"Only half of the countries examined have announced labour market initiatives and among those, the resources allocated to these measures are relatively limited", said Raymond Torres, Director of the ILO Institute, adding that social policy measures represent, on average, 9.2 per cent of the total fiscal packages. In the case of labour market measures, the figure is 1.8 per cent.
The report also says that infrastructure programmes do not adequately take into account the need to reinforce the existing capacity of businesses and skills supply – so that part of the infrastructure spending may result in higher prices, rather than higher production and jobs; some tax cuts will end in higher savings rather than higher demand, output and jobs; and little is done to help youth and other vulnerable groups.
The measures moreover involve only limited social dialogue with employers and unions and lack coordination across countries. Involving social partners would help improve the design of the measures and help restore confidence.
"The global crisis requires global solutions", emphasized the ILO Director-General. Lack of coordination diminishes the overall effect of the stimulus measures, making each individual country reluctant to move faster than its trading partners and aggravating the recession. The study also says trade protectionism would further depress world demand and wage deflation or weaker workers' rights would not only aggravate the global crisis, but be perceived as unfair and aggravate the social crisis.
"The measures have also often failed to tackle the structural imbalances that lie behind the crisis", Mr. Somavia said. "Responses to the crisis must not be piecemeal in nature and rolled out temporarily, only to revert back to 'business as usual' as soon as possible. Moving ahead with the Decent Work Agenda is crucial to supporting the economic recovery, averting labour market and social crises and promoting social cohesion."
By coming together around a Global Jobs Pact, ILO constituents could make an important contribution to global policy coherence on these issues. Such a Pact could ensure that stimulus measures more effectively tackle the transmission mechanisms of the crisis, namely the credit crunch, the rapid deterioration in domestic demand conditions and the recession in external markets, addressing key factors that nurtured the crisis while building the foundation for a more sustainable economy.
The forthcoming International Labour Conference in June this year will focus on tackling the Global Jobs Pact.
(China.org.cn March 26, 2009)