With structural unemployment still above pre-crisis levels in G20 countries, the ILO has called for broader and more inclusive job creation policies to achieve the G20’s shared goal of strong, sustainable and balanced growth. “I am convinced that more can be done. Experience suggests that high employment levels and inclusive growth can be achieved through a well-designed combination of supportive macroeconomic policies and employment, labour market and social protection policies that are designed to spread the benefits of growth”, said ILO Director-General Guy Ryder.
The ILO chief was speaking at a press conference to present the statistical update – “Short-term labour market outlooks and key challenges in G20 countries” – prepared by the ILO and the OECD for the meeting of G20 Labour and Employment Ministers.
Five years after the financial crisis, unemployment remains at “unacceptably high levels”, with every G20 country facing serious jobs challenges, said Ryder, adding that the IMF has again reduced its global forecast growth for 2013 and 2014. “This means that on the current course we cannot expect significant improvement in the employment situation unless countries undertake more ambitious policies to address the jobs deficit”, he said.
According to the ILO-OECD update, unemployment is up in half of G20 countries, and down only marginally in the other half. In the face of even higher unemployment rates among young people, their rate of participation in labour markets is also down, with worrying long-term implications.
Rapid demographic changes taking place in many countries are beginning to have an impact on labour markets through a marked decline in the rate of growth of the active population.
Income and earnings inequality are high and have been on the rise in many G20 countries. However, the situation varies across the G20, with an increase in wages and in the quality of jobs (albeit from a low base) in many emerging economies, while in advanced economies the trend has been largely in the opposite direction.
Against this background, Ryder stressed the need for measures aimed at strengthening domestic demand in G20 countries and rebalancing global aggregate demand.
Several G20 countries have already implemented measures to increase employment and wages and incomes and to provide better social protection to vulnerable households, according to a joint ILO-OECD report on “Addressing employment, labour market and social protection challenges in G20 countries: Key measures since 2010”.
Some successful policies include the following:
- Increasing the level of investment in infrastructure to trigger medium and long-term economic growth and productivity while providing short-term job creation. Australia, Brazil, Canada, Indonesia, Japan and South Africa have dedicated significant resources to infrastructure investments, which tend to have high employment content.
- Enhancing the level and coverage of minimum wages to address working poverty and inequality while contributing to domestic demand. A number of G20 countries have raised minimum wages to address working poverty, including China, Brazil and Indonesia.
- Improving wage determination mechanisms, including by strengthening collective bargaining, to better align wage and productivity growth and to address inequality.
- Expanding the coverage of social protection systems to increase the resilience of households, reduce poverty and increase social inclusion. Argentina has expanded the coverage of child benefits and maternity health benefits; Brazil’s Sem Miséria (Without poverty) Plan combines cash transfers, employment opportunities and access to public services directed at people in poverty; India has introduced additional maternity services and expanded nutrition and health care to 8.7 million girls; Russia has extended support to senior citizens; South Africa is extending old-age, disability and child benefits.
- Adopting public employment programmes as a form of social protection for the most vulnerable. India has provided employment to 40 million rural households under a rural employment guarantee.
- Enhancing skills development programmes and improving the quality of national educational systems.
- Improving availability of credit, especially for small and medium-sized enterprises.
- Providing targeted hiring subsidies to encourage employment. Such subsidies were introduced in Argentina, Australia, Brazil, Canada, France and the US. In many countries, such subsidies were targeted at specific groups, such as women, youth or the long-term unemployed. The US facilitates tax credits to employers who hire veterans with disabilities.
A number of G20 countries have stepped up such measures in 2011 and 2012 in response to continuing labour market distress and disappointing growth.
And the ILO chief says there is room for more to be done. “The G20 gained its legitimacy in 2009 through bold and decisive collective action. We are again at a moment, when the G20 must take bold and decisive action to turn labour markets around. The world is looking to the G20 to agree on an ambitious and coordinated policy framework that can stimulate creation of more and better jobs”, concluded Ryder.