Human Rights-Based Approaches to Financial Regulation, Macroeconomic Policies, and Economic Recovery

1. Human rights-based approaches to financial regulation, macroeconomic policies, and economic recovery: An ILO perspective ViniciusCarvalhoPinheiroDeputy Director, ILO Office for the UN in New York NYC, 24 April 2013

2. Global employment figures – 2012There was a crisis before the crisis • Total population – around 7.1 billion people • Working age population – 5.3 billion • Labor force – 3.344 billion (60.3 % participation rate) • Employed – 3.147 billion • Working poor (less than USD 2/day) – 869 million • Unemployed – 197.3 million (5.9% U rate) • Youth unemployed 73.8 million (12.6% U rate) – risk of loosing a generation • Labor force annual growth – 1.2% (44 million per year) • Social protection coverage – 25 % Source: ILO Global employment trends 2013

3. The global employment crisis toll (2007/2012) • 67 million jobs gap (28 million increase in unemployment + 39 million dropped the labour force) • Unemployment rate increased from 5.4% (2007) to 5.9% (2012) and tend to keep growing to 6-6.2% in 2017 • Youth unemployment increased form 11.6 to 12.6% from 2007 to 2012 (+3.7 million unemployed) since 2007 and around 19 million young dropped the LF. Increase in Youth neither in employment nor in education or training (NEETs) • Lesson from previous crisis – employment recovery takes 5-7 yrs • Divergent unemployment picture in developed and developing economies • Developed economies: unemployment increased from 6.9 to 8.6% regions • Long term unemployment • Developing economies: reduction in unemployment • Informality and job quality

4. Structural challenges – job unfriendly growth • Surges in long term unemployment • Major shifts in labour force participation mostly in developed economies - increasesin discouraged workers, which worsens labour force participation rates that are already low • Persistence of high shares of informal and precarious employment • Labour income as share of national income has declined, reducing aggregate demand • Austerity measures contribute further to the decrease in labour income share reducing household consumption and depressing aggregate demand

5. In sum… • The global economy is not growing fast enough to create enough decent jobs to return to pre-crisis employment levels – the pace of growth actually appears to be slowing further. • Wages are lagging behind productivity, and wage shares as a percentage of income are shrinking in favor of profits –but this has not yielded an investment-led recovery, and has only increased inequality • Employment focused policies are need to sustain aggregate demand and to put into motion a virtuous circle of expanding and inclusive economic growth • Increased investment in infrastructure and maintenance • Ease of credit conditions for micro and SMEs • Minimum wage policies • Investment in education and training, particularly for those who face exclusion • Extension of social protection and establishment of SPFs

6. What should be done?

7. 1. Employment and social protection must at the heart of the macroeconomic policies…. • Minimum wage policies • China, Brazil and Indonesia in particular have used minimum wage increases to address inequality with beneficial effects on household consumption. • An ILO-European Commission Study shows that minimum wages helped to reduce wage disparity and limit the number of low paid workers in European countries that established them. • Collective bargaining, which can better link productivity increases to wage increases and narrow wage dispersion • Financial and tax incentives for productive investment, and for small and microenterprises (SMEs) – the real job creator machine. While too much attention was given to those too big to fail, those too small to matter were forgotten. Financial regulations must ultimately favour lending to SMEs and housholds • Social protection

8. 2. Call for action on youth employment - averting the risk of a lost generation • employment and economic policies to increase aggregate demand and improve access to finance; • education and training to ease the school-to-work transition; • labourmarket policies to target employment of disadvantaged youth; • entrepreneurship and self-employment to assist potential young entrepreneurs; and • labourrights that are based on international labour standards to ensure that young people receive equal treatment and are afforded rights at work. • Opportunities deriving from the transition to a greener economy

9. A growing concern about skills mismatch… • For many workers, job destruction and unemployment means look for jobs in new sectors and occupations • Structural change in the labour market with reallocation of workers from low- to higher productivity sectors (from agriculture and industry to services) can reduce vulnerabilities if the adequate skills are in place • Transition to a greener economy can have a positive impact in job creation pending on adequate skills adaptation strategies

10. 3. Social protection floors • ILO Recommendation 202 – Income transfers + social guarantees • Policy coherence approach to overcome fragmentation of social goals • Triple effect: Protect and empower people and contribute to boost the aggregate demand • ILO + IMF: It is feasible even in poor economies: not a matter of resources, but of political will

11. Conclusion • In 1948, the Universal Declaration of Human Rights called for social protection for all with adequate living standards, access to health and education, food and housing, and social security. • Despite of more than 6 decades of strong economic grow - in 2010 the global GDP was 10 times larger than in 1950 an increase of 260 per cent per capita, access to adequate social protections services and benefits remains a privileged offer to a few people. 75 per cent still lack access to adequate Social Protection. • The current economic model is clearly not delivering enough on social protection and generation of decent jobs. • The global community has an opportunity to deliver on the promises made half a century ago, by making clear commitments to full and productive employment, decent work and social protection floors as part of the post 2015 development agenda.