ILO, ITUC blame slow global economic growth on inequality

THE continued growth of social inequality is threatening the global economy, the International Labour Organization (ILO) has said.

The ILO Director General, Guy Ryder, also welcomed the G20 leaders’ adoption of concrete policies priorities to reduce the decline in labour income share of GDP and related rise in inequality in most G20 countries.

Ryder, who speaking at the closing session of the Leaders’ Summit recently in Antalya, Turkey, said: “This year’s G20 has been particularly encouraging for the world of work. For the first time, the G20 acknowledged the problem of inequality. Even more importantly, they endorsed a set of policy priorities to make labour markets more inclusive as recommended by their Labour and Employment Ministers. They called for comprehensive and balanced policy packages that include economic, financial, labour, education and social measures to reduce inequalities.”

Ryder noted that much of the increase in inequality has happened in the labour market itself through stagnant wages, rising job insecurity and increases in involuntary temporary and part-time work. Tackling these issues, along with more progressive tax policies and strengthened social protection systems can make an important contribution to increasing economic growth and reducing inequality at the same tıme.

According to the ILO Chief, government policies alone would not translate into better incomes and working conditions without robust social dialogue at the national level and between employers and workers in the workplace.

The ILO head added that the focus now must be on implementing the policies that will help deliver these commitments. He pointed to the G20 Labour and Employment Ministers’ call for measures including stronger wage-setting mechanisms like minimum wages and collective bargaining that help to put money into the households most likely to spend it and to increase demand as a result. The Ministers also focused on how to achieve better job quality, reduce labour market insecurity, improve working conditions and ensure healthy and safe workplaces.

The G20 leaders noted that, unemployment, under-employment and informal jobs are also significant sources of inequality in many countries. They agreed to adopt a collective goal of reducing by 15 per cent by 2025 the share of youth who are at risk of being permanently left behind due to their low skills. This will require diligent effort in a number of G20 countries. The G20 asked the ILO and the OECD, to assist the G20 in monitoring progress towards achieving this goal.

The G20 leaders said that they would also support the better integration of young people into the labour market, including through the promotion of entrepreneurship and an overall emphasis on supporting Small and Medium Enterprises (SMEs).

On her part, Deputy Director-General of the ILO, Sandra Polaski said: “The ILO has been increasingly engaged in different G20 working groups and tracks, especially during this Turkish Presidency year and it’s rewarding to see that the perspective that we bring, with our knowledge of the real economy and the experience of workers and employers, has been increasingly recognized as adding real value to the work of the G20.”

The G20 leaders said that they would continue to monitor the implementation of their employment plans, as well as the goals to reduce the gender participation gap and to foster safer and healthier workplaces within sustainable global supply chains. They also committed to addressing the opportunities and challenges that issues such as international labour mobility and the ageing of populations bring to labour markets.
“We now look forward to continuing to contribute our research, knowledge and policy recommendations to assist the work of the G20 under the Chinese presidency,” Polaski said.

Meanwhile, the General Secretary of the International Trade Union Confederation (ITUC), Sharan Burrow said for the first time in a Leaders’ statement, the G20 acknowledged that rising inequality is a major risk to ‘social cohesion and our objective to lift growth’ and called on Finance Labour and Employment Minsters to review growth strategies and employment plans to strengthen action against inequality.

ITUC noted that with global unemployment still 30% above the level before the crisis and the global jobs gap forecast to rise to 80 million by 2018 and the risk of further recession, action is needed in the short term to raise growth.
She added: “The world needs hope, and with control of 85 per cent of the global economy and the majority of the world’s population, the G20 must act with greater coordination and build on these commitments in China.”