Rebeca Grynspan: Decent work for human development

02 Nov 2010

Keynote Address by Ms. Rebeca Grynspan,
UNDP Associate Administrator

ECOSOC Retreat – 29 October

I am delighted to join this distinguished group of Permanent Representatives and UN officials for this very interesting retreat. The issues we have been discussing today, and our programme for tomorrow, all matter enormously for the future work of ECOSOC and indeed the UN development system as a whole.

I am also very pleased to have been invited to address you this evening on an issue that has long been of great importance to us, both academically and in practice: namely decent work and job creation for human development.

On November 4 we will celebrate the twenty years anniversary of UNDP’s Human Development Report.

Underlying the report is our conviction that development is about far more than just increasing GDP per capita; it fundamentally must be about expanding opportunities and improving people’s well being and their ability to shape their own lives.

For the past twenty years UNDP has been developing and advocating for this human development approach to development, and even if the approach has since gained wide traction, it is just as important to promote it today as it was twenty years ago.

This year’s report introduces new measures for assessing inequality, gender disparities and the multiple dimensions of poverty. It also proves again that growth alone does not tell us the whole story about progress in Human Development and peoples’ lives: countries which have the fastest growth are not necessarily the ones achieving the largest gains in human development. It shows that it is not only growth, BUT INCLUSIVE AND EQUITABLE growth, which brings about the best performers in the Human Development index. 

At the core of inclusive growth lies people’s access to opportunities for decent work, to have a voice and to exert their rights as full and active citizens - to be actors, and not targets or objects of assistance.  

Decent work involves adequate pay, security, safety standards, and opportunities for women and men to have a say in the decisions which impact on their livelihoods, through employment or through income generating activities. 

Indeed, achieving “full and productive employment and decent work for all, including women and young people” is included as a target in MDG1 and, more broadly, decent work is also a factor in meeting all the other MDGs.
 
Unfortunately, the global recession forced many people into unemployment and vulnerable economic situations.

For both developed and developing economies, job losses have been huge: the number of people unemployed increased by more than 32 million between 2007 and 2009, and the total number of unemployed is projected to hit more than 213 million in 2010 – the highest rate of unemployment ever registered. According to the ILO, 400 million jobs will have to be created over the next decade in order to absorb the growing labor force.

Although the global economy has started to improve since the second half of 2009, the current labour market recovery exhibits strong divergences in speed from region to region, country to country, and sector to sector. As UNDESA Global Economic Outlook October 2010 states, unemployment remains the Achilles’ heel of the global recovery.

The estimates are much more pessimistic for developed countries, where the unemployment rate is projected to continue increasing over 2010 and not expected to return to pre-crisis levels before 2015. “In addition, the share of long-term unemployed has increased in most developed countries since 2007.  In the United States, the share of workers who have been unemployed for 27 weeks or more has been rising at an alarming pace, representing nearly half of the unemployed”. (UNDESA Global Economic Outlook October 2010)

In contrast, the group of emerging and developing economies, especially emerging Asia, is leading the global economic recovery and predicted to go back to their pre-crisis levels of unemployment by the end of 2010. But over 8 million jobs are still needed to meet the growing workforce in those countries.

But unemployment doesn’t tell us the whole story either….Specially in developing countries, many workers, who were laid off from their paid jobs (especially in the export sectors) were forced to seek self employment or enter vulnerable employment. The number of vulnerable workers worldwide is estimated to have increased by 110 million from 2008, reaching 1.5 billion in 2009 - just over half of the world’s working population.

Similarly, the proportion of the extreme working poor, which dropped from 37.5 percent in 1998 to 21 percent in 2008, is estimated to increase by 7 percentage points between 2008 and 2009, pushing the global population of extreme working poor to as high as 848 million, 215 million more working poor than in 2008.

The largest potential negative impacts of the crisis on the working poor are in South Asia, South-East Asia and sub-Saharan Africa, which reflect the fact that preceding the crisis many workers in these regions were only slightly above the poverty line. The situation is most dismal for sub-Saharan Africa where more than two-thirds of workers were at risk of falling below the extreme poverty line in the worst case scenario.

Young workers have also been particularly affected and in 2009, youth unemployment reached the highest number ever - among the 620 million economically active youth, 81 million were unemployed (13%). This is a very serious issue, both for current and future economic prosperity, as well as social stability.

Furthermore, if we calculate the percentage of young people that does not study nor works, it can get in some regions above 25% of those between 15 and 24 years of age.  So…if they are not at school and nor at work, where are they? Isn’t youth employment a key challenge for crisis prevention programs?  

And with respect to women, despite a mix impact depending on the different sectors hit by the crisis (ex. car manufacturing or textiles and services), they have continued to face disadvantages in labour markets with the global female unemployment rate still higher than for male workers. Also, whereas overall female labour force participation has increased slightly over the last two decades, compared to men, women remain to be more economically inactive, face more challenges in finding work, and in the case of finding work, they receive less pay and benefits than male workers for work of equal value.

In short, the fallout of the crises has thus aggravated the socio-economic situation of many around the world:  parents unable to feed their children, young people with no hope for the future, and vulnerable populations that have to accept work in inhumane conditions out of despair.

Recovery from past recessions tells us that if the market is left to its own devices, or if economic policy is blind to jobs, the negative impact on employment could be greater along with a significant time lag between the return of economic growth and a lift in employment. 

So, it is difficult to think that we can seriously talk about a development agenda or a growth agenda excluding employment from the core objectives of macroeconomic policy.  To start with, we will therefore need to make visible the impact of the economic policies on employment and hold policies accountable.

We also know, that if education and health expenditures suffer during the crisis, and if we are unable to protect families from the impact of the crisis, we run the risk of transforming “short term” poverty into structural poverty, simply because families are unable to recover from losses occurred during crisis which affect their long term well being, such as increases in maternal or infant mortality, increases on child malnutrition or school drop outs. This is why many times economic recovery is much faster than social recovery when social protection schemes are not in place.

Decent Work and jobs have therefore to be put at the very centre of development strategies and the policy responses to the crisis.

Here, I believe, that both the private sector and public policy have a crucial role to play by fostering a job rich growth for a more inclusive and equitable development.

Let me make some brief reflections on public policy contribution on meeting this challenge and classify it as pre-market, in-market and post market policies.

Usually we talk more about the pre and post market policies, especially when discussing the MDG agenda; but when we include jobs and decent work, we need to go further in our discussions and reflect more on what I call “in the market space” policies.

By pre-market policies I mean, those that the state can pursue to help prepare people to enter or reenter the labour market – these are what we usually call human capital building policies.

Here, education – from early childhood and basic education to professional training - are critical for preparing individuals for the labour market. They also have long-term impacts on skill building and labour market outcomes.

Many of the MDGs refer precisely to this objective and they are pre conditions for a full participation in the labour market. Bringing down maternal and infant mortality, malnutrition, universal primary education, the fight against disease are all necessary building blocks for people to be able to take advantage of decent work opportunities in the future and live fulfilling lives.

Professional schools and job training programmes can also play an important role in facilitating re-entry to the job market and the benefits of education can be further enhanced by parallel investments in health and nutrition.

UNDP’s International Assessment on what it will take to achieve the MDG’s identifies successful programmes that have contributed to reduce poverty and inequalities.  Conditional cash transfer programmes for example have been particularly effective in helping maintain investment in human capital and channel help to the most vulnerable during crisis and non-crisis times, as the experience particularly in Latin America has shown. 

By post-market interventions, we mean redistributive fiscal policies usually aimed at addressing inequalities and socially suboptimal market outcomes as for example the fiscal responses to crises aimed at stimulating aggregate demand and lay the ground for longer term sustainable growth.

At the same time, without downplaying the importance of aid to many developing countries, the mobilization of internal resources, especially but not exclusively in MICs, through the building of a fiscal pact, is critical for the achievement of the MDGs and the sustainability of the development efforts.
 
But let me now turn to the in-market policy space, which is usually something we talk less about. 

It is the in-market policies which promote the retention of existing jobs, create new jobs and work opportunities, and cushion the impacts of crises on earnings.

The first point to make here is the role of the macroeconomic policy and the critical need to include employment and decent work in the framework of macroeconomic objectives.

Second is the role of specific, interventions that aim at creating employment proactively. Here, options range from effective tripartite consultative process involving the government, employers and workers to determine what are the best policies for any given situations to public work programmes and unemployment guarantee schemes that can be effective in reducing unemployment and alleviating short-term poverty while at the same time, if well designed, also create valuable public goods, particularly at the community level. As well, we have minimum salaries policy that proved successful in Brazil as it lessened the impact of the crisis and stimulated aggregate demand, to fostering inclusive financial markets to enhance access to assets, credit and technical support for micro, small and medium sized enterprises.
And then we have the important conciliatory measures between work and family which have been so critical in promoting women access to decent work employment and gender equality in the labor market.
Examples of public works schemes include Argentina’s Programmes for Unemployed Male and Female Heads of Household which contributed to the national poverty line falling from 54.7 percent in 2003 to 26.9 percent in 2006. The programme covered 1.95 million workers, costing less than one percent of GDP.

Or Ghana’s National Youth Employment Programme (NYEP), which provided employment, livelihood options, and job training for over 100,000 youth.

And the world’s largest job creation scheme in India benefits 46 million households, with women representing around 51 per cent of those accessing the programme of 100 days work a year guarantee.

Finally is interesting to note, that, sectorial policies have reemerged as being regarded a valuable tool, hopefully taking into account lessons learnt from the past and there is a move away from the idea that the best sectorial policy is the one that doesn’t exist. 

Agricultural and rural development policies (and value chain approaches) have clearly emerged as winners for inclusive growth, and we are also seeing a reemerging discussion on industrial policies as means to create high-skill jobs and speeding up structural changes, both in developed and in developing countries. Through those policies, the government supports investments in infrastructure, publicly financed R&D, private-public venture funds, and incentives, which can encourage private firms to develop new technologies and create more jobs.

And last but not least, promoting investments in green technologies and infrastructure, or through environmental public works, the state can tackle unemployment and the climate crisis together.

Last year, ECOSOC encouraged member states to make full use of ILO’s Global Jobs Pact in shaping their policy packages.

The actions which are proposed in the Global Jobs Pact, put jobs at the very centre of responses to the crisis and calls for measures to retain existing jobs, sustain enterprises, create new jobs and job recovery combined with social protection systems, in particular for the most vulnerable.

ECOSOC has also “called on the UN to consider integrating the policy contents of the Pact into the activities of the Resident Co-ordinator system and country teams in support of national crisis responses.”

The outcome document from the MDG Summit clearly identifies progress on advancing decent work as an important element in accelerating progress on the MDGs.

As a response, ILO Director-General, Juan Somavia, and Helen Clark UNDP Administrator sent a joint letter to UN Resident Co-ordinators around the world, calling on them to work with their partners, including trade unions, to implement the Global Jobs Pact in ways which are appropriate to their national context. 
These actions also followed a UNDP Executive Board resolution in January 2010, asking UNDP to give priority to the recommendations in the Global Jobs Pact, in collaboration with the ILO, and to integrate the Global Jobs Pact into its operational activities.

UNDP and ILO have worked together on joint initiatives across youth employment, migration, and private sector development. For example in Bosnia, Costa Rica and Sudan, UNDP and ILO are helping unemployed young people get productive and decent work. And In Vietnam, we are supporting environmentally sustainable production to increase incomes and employment opportunities for the rural poor.

At UNDP we have used the evidence on what works in MDG achievement and put it into practice, and we have developed an MDG Acceleration Framework, piloted already in ten countries, designed to help countries do just that.  The Framework enables governments and development partners to work together to identify and systematically address the bottlenecks preventing MDG progress.

Conclusion

The importance of inclusive job-rich growth cannot be overstated – particularly now that despite the signs of recovery, “the road ahead is”, according to UNDESA latest report, “proving to be long, sinuous and bumpy.  After a year of fragile and uneven recovery, growth of the world economy is now decelerating on a broad front, presaging an even weaker growth in the outlook for 2011”.

 “For developing countries and economies in transition, major risks are associated with surges in capital inflows, which are causing upward pressures on their currencies.  Meanwhile, the increased volatility in the exchange rates of major reserve currencies and the difficulties in coordinating policies to redress the global imbalances, as well as some increase in protectionist measures, all pose serious risk to the stability of international trade and finance, and unless address timely, will impede a strong, sustainable and balanced recovery of the global economy”.

This is part of the discussions we will have during this retreat about the role of ECOSOC and how it can constructively contribute to guide global actions in this area, focusing on promoting an enabling environment and an international framework conducive to a more stable, sustainable and dynamic global economy.  Some of the proposals emerging from the G20 are encouraging news but the road ahead poses still very complex challenges that need a very solid and stable economic and financial governance structure.

At the same time, going from the global to the country needs, there is a range of tried and tested policies - be they pre-market, post-market or in-market – conducive for MDG acceleration and which could bring successful efforts to the necessary scale for the transformational change needed.

The UN development system has plenty to offer to offer to help developing countries to address the impacts of the downturn, build resilience to future crises, promote inclusive growth, and advance human development.

The choice of policies and approaches is of course always subject to country circumstances and priorities – but if achieving the MDGs and advancing human development remains the ultimate goal of these efforts, and of the global economic discussions, then, I am sure, the world will be better off.
Thank you.