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TWN Info Service on UN Sustainable Development (Jun13/03)
17 June 2013
Third World Network

Dear friends and colleagues,

The fourth session of the Open Working Group on Sustainable Development Goals is taking place on 17 - 19 June 2013 at the UN headquarters in New York. The formulation of SDGs is one of the major agreed actions from the June 2012 UN Conference on Sustainable Development. The Co-chairs of the Open Working Group are Ambassadors Macharia Kamau of Kenya and Csaba Korosi of Hungary.

This week's session will address the following topics: "Employment and decent work for all, social protection, youth, education and culture, as well as health population dynamics".

We are pleased to share with you TWN briefing paper No. 1 on “Employment and sustainable development.”

With best wishes,
Third World Network

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TWN BRIEFING PAPER NO. 1 FOR THE FOURTH SESSION OF THE OWG-SDG

EMPLOYMENT AND SUSTAINABLE DEVELOPMENT

UNGA Resolution 66/288: RIO+20 Outcome Document (The Future We Want), Paragraph 24:

"We express deep concern about the continuing high levels of unemployment and underemployment, particularly among young people, and note the need for sustainable development strategies to proactively address youth employment at all levels. In this regard, we recognize the need for a global strategy on youth and employment building on the work of the International Labour Organization."(Emphasis added)

A.        A global strategy on employment is critical for the human right to social security

Article 22 of the Universal Declaration on Human Rights states:

“Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.”

Article 23 further elaborates that:

“(1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.

(2) Everyone, without any discrimination, has the right to equal pay for equal work.

(3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.

(4) Everyone has the right to form and to join trade unions for the protection of his interests.”

Work is thus a key element of social and economic development.  Through job creation and better working conditions people, communities and countries can lift themselves out of poverty and improve lives.  However, this happens only when work is decent, productive, provides fair wages and is underpinned by rights.  International labour rights standards includes ensuring a living wage, reducing precarious and exploitative work and complying with rights and regulation norms.

National capacity to create employment is a central aspect of economic development strategies, and is essential for achieving sustainable, sustained, and inclusiveeconomic growth which is fairly distributed.

The employment-social protection nexus is key in the formulation of policies and measures within a sustainable development framework, as is a supportive and enabling global environment.

Accordingly, Heads of States and Governments in paragraph 147 of the Rio+20 Outcome Document “recognize that poverty eradication, full and productive employment and decent work for all, and social integration and protection are interrelated and mutually reinforcing, and that enabling environments to promote these need to be created at all levels.”

Unemployment exacerbates poverty, insecurity and inequality.  Lower incomes lead to a downward spiral of debt traps, reduced investments and higher public deficits.  People respond by cutting back on consumption, slowing the economy further.  For many developing countries, the consequences of unemployment are often more severe due to the absence of public safety nets such as unemployment insurance, less access to credit and less individual wealth buffers.

There are serious long-term consequences associated with persistent periods of unemployment. If a child’s education is interrupted, there is a high probability that the child will not return to school; an episode of malnutrition or an untreated illness can have lifelong effects. Informalisation of labour deepens, where health and safety protection, much less social security and benefits, are often lost.  Extended bouts of unemployment are also associated with various forms of social exclusion, including increased rates of family dissolution, higher suicide rates and increased crime and violence.

In particular, youth unemployment threatens the skill sets and productive capacities of entire generations. The young labour force in society is indispensable in driving the rise of developing countries across the production value chains.

In the longer-term, unemployment among youth contributes to limiting the ability of developing countries to achieve higher levels of diversification and competitiveness. It limits the ability to stimulate and accumulate the knowledge and innovative contributions among the labor force. Unemployed youth often fall off the career trajectory and lose the ability – at least for long periods of time – to re-enter the economy’s productive cycles. Moreover, sustained bouts of unemployment lead to higher rates of migration and loss of national capacities and resources.

A global strategy on youth and employment needs to be conceptualized within the broader objective of full employment, decent work, and dignified livelihoods, and should address the quality and geographic distribution of employment. The principles underpinning the UN discussion (both in the SDG track and the post-2015 development framework track) should reflect the urgency of addressing youth employment, and more broadly, the right to work employment as a key social and economic right.

Employment-focused policies requires national and global enabling factors: Goal 8 of the Millennium Development Goals (MDGs) was essential to capture the concept of goals for a global system and partnership, but was not adequately conceived or designed, and did not include an analysis of systemic factors nor did it articulate means of implementation to achieve the goals. The post-2015 agenda and the SDG framework should address goals on global supportive actions and objectives, and should capture the international aspects included within each of the specific SDGs.

In particular, the global financial and economic crisis that started in 2008 has resulted in millions of job losses around the world. Developing countries had no responsibility in creating the crisis, but nevertheless suffer disproportionately from it. Efforts to help low-income countries cope with the crisis should be strengthened, both in terms of conventional international support measures (such as ODA and access to credit) as well as enhancing policy space, including the recognition of the need for capital controls in crisis and post-crisis situations. 

Employment objectives need to become central to global actions and mechanisms:  The rules in trade and international finance either assume that employment objectives are automatically achieved with reduced restrictions on international trade and finance, or look upon employment as the adjusting variable for realizing objectives in trade and international finance.  This logic has to be reversed and the global partnership must be designed to serve employment objectives.  

Employment-boosting objectives need to be supported within a framework of international cooperation that supports developing countries through: (i) undertaking action at the level of the international economic, financial, trade, technology and social systems, to support and enable developing countries’ actions/efforts, and (ii) refrain from actions by developed countries that create barriers to developing countries’ [1] efforts and progress.

In its report entitled “A new global partnership: eradicate poverty and tranform economies through sustainable development”, the high-level panel of eminent persons on the post-2015 development agenda acknowledged the need to look at quality – not just quantity – of growth, and underlined the centrality of addressing the global factors. The panel called for “commitment to rapid equitable growth, not growth at any cost or just short-term spurts in growth, but sustained, long-term, inclusive growth that can overcome challenges of employment (especially youth unemployment), resource scarcity, and ...adaptation to climate change”[2].

The panel adds that this kind of growth has to be supported by “a global economy that ensures financial stability, promotes stable, long-term private financial investment, and encourages open, fair and development friendly trade" [3]. However, the report does not highlight the significant constraints that international rules and obligations often have on developing countries’ ability to fulfill their employment obligations.

The ability of countries to pursue and achieve sustained, sustainable, and employment-generating growth strategies depends in large part on how effectively and appropriately they integrate into the global economic system.

B.        Enabling national and global policy frameworks for the national capacity to create employment and decent work

This requires attention on the following issues:

Policy space for national governments to design and manage various policy choices, including macroeconomic policies, trade, investment, finance, tax, and social protection to prioritize decent employment generation, is critical.

Decent work is associated with an active wage policy that aligns changes in wage rates to trends in productivity, as well as a minimum wage and comprehensive social protection policies. Wage policies and labor empowerment are integral part of sustainable and sustained inclusive growth and development.

Macroeconomic policies must prioritize employment creation and support economic growth through boosting output in the real economy, not just focusing on price stability, inflation management, and redress of macroeconomic imbalances.  Fiscal policy ought to be a leading instrument for full employment and economic growth; it cannot be reduced to means of shrinking government deficits and correcting imbalances. Furthermore, monetary policy is a dynamic tool to govern both the price and volume of credit available for the the real economy; it cannot be reduced to means of controlling inflation through sole focus on interest rates.  Countries need to break away fromthe excessive focus on macroeconomic stability and emphasis on contractionary fiscal and monetary targets, and give attention to the dynamic use of counter-cyclical policies.

Accordingly, a global employment strategy requires an overhaul in the current global macroeconomic policy framework. This is especially important in view of the global economic slowdown, which is now affecting the developing countries adversely.  The global economy should follow an expansionary macroeconomic path based on productive employment generation and shifting labour to higher value-added activities in developing countries.

International financial liberalisation has underpinned the global economic crisis, which led to millions of job losses and reverse of development trends achieved in recent past. The crisis also led to an increase in poverty and negative effect on growth prospects in many developing countries.The experiences across regions (for example many countries in Latin America)have shown that open capital accounts and high inflows of short term capital can lead to exchange rate appreciation; while this may have played a role in meeting inflation targets it has also had adverse effects onmedium and long-term goals in productivity growth, employment, and industrial development [4]. Capital account openness has long-term impacts on labour markets and fiscal revenue capacity. Building a development-supportive international financial and economic system necessitates new multilateral mechanisms that prevent the adverse spillovers and shocks to developing countries from policies undertaken in developed countries or destabilizing impulses from the international financial markets.

Finance thus needs to get back to the business of providing security for people's savings and mobilising resources for productive investments. This necessitates, among others, restoring the capacity of national authorities to better control capital inflows and outflows.

Trade and investment policies must be designed to prioritize support of productive policies and employment generation: The capacity behind employment generation is fundamentally linked to reviving and enhancing productive policies, through adequate finance, investment, and trade policies. It also necessitates the capacity to mobilize domestic resources in support of comprehensive rights-based social protection strategies.

Yet, the international trade and investment relations as currently designed pose several critical impediments to the ability of States to carry out national development strategies and macroeconomic policies that support eliminating socioeconomic inequities. It also impedes boosting employment levels and supporting the diversification and dynamism of local economies. 

A global trade system that works for employment generation will require the strengthening and operationalization of the principle of special and differential treatment for developing countries. This includes addressing the implementation challenges facing developing countries, respecting the principle of less than full reciprocity for developing countries, and securing development-oriented rules. For low-income countries with limited national economic capacity, premature and excessive import liberalisation can have adverse effects on employment, domestic firms and farmers’ livelihoods. Therefore it is imperative that developing countries and LDCs should not face pressures to undertake such premature or excessive liberalisation.   

Moreover, arriving at development-focused investment policies necessitates revision of many of the current national and international investment legal frameworks. It involves establishing and strengthening the right to regulate for the public interest, including the need for prioritising employment-generating policies.  Accordingly, it requires rethinking and reforming the models of bilateral and regional investment treaties that underpin the global movement of foreign investments.

C.        Gender inequality in labour markets

Virtually all economies are marked by persistent gender inequalities in labour markets and in economic policy decision-making.  Though women’s labour force participation has risen in many countries, the majority of women are still working in the informal economy, and often in low-paying occupations that are considered to be ‘low-skilled.’ 

Women’s work is more likely to be on precarious terms, marked by insecure contracts, pay and predictability, for example, and thus women are more likely to experience poverty and lack of social security, pension and healthcare befits in old age than are men.

An important aspect of gender inequality in the labour market is the unpaid care economy,in which women perform the overwhelming share of the unpaid work of caring for families and communities.  The unpaid care economy, in which the social and reproductive economy are constituted, is perceived by most societies across both developed and developing countries as the domain of women’s work and responsibilities.  For instance, women spend twice as much time on child care as men in Sweden, 4.6 times more in Ghana, and 6 times as much in Pakistan. 

As a result of the double burden of both paid and unpaid work, on average, in most countries, women work longer hours in total than do men, and low- and middle-income women are the hardest hit.

The equal labour rights of women and girls, as well as a recognition and integration of women’s unpaid work in the care and reproductive economy, must be placed at the center of the sustainable development goals spotlight on employment and decent work.

D.        Reforming international economic governance and financial institutions

A structural constraint to development-oriented economic policies are the contractionary loan conditions and policy advice attached to financing and assessment reports from the International Monetary Found (IMF), and to the financing of aid donors and multilateral development organisations.  The role, governance, and accountability of these institutions should be re-examined.  Their work programs should reflect the right to work and a global strategy on employment.

Article I.2 of the IMF Articles of Agreement, which upholds one of the key purposes of the IMF, as decided at the Bretton Woods conference in 1944, says that the Fund will work “to facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.”

In 2010, the IMF and the ILO held a conference in light of the global financial crisis with the objective of improving “the integration of employment and social policies with international and national macroeconomic policies”, which requires according to the two organizations, a “better understanding of the forces at work in the global economy and contributing factors both globally and nationally. [5]

The IMF and the ILO both agreed that their institutions will focus on policies to promote employment-creating growth [6].  However, this objective has yet to be reflected in the work program and structure of macroeconomic and structural policy advice designed by the IMF.


Endnotes

1. Not all countries are signatory to the International Convention on Economic, Social, and Cultural Rights.  But for those countries that are, employment is a national obligation.  International rules and commitments should not prevent these countries from fulfilling their employment obligations.

2. See: “A new global partnership: eradicate poverty and tranform economies through sustainable development”; the report of the high-level panel of eminent persons on the post-2015 development agenda,page 8.

3. Ibid.

4. See: Manuel Montes (December 2012), “Obstacles to Development in the International Economic Architecture”, page 42. Since open capital accounts increase ‘the elasticity of the supply of capital, it reduces the ability of countries to set their preferred tax schedule, induces a shift towards taxes on labour, and encourages a race to the bottom in which several countries try to attract capital by lowering taxation, and, eventually, end up with lower tax revenues and no change in their capital stock’ (UNCTAD, 2011: 41).

5. “The challenges of growth, employment, and social cohesion”; part of publication entitled “The Challenges of Growth, Employment, and Social Cohesion”, prepared by the IMF and ILO, see page 6.

6. Oslo Conference Calls for Commitment to Recovery Focused on Jobs”; Press Release No. 10/339
(September 13, 2010), www.osloconference2010.org.

 


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