Statement by Mr. José Antonio Ocampo, Under-Secretary-General for Economic and Social Affairs at the High-Level Segment of the Economic and Social Council on full and productive employment and decent work for all
Geneva, 4 July 2006

Mr. President,
Distinguished delegates,
Ladies and Gentlemen,

I have the honour to introduce the report of the Secretary-General (E/2006/55) that addresses the issue of generating full and productive employment and decent work for all.

The goal of full employment has been one of the central concerns of the United Nations since its inception and is enshrined in its Charter. In its first five years, the United Nations issued three major reports on economic development, each of which focused primarily on how to achieve or maintain full employment. The reports identified the rapid creation of employment as a fundamental goal. This preoccupation was no doubt fuelled by the memories of massive unemployment in the industrial economies during the Great Depression.

In recent history, the 1995 World Summit on Social Development focused global attention on the issue of employment. And last September, at the 2005 World Summit, world leaders agreed to make the goals of full and productive employment and decent work for all a central objective of their national and international policies.

While these commitments are in themselves achievements, the vision they represent does not match the reality of recent trends in employment generation and the quality of jobs. The report provides a detailed analysis of these trends. Let me focus on six major areas.

First, over the last decade, unemployment has risen. The number of unemployed worldwide reached its highest point in 2005, affecting 192 million people, despite the world economy’s having witnessed fairly robust growth in recent years. Clearly, this means that the actual link between global economic growth and the creation of new jobs has been weak. Growth alone can neither guarantee job creation nor ensure the much-needed significant reduction in extreme poverty, called for in the first Millennium Development Goal.

Second, the quality of employment has deteriorated. Half of the world’s labour force still does not earn enough to shake loose the shackles of poverty and deprivation. While unemployment is a major challenge in developed countries, in most developing countries, poverty results less from unemployment than from the inability of workers to secure sufficient income from their hard labour. Underemployment, characterized by low productivity and inadequate income, remains pervasive and is probably on the rise. This is particularly true in the agriculture sector and in the urban informal economy, which together account for the major share of employment in most developing countries.

Third, unemployment affects youth in a severe way. Young people are only 25% of the world’s working population, but they make up half of the world’s unemployed. The young not only have greater difficulty in finding work of every sort; when employed, they are less likely to have decent and productive jobs. Youth unemployment and underemployment are serious challenges for both developed and developing countries and must be firmly confronted, lest they continue to tear at the fabric of societies.

Fourth, globalization, technological change and other related economic processes have widened income disparities, particularly between skilled and unskilled workers. This income gap between types of workers, when combined with the rising share of profits and growing regional or urban-rural disparities in some countries, explains the fairly widespread trend towards rising income inequality within countries seen in recent decades. The gender gap also remains very large, in terms of both income and employment opportunities. Indeed, around the world, women face a higher level of open unemployment and informal sector employment than men.

Fifth, significant changes in the labour market are taking place worldwide. In a rapidly globalizing world, structural change and labour-market adjustments have become quasi-permanent features of national economies. While efficiency gains may come from some of the major policy transformations under way, such as trade liberalization, those who lose their jobs in the process gain little comfort from that. This is particularly because the social protection systems that should accompany such changes are absent in many parts of the world and have weakened in others. There is thus a growing perception that the world seems to be moving away from the concept of secure employment. The pressures for increasing labour market flexibility have resulted in a growing sense of socio-economic insecurity, which has in turn generated problems for all societies, particularly in the face of adverse trends in social protection.

Finally, and as part of the structural changes taking place, international migration is redefining many features of the global labour market. Migration has some negative effects on less skilled workers in receiving countries, many of whom are themselves prior migrants. But, as underscored in the recent report of the Secretary-General on International Migration and Development, these impacts are relatively small because low-skilled migrants are generally hired for jobs for which there is an insufficient domestic labour supply. Migrants thus tend to complement rather than compete with local workers.

In spite of the complementary character of migrant labour, and the salutary effects that it has on growth in recipient countries, we see xenophobia on the rise, along with more restrictions on labour mobility, particularly of unskilled labour. This has generated significant asymmetries in the mobility of factors of production and of goods in the global economy. And it may generate a bias in the distribution of world income against the less mobile factors of production, particularly unskilled labour, which is sometimes the only factor of production that the poor possess to lift themselves out of poverty.

Mr. President,

The challenges of achieving and maintaining full and productive employment clearly require a fairly comprehensive approach at both the national and international levels. This is essential to achieve not only the global objectives on employment but also the wider UN development agenda, with its central focus on overall improvement in the plight of the poor.

As the report of the Secretary-General points out, the responsibility for creating conditions for full and productive employment and decent work for all rests first with national governments. This means that the goal of full employment and decent work for all must be made the central goal in all areas of national economic and social policy. And it implies that the commitment to generate adequate employment levels should be central to macroeconomic policies, including to monetary and exchange rate policies, even when they are under the responsibility of independent central banks.

In recent decades, monetary and fiscal policies in many countries have shifted towards emphasizing the single objective of achieving and maintaining low levels of inflation. This has often led to pro-cyclical adjustment of economies which, as shown in the latest World Economic and Social Survey, has been detrimental to long-term growth and thus to employment creation. So countries should also strive to create more space to conduct counter-cyclical macroeconomic policies. And they will need to ensure adequate levels of public expenditures in the areas of infrastructure and human development, without which the employment goals cannot be achieved. In developing countries, exchange rate policies are also crucial for employment generation, particularly as trade liberalization has reduced policy space to adopt pro-active industrial policies.

The competitive environment that characterizes the global economy has made it more difficult in all countries to manage demands for both job security and labour market flexibility. As we well know, any solution to the major trade-offs involved in meeting these opposing demands will require the strengthening of social protection systems. This by itself is a major challenge in industrial economies; for developing countries, it is even more difficult, given the underdevelopment of their own social protection systems and the large proportion of employment in the informal sector. Consequently, the continuous development of contributory social security systems must be complemented by increased State responsibility for providing social protection through fiscal mechanisms that are not tied to social security contributions. Another requirement is to build institutions that enhance labour-business cooperation—and thus social dialogue—as a tool for adapting to changing, competitive market conditions and to unstable macroeconomic environments.

For many developing countries, the agriculture sector is still the main source of jobs. Accordingly, more concerted action is needed on rural development, aimed at expanding market access, employment and productivity. To reduce the prevalence of the working poor in the developing world, employment generation and productivity growth must be pursued simultaneously. More generally, the poor are overwhelmingly employed in small production units or self-employed. Thus, in rural and urban areas alike, the reduction of poverty requires promoting micro and small enterprises and building strong linkages between small firms and dynamic sectors.

The productive integration of youth into the labour market, especially from poor households, is essential for socio-economic stability. And it is also key to breaking the inter-generational transmission of poverty and inequality. A comprehensive strategy to promote youth employment should focus on investing in education and vocational training, promoting entrepreneurship and providing equal opportunities to both men and women. In addition, governments need to launch targeted measures to overcome the specific disadvantages that many young people encounter in entering or remaining in the labour market.

All these efforts and policies for generating employment, as well as others presented in the Secretary-General’s report, will not likely make any headway without a supportive and enabling international environment. Developing such an environment is a crucial exercise in the coherence of the international system, as correctly underscored by the World Commission on the Social Dimensions of Globalization convened by the International Labour Organization. The ILO should be at the centre of international cooperation in this area, but must be able to count on the full support of the whole international system.

This exercise of coherence must address the employment implications of global macroeconomic conditions and of the international trading system. Under the current conjuncture, this means that international cooperation in macroeconomic policymaking should work to guarantee high levels of effective demand in the global economy while its large existing imbalances are being redressed. The International Monetary Fund should play an important role in facilitating such cooperation and in ensuring that employment objectives are given centre stage. Only this could do justice to the Fund’s first Articles of Agreement, which enshrined the promotion and maintenance of high levels of employment as one of the IMF’s core objectives.

The UN system at large needs to attach high priority to this goal. There have been some encouraging signs, as the UN agencies, funds and programmes, and the international financial institutions are all placing more emphasis on employment issues. But the need remains to ensure that employment policies appear more prominently in national development and growth strategies. To this end, the ILOs’ Decent Work Country Programmes should be made an essential part of the UN Development Assistance Frameworks.

Finally, Mr. President, let me stress the need for consistent follow-up to declarations and global agreements in this field. Particularly in view of its new functions, the Economic and Social Council should become a major forum for ensuring that the goal of full and productive employment and decent work for all receives the attention—and action—that it deserves from governments and the international community.