Speech

The Challenges of Growth, Employment, and Social Cohesion—Opening Remarks

September 13, 2010

Good morning. It’s a great privilege to be here, among such distinguished guests, to discuss the most urgent topic facing policymakers today—growth and jobs.

I regard this conference as very important, and I thank our Norwegian hosts—especially Prime Minister Stoltenberg. I would like to thank the leaders and ministers participating here today. I would also like to thank our colleagues in the ILO for helping to put this conference together. This marks a historic step in strengthening the collaboration between our two organizations, and I salute my friend, Director General Juan Somavia, for his cooperation.

This is the first time that the IMF and ILO have worked together in this way. Our organizations sometimes have different points of views but we have the same goal: to build a better world for all. The ILO has a strong interest not only in jobs but also macroeconomic stability; and the IMF is not only interested in macroeconomic stability but also jobs.

In fact, the mandate of the IMF is global economic and financial stability—not for its own sake, but because it paves the way for strong, inclusive growth and steady employment. The IMF is sometimes portrayed as being only interested in fiscal retrenchment. This is not the case: our goal is growth and jobs.

Today, as you know, the labor market is in dire straits. The Great Recession has left behind a waste land of unemployment, and this devastation threatens the livelihood, security, and dignity of millions of people across the world.

In part, the loss of jobs is so severe because this recession is so severe. But it’s more complicated than that.

Unemployment rates actually have fallen in Germany, and haven’t changed much in Norway or Japan. Job loss was greatest in countries where housing and financial markets collapsed. Most of this came from manufacturing and construction—showing that ordinary workers have paid the price for mistakes made elsewhere.

And what about the human costs? This is the real tragedy. Unemployment leads to a loss of earnings that is both substantial and long lasting, especially among younger people. The crisis hit them especially hard.

We must not underestimate the daunting prospect we face: a lost generation, disconnected from the labor market, with a progressive loss of skills and motivation.

And the human costs do not end there.

If you lose your job, you are more likely to suffer from health problems, or even die younger. If you lose your job, your children are likely to do worse in school. If you lose your job, you are less likely to have faith in public institutions and democracy.

So far, I am talking mainly about advanced economies. Let us not forget that inlow-income countries, the situation becomes even worse.

Without adequate social safety nets, we are not just talking about loss of jobs or incomes, we are talking about life and death. And with little hope of a better future, people can turn to unproductive or even violent activities, possibly leading to instability, a breakdown of democracy, or even war. So, there is more at stake than macroeconomic stability-the stability of our world is at stake.

These stark realities form the backdrop of this conference.

What do we need to do?

We must acknowledge that the crisis will not be over until unemployment decreases. We must not expect that growth alone will automatically create the jobs we need--and set job creation as priority using all the available policy tools. We need to make the financial system an effective support of the real economy. We need to take advantage of the cooperation between the IMF and ILO to boost international cooperation.

The rules of the game have changed. The global economy after the crisis is not the same as before the crisis. So, in a nutshell, we need to think differently.

Why? Because the future of millions of people is at stake. Because the future of our world—prosperity and peace—is at stake. Because the challenges are really difficult. Because they are urgent. My hope is that, at this conference, we can begin to identify a new way to think as to what we can do, together, to build a better world.

If successful, maybe in four or five years time, we will be able to say "I was in Oslo" where it all began.

Thank you.