Invest more in job creation to stave off global recession – ILO chief

International Labor Organization (ILO) Director-General Jose Somavia implored regulatory bodies to make labor market policies “that promote, in the near term, high levels of productive investment and job creation in sustainable enterprises of the real economy… to avoid sliding into a possible recession.”

“The world is not on track to generate the 400 million new jobs needed in the next decade just to keep up with the increase in the working age population,” Somavia said in a statement delivered at the International Monetary and Financial Committee and Development Committee in Washington D.C. Saturday (Sunday in Manila).

In the Philippines, the ILO estimates that 2.5 million job-seekers are unemployed, while 15 million workers out of over 35 million currently employed are in the “vulnerable employment” sector. Vulnerable employment refers to risky jobs that give no regular salary, no unemployment insurance, and no social and medical benefits.

Somavia recommended that policies of governments should focus on the real economy stressing its capacity to sustain investment, savings and consumption based on high levels of productive employment and decent work.

“Today we target inflation rates, balanced budgets, public debt levels but not job creation. Yet, employment targets frequently feature in electoral campaigns. We should mobilize to achieve high levels of employment as effectively as we have done to keep inflation low. Having a measurable jobs and investment target alongside an inflation target would send a strong signal,” he said.

The ‘real economy’

The ILO chief also said the lingering global financial crisis has also kept workers’ wages stagnant for several years while further pushing workers in all nations into vulnerable employment and increasing the informal economy vis-à-vis the real economy.

“It is urgent to put the financial system at the service of the real economy,” stressed Somavia.

“Putting the real economy in the driver’s seat is the priority. With a financial sector at the service of the real economy, global policy makers need to reconnect to the needs of working families and tackle the global jobs crisis at its roots,” he said.

He said governments must implement policy measures that stimulate investments in the real economy so that productive enterprises could generate jobs and absorb workers in the informal sector.

“Infrastructure investment, investment in green energy and in greening of production and transport are needed to create and sustain jobs in enterprises,” he added.

Regain the people’s trust

Somavia emphasized on the need “to regain the trust of people in the ability of governments to make public policies for the benefit of working families and their communities, and of businesses and entrepreneurs of the real economy.”

He said the collapse of the financial institutions in many developed countries is caused by the increasing public thinking that “some banks are too big to fail, and we are too small to matter, understandably, there is anxiety, anguish, and anger.”

The ILO chief called attention to the 20 percent rise in youth unemployment worldwide, pointing out that “[p]opular uprisings [such] as in the ‘Arab Spring,’ mass protests, demonstrations, riots and other expressions of anxiety and anger are on the rise.”

“Social protection for the more vulnerable should be guaranteed; unemployed persons should have access to unemployment benefits, as well as orientation and training to facilitate job search,” he said. “Public and private investments in job-generating activities should be promoted, including housing, infrastructure upgrading and greening, education and health services.”

He added that developing countries should “continue to rebalance their economies away from excessive reliance on exports and towards domestic consumption,” while distributing productivity gains more evenly “so that wage earnings and household consumption play a stronger role in growth.” — MRT/KBK, GMA News