Press Release: IMF and ILO Launch Background Paper on the “Challenges of Growth, Employment and Social Cohesion” for High-Level Conference on September 13 in Oslo

IMF News, September 2, 2010

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Canonical URL: Press Release: IMF and ILO Launch Background Paper on the “Challenges of Growth, Employment and Social Cohesion” for High-Level Conference on September 13 in Oslo

Publication date: September 2, 2010.
Event: Joint high-level IMF-ILO conference on “The Challenges of Growth, Employment and Social Cohesion,” one-day conference on September 13 in Oslo, hosted by Norwegian Prime Minister Jens Stoltenberg.
Chairpersons: IMF Managing Director Dominique Strauss-Kahn and ILO Director General Juan Somavia.
Lead speakers listed: President Ellen Johnson Sirleaf of Liberia; Prime Minister George Papandreou of Greece; Prime Minister José Luis Rodríguez Zapatero of Spain; Finance Minister Christine Lagarde of France; U.K. Secretary of State for Labour Iain Duncan Smith; and International Trade Union Confederation General Secretary Sharan Burrow.
Purpose: To explore new ways of forging a sustainable, job-rich economic recovery and to improve integration of employment and social policies with international and national macroeconomic policy strategies.

Unemployment increase: “unemployment is up by more than 30 million worldwide since 2007.”
Global unemployment level: 210 million people out of work – “the highest level in history.”
Social protection gap: 80 percent of the global population without any access to social protection.
Working poor: “approximately 1.2 billion women and men, or 40 per cent of the world’s labour force, still did not earn enough to keep themselves and their families above the $2-a-day poverty level in 2008.”
Future job needs: “in the next 10 years, more than 440 million new jobs will be needed to absorb new entrants into the labour force, and still more to reverse the unemployment caused by the crisis.”
Long-term earnings loss from recessionary job loss (U.S. studies): “even 15-20 years after a job loss in a recession, the earnings loss amounts on average to 20 per cent.”
Health impacts: layoffs “are associated with higher risk of heart attacks and other stress-related illnesses in the short run. In the long run, the mortality rate of laid-off workers is higher than that of comparable workers who kept their jobs.”

Central diagnostic: “The Great Recession has created a painful legacy of unemployment,” which threatens livelihood, security, dignity, and social cohesion.
Primary cure: “a recovery in aggregate demand is the single best cure for unemployment.”
Fiscal guidance: “as a general strategy, most advanced economies should not tighten fiscal policies before 2011, because tightening sooner could undermine the recovery.”
Fiscal consolidation metric cited: “The consolidation plans that these countries have for 2011 imply an average change in the structural balance of 1¼ percentage points of GDP.”
Caveat: “the fiscal situation varies across countries, requiring adaptation of this general strategy to the available fiscal space.”
Monetary policy: “Monetary policy can also remain supportive of aggregate demand as inflation pressures remain subdued.”
Social and human costs emphasized: persistent loss in earnings, reduced life expectancy, and lower academic achievement and earnings for children of those who become unemployed; unemployment’s effect on attitudes reducing social cohesion.

Employment crisis framing: stresses a “grim picture” with record unemployment and large gaps in social protection and decent earnings.
Short-term policy warnings: “a premature fiscal retrenchment could damage growth and lead to even larger deficits and debts.”
Recommended approach: call for “well-sequenced coordinated short-term exit strategies and deficit reduction policies,” linked to “a progressive recovery of the real economy and jobs and are fair in the sharing of the benefits and burdens of adjustment, especially in the protection of the most vulnerable.”
Structural and labor-market concerns:
- Globalization pressures have increased worker vulnerability through increased intensity of work, a shift towards more flexible contracts, diminishing social protections, and decline in workers’ bargaining power and voice.
- Emphasis on improving the quality of employment: “more productive jobs offering better earnings” are essential to sustain poverty reduction and development.
- Strength and quality of labour market institutions can substantially contribute to sustainable growth and development.
Policy priority: build an employment-oriented framework for strong, sustainable and balanced growth and prioritize employment growth to buttress global demand.

Joint objective of IMF and ILO: “to improve the integration of employment and social policies with international and national macroeconomic policy strategies” and to “focus thinking and action on how to ensure that policies have the same priorities as people – more and better jobs.”
Consensus direction: a growing consensus for coordination of efforts to prioritize employment growth because “strong and steady growth in jobs and household incomes in many countries at the same time will buttress global demand, creating still more jobs.”
Purpose of the discussion document: stimulate international cooperation and policy innovation, promote debate at the Oslo conference, and launch an online discussion forum for wider engagement.

Source: IMF press release dated September 2, 2010, for the IMF-ILO conference on September 13 in Oslo.