Urging focus on job creation, UN official warns of debt threat to global economy

Director-General Juan Somavia addresses opening of the ILO’s 99th International Labour Conference

2 June 2010 – The head of the United Nations labour agency today called for the formulation of policies that would help the world sustain a “jobs-rich” economic recovery, warning that financial turbulence triggered by the debt problem in some European countries poses a new threat to the global economy.

Juan Somavia, the Director-General of the UN International Labour Organization (ILO), told the opening session of the agency’s 99th International Labour Conference in Geneva that the recent debt crisis and deficit reduction measures, mainly in social spending, could “directly affect jobs and salaries” at a time of weak economic recovery and continued high levels of unemployment.

He called for a “balanced policy convergence strategy” based on three elements – securing a job-rich recovery, moving to a path of strong, sustainable and balanced growth, and tackling the structural imbalances of the global economy that existed before the crisis.

“We need to act on all three objectives together in a harmonious way within a short, medium and longer-term perspective,” Mr. Somavia said. “They are all interconnected. So we don’t have ‘either or’ options,” he added.

“The immediate danger of a simultaneous fiscal retrenchment in a significant number of countries is to slow down Europe’s weak recovery even more,” Mr. Somavia said. “In turn, this would damage in different ways growth prospects around the world. A contagion effect cannot be ruled out.”

Mr. Somavia spoke amid new concern over the continuing jobs crisis, which has driven global unemployment to more than 210 million, the highest level ever recorded, according to the ILO’s report, Recovery and Growth with Decent Work, which will be discussed at the conference.

Mr. Somavia noted that the ILO saw no indications that the global rate of unemployment would decline this year, despite signs of an economic recovery.

The conference is also expected to discuss progress on a Global Jobs Pact adopted last year during a summit of the heads of State and government of some of the world’s largest economies.

Mr. Somavia urged delegates from governments, workers and employers from the ILO’s 183 Member States to initiate “a coordinated, orderly, balanced and credible long-term process to deal with the public debt and deficits… according to each country’s situation and within a convergent international pattern.”

He warned that that “too much, too fast, will damage job prospects and the real economy, make it much harder to stabilize public finances and risk a double dip recession.”

More people with jobs and rising earnings would translate into more tax revenue, less unemployment-related spending and a narrowing of deficits, Mr. Somavia said, calling for what he described as an “employment-oriented framework for strong, sustainable and balanced growth.”

“Social tensions continue to rise,” he said. “There was already much anger and frustration over a ‘job-weak’ recovery,” he said. “Today, our culture of social dialogue founded on respect for workers’ rights is needed more than ever.”


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