis
    management and response
  • Emergency support to labour administration,
  • Prevent erosion of ILO core principles and
    standards during crisis
  • Support to social dialogue at enterprise,
    sectoral and national level for all of the above
  • Adequate governance structures for international
    funds established with the objective of
    supporting countries in these areas

  • The ILO is in process of preparing and
    elaborating this Global Jobs Pact concept between
    governments, employers and workers.
  • We would like to invite all of you to be part of
    this global exercise on which we are working
  • And we hope the G-20 group could support these
    ideas and initiatives on the labour market and
    social policy responses to the crisis that put
    employment and social protection at the center of
    the response
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