The International Labour Organisation offers Ed the policies for jobs and growth

by Robin Thorpe

“Women and men without jobs or livelihoods really don’t care if their economies grow at 3, 5 or 10 per cent a year, if such growth leaves them behind and without protection. They do care whether their leaders and their societies promote policies to provide jobs and justice, bread and dignity, and freedom to voice their needs, their hopes and their dreams” -Juan Somavia

Juan Somavia was the Director-General of the International Labour Organisation (ILO) until 2012. The ILO was founded in 1919, in the wake of a destructive war, to pursue a vision based on the premise that universal, lasting peace can be established only if it is based on social justice. The ILO became the first specialized agency of the UN in 1946.

From the 5th to the 20th of June 2013 the ILO are holding the 102nd International Labour Conference in Geneva. On the agenda are several themes that have been prevalent in the UK media recently and have relevance to the lives of the UK population. These are;

  1. Sustainable development, decent work and green jobs
  2. Employment and social protection in the new demographic context
  3. Social Dialogue

OK so they don’t sound relevant in the bureaucratese in which they are written, however these issues could all have a profound impact on our quality of life. I shall attempt to decipher them for you.

The first of these deals with the two most significant challenges facing humanity in the 21st Century; achieving environmental sustainability and ensuring decent work for all. The ILO report on this topic states that “The shift to a sustainable, greener economy offers major opportunities for social development: (1) the creation of more jobs; (2) improvement in the quality of large numbers of jobs; and (3) social inclusion on a massive scale.”

The report goes onto to say that “an assessment of a broad range of green jobs in the United States, for example, concluded that they compare favourably with non-green jobs in similar sectors in terms of skill levels and wages. Research in China, Germany and Spain has also found the quality of new renewable energy jobs to be good.”

Major investment both in terms of policy and money will therefore only reap rewards; if we are to gain the most from this opportunity then we can’t simply play at building wind-farms.

Long-term policy commitments must be made to ensure that private investment is forthcoming, something not helped by last week’s UK parliamentary vote against a clean power target, which will also affect the motor manufacturing industry.

The demographic context to which the second item refers is the “inevitable and irreversible trend of ‘population ageing’”.

By 2050 there will be an extra 2 billion people globally, but as the birth-rate stabilises and people live longer the number of people over 60 will triple. This change in the ratio of working-age and retired people could result in shortages in labour supply and skills as people retire.

This could result in loss of productivity and innovation and will certainly affect how national governments make provision for social security services.

A report on this by ILO emphasises the importance of having active labour market policies and recognise that “social security systems work best when they are well integrated and co-ordinated with wider social, economic and employment policies”.

A key element of this is getting the young into employment. This is important because not only will the young have to pay tax in the future to support the increasingly aged population but also to ensure intergenerational social cohesion.

Social dialogue is defined in the ILO report as “the term that describes the involvement of workers, employers and governments in decision-making on employment and workplace issues. It includes all types of negotiation, consultation and exchange of information among representatives of these groups on common interests in economic, labour and social policy.”

This is important both in giving people a voice and role to play in shaping their workplaces and by extension wider society but also as a means of achieving social and economic progress. Social dialogue has taken an important role in shaping the workplaces of the UK over the last few decades but the new century has brought new challenges.

Collective bargaining power is now weaker as a result of increased competition from new global markets, increased unemployment and a decline in the proportion of GDP arising from labour intensive industry.

This, combined with a decline in unionisation an increased income inequality, means that new methods of achieving social dialogue must be found. The fact that the unions remain strong in the public sector but are weak in SMEs where the majority of people work results in many people having a negative view of their potential to enable change in the workplace. More must be done to make social dialogue more inclusive.

In addition to these agenda items the ILO has produced several documents that explore how these topics are inter-related and propose policies that would both improve social justice and achieve financial equilibrium for nation-states.

In the World of Work Report 2013 the ILO present the case for a more job-friendly approach to macroeconomic policy.

The report argues that “well-designed and coordinated macroeconomic, employment and social policies can have mutually reinforcing effects.” Both Argentina (in 2001-2002) and Sweden (in 1990s) successfully pursued policies that focused on job protection and creation rather than on fiscal consolidation.

In Sweden in particular this was achieved by the development of a package of labour market policies designed with the specific intention of reducing the risk of long-term unemployment. The flagship policy of this package was a youth employment guarantee.

There are several policy proposals that the World of Work Report present and provides evidence for their beneficial impact on increasing employment and stabilizing the economy. These are;

  1. Public investment for innovation
  2. Investment in and extension of credit to small and medium-sized enterprises (SMEs):
    1. supporting the creation and development of credit mediators to reassess SMEs’ credit requests that have been rejected by banks;
    2. introducing credit guarantees for viable SMEs, in which a percentage of the loan is backed by government support; and
    3. directly earmarking a portion of bank recapitalization funds for the provision of SME credit
  3. Avoiding wage stagnation or deflation traps: A significant proportion of GDP is in domestic consumption, particularly in larger or more developed economies. Therefore attention to employment, wages and other sources of household income is a critical part of a sound macroeconomic policy mix.

Resilience in a Downturn: The power of financial cooperatives is a report that discusses the historical, statistical, conceptual, and policy aspects of financial cooperatives. With particular reference to how cooperatives fare in times of crisis.

The report shows that financial cooperatives have continued to provide banking services to people on low incomes, to stabilize the banking system, to regenerate local economies and, indirectly, to create employment.

The report explains that cooperatives are able to do this because of their unique combination of member ownership, control and benefit. It concludes with a set of policy recommendations for governments, development agencies and other policy-makers, for instance using cooperatives not as “conduits” but as partners in the wider aims of business development, insurance against episodic poverty and decent work.

Ed Miliband has recently given a speech outlining his direction for the Labour party over the next few years. In summary he said that “We all know Labour in 2015 will have less money to spend, because the Tories have failed on the economy. So we are going to take action on the big problems our country faces to control spending:

  • Cut costs by helping the long-term unemployed back to work
  • Make sure jobs are well-paid to reward work, so the state does not face rising subsidies for low pay
  • Get the cost of renting down by ensuring more homes are built – thereby reducing the welfare bill
  • Cap social security spending by focusing on the deep-rooted reasons benefit spending goes up.”

Conservative MPs have predictably derided this speech; however it is a welcome intervention from Ed Miliband and should be welcomed by all who would rather see a Labour led government.

The findings of these ILO reports all generally agree with the view of most Labour supporters and Tory critics that jobs must come before growth and not the other way around. Conservative opinion seems generally to be that only by reducing national expenditure can we afford to invest in education and provide social security. As numerous economic experts have commented however, fiscal consolidation reduces domestic consumption, which reduces GDP.

The major role that governments can take in this approach is in forming policy that encourages private investment. For example long-term clean energy policy that drives investment in manufacturing and development; macroeconomic policy that facilitates lending to SMEs and incentives for youth employment and a housing policy based on using financial co-operatives to invest pension funds in the development of new residential and commercial units for long-term tenancies.

Robin Thorpe is a consulting engineer for a small practice on the south coast


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9 Responses to “The International Labour Organisation offers Ed the policies for jobs and growth”

  1. Nick says:

    And poor people don’t care about a living wage.

    All that matters is what money they have to spend.

    So the government can tomorrow solve the problem.

    Stop taxing people so they can have a living take home wage packet.

  2. Nick says:

    For example long-term clean energy policy that drives investment in manufacturing and development;

    ===========

    We’ve had that already. How’s it going so far?

    1. Manufacturing. Er, they’ve gone bust.
    2. Manufacturing. Er, its gone to chine.
    3. Big manufacturing. It’s gone off shore, because energy costs have be ramped up
    4. People are in fuel poverty because they are forced to pay for the ‘clean energy’. The likes of Tim Yeo have profited.

    ————–
    s numerous economic experts have commented however, fiscal consolidation reduces domestic consumption, which reduces GDP.
    ————–

    And they are wrong.

    If you cut taxes, no money leaves the economy. It stays with people, and not with the state. It’s just a different person spending or investing.

  3. Nick, “poor people don’t care about a living wage. All that matters is what money they have to spend” These statements are contradictory. A living wage will give people more money in their pockets.

    I didn’t mention tax; the main thrust of this article is long-term policy making – i.e. planning, not spending. If you read the articles that I link to above then you would see that many companies are put off investing in the UK because policy making is so short term.
    “This includes companies like German manufacturing giant Siemens, which plans to build an £80m wind turbine factory on the east coast in Hull, a city where 15,000 are out of work. A Siemens factory would create hundreds of jobs, but the firm is yet to make a final investment decision, because it is unsure about committing to a long lease on a port site if it cannot see a market for offshore wind lasting beyond 2020.”

    Our motor manufacturing industry is still very successful; it doesn’t employ as many as it once did but that’s because more of the work is mechanised. The next step for cars is in clean-energy, but again short-term politicking is holding UK industry back. The former chief executive of the Society of Motor Manufacturers and Traders, Paul Everitt, said to the transport select committee “Government should be taking a stronger role with the infrastructure and the power generators to ensure that they too have a coherent roadmap to deliver the resilient and decarbonised grid we need post-2025?.

    I am sure that you know more about macroeconomic policy than the numerous experts who agree that reducing government spending reduces doestic consumption; however if the government cut taxes to leave more money with the people then who will pay for the roads to be repaired, who will run the schools and hospitals and retain the fire and police services? Taxation isn’t just ‘the evil state’ taking your money. It is about local and national government operating civil infrastructure that enables individuals to make money by interacting with other human beings and to lead more fulfilling lives.

  4. Nick says:

    Nick, “poor people don’t care about a living wage. All that matters is what money they have to spend” These statements are contradictory. A living wage will give people more money in their pockets.

    ===============

    It has other side effects.

    1.It drives up costs for businesses. If that poor person is buying a service where another poor person is involved, their costs have gone up. That means the price goes up. They may have more money, but they can buy less.

    2. In the case of a lot of jobs, they are what the economists call tradeable goods. A restaurant is a non tradeable good. Making toys is.

    So if you drive up the costs, you get price rises. In the case of tradeable goods, the firms may well relocate. In other cases, the firms may not be able to compete, and so they go bust or close down. None of these is good for the poor.

    3. Tax cuts do not have this problem. The government can implement a tax cut for the poor very easily, tomorrow.

    4. Lets say you force people to pay 10 times the wage. What happens? A few companies may be able to automate, but not the others.

    5. See the high street. High tax, high rent, end of businesses. Same for wages.

    If you want to see the biggest change for the poor.

    1. Cut taxes
    2. Prevent low skilled migrants from working in the UK.

    There is no prospect for windpower. It is just a means of harvesting more money from the poor, because they have to pay the 500% extra cost of the power they generate when it works. Nice for Tim Yeo, bad for the poor.

    PS. There will be no tax cuts. The state had a 5,010 bn debt for pensions two years ago, hidden off the books rising at 734 bn a year.

    They will screw people, including the poor to get the cash.

  5. Nick,
    I happen to agree with you that there should be a tax cut that would help the poor. But I suspect you would cut income tax, whereas I would cut VAT. Cutting income tax reduces the tax bill of the wealthy at a higher proportionate rate; whereas VAT affects the poor at a higher proportionate rate.
    With regard to the living wage may I point you in the way of this document – http://www.resolutionfoundation.org/media/media/downloads/Final_What_Price_a_Living_Wage_1.pdf
    The arguments for the living wage are two-fold;
    1) an increase in worker morale and therefore an increase in productivity. Tangible benefit to businesses that help maintain competitiveness (see also http://hbr.org/2012/01/why-good-jobs-are-good-for-retailers/ar/1).
    2) The UK and other developed nations import a lot of goods, therefore increasing wages would not have a significant affect on our exports but could increase domestic consumption.
    No-one is seriously proposing that the living wage is introduced overnight; but if it were phased in over-time then it would help those on lower wages.

    I know that wind-power is not the panacea that will solve our future energy crisis; but it can be part of the energy mix for the UK. Like all emerging technologies it needs support to reduce future costs. I don’t think that wind turbines can be solely blamed for high energy prices. We import a lot of gas and coal and nuclear remediation is hugely expensive.
    Clean energy is about more than wind; I used the quote about turbines as an example where a lack of long-term policy affects private investment. The same can be said on aviation and rail infrastructure.
    The single most important thing that could be done to reduce energy costs is to reduce consumption. Retrofitting of existing commercial and domestic buildings and rigorously enforcing enhanced standards in new buildings can achieve this. This could be facilitated by government policy making.

    Your focus on pensions and tax is the crux of this whole article; without jobs, particularly for the younger generation, there is no solid tax base with which to pay these pensions.

  6. Ex-labour says:

    There is so much tosh talked about so called Green Jobs. There was a report about 18 months ago by Verso Economics called Worth a Candle, which stated that for every 1 green job created 3.7 jobs were lost in other parts of the economy. A similar study in Spain in relation to their headlong jump into Solar said much the same thing.

    The Renewables Obligation on energy companies is driving up our bills massively and now accounts for some 20 percent of our bills. The government say its less but they don’t take everything into account.

    We have Labour crying about fuel poverty and families being affected, yet it was Labour who introduced the Climate Change Act which is crippling our economy and households with huge energy bills. Our decarbonisation targets are ridiculous and wil further plunge our economy into a downward spiral.

    Here is a quick fact for you. Even if the UK stopped all carbon output immediately, within 12 months the ever increasing output from China over that 12 month period would make up the UK contribution.

    This all comes on top of new research emerging that the climate is not actually warming anymore and that previous wild predictions made by computer models have been shown to be completely wrong after a period of actually measuring and recording climate activity.

    It may surprise you as the Guardian and BBC won’t report it but there are thousands of scientists who don’t believe in the man made climate change theory. However they don’t get the same amount of publicity the doom mongers do.

  7. Dan says:

    Juan Somavia is right, as this is exactly what is going on with those who have no jobs. I can’t imagine myself being not able to borrow some money instantly whenever I need this. Now it is our goal to provide people with jobs, provide them with normal living and chances to have a bright future, well at least everyone deserves to have steady financial perspectives. As really what we have now is reminds more of dark monetary hole. I really like Nick’s comment!

  8. @ex-labour – I don’t claim to have all the answers, however these proposals come from the UN Agency the International Labour Organisation. I’m slightly more inclined to trust their judgement than your opinions. Nevertheless I was interested in this report – worth the candle. I haven’t read it as you have to pay for that privilege, however I found this critique of it
    http://climatesafety.org/why-the-doubters-are-wrong-about-green-jobs-in-scotland/
    The critique is by Friends of the Earth so is, to be fair, not balanced, but it rebuts all of the claims that Verso-Economics make and concludes with the following statement “As well as being a shoddy piece of research, the Verso study makes the fundamental error of assuming that we have a credible choice about whether or not to embrace renewable energy. From the perspective of long term energy security and social justice it is the only choice.”
    So to summarise you are proposing that the Report by a UN agency that cites a significant number of peer-reviewed research papers be ignored on the basis of 1 or 2 reports (of which the one you name appears to be based on erroneous research)?

    I note that you don’t provide a link to back-up your claim about Chinese carbon output; but that is the point of the UN leading an International effort to de-carbonise industry. [Incidentally I know that China is the worlds largest emitter of carbon. There industrial power is based almost entirely on cheap coal, but they are also leading the world in the research and application of Carbon Capture Utilisation and Storage http://www.scientificamerican.com/article.cfm?id=china-seeks-mastery-of-carbon-capture-and-storage%5D

    Similarly you make the unsubstantiated accusation that climate change is not really happening. You will be surprised to learn that the well-known Socialist rag ‘The Telegraph’ does not support your accusation.
    http://www.telegraph.co.uk/earth/environment/climatechange/10061285/Scientific-consensus-that-humans-to-blame-for-climate-change.html
    “A review of 12,000 scientific papers has found the consensus among scientists that humans are to blame for climate change is “overwhelming” and the dissenting view was held by less than two per cent of scientists. ”
    Climate change presents the business world with numerous opportunities for new employment sectors.
    If you going to comment kindly leave your prejudices at the door and arm yourself with the facts.

  9. Ex-Labour says:

    @Robin Thorpe

    Your arrogance is breathtaking, but typical of a lefty when challenged. The words “pot” , “kettle” and “black” spring to mind.

    “If you going to comment kindly leave your prejudices at the door and arm yourself with the facts”. Oh dear you then go on to Friends of the Earth and their compatriates like Greepeace, WWF etc who are clearly not biased at all …sarc/

    Of course you dont bother to check any facts but go to newspaper clips. OK lets go for it.

    Met Office says GW stopped 16 years ago. The report was also on the Met Office website.

    http://www.dailymail.co.uk/sciencetech/article-2217286/Global-warming-stopped-16-years-ago-reveals-Met-Office-report-quietly-released–chart-prove-it.html

    http://www.reuters.com/article/2013/04/16/us-climate-slowdown-idUSBRE93F0AJ20130416

    Here is a petition signed by over 31,000 US scientists disagreeing that climate science is “settled” as the Guardianista’s want us to believe.

    http://www.petitionproject.org/review_article.php

    Want peer reviewed stuff ? Here you go….

    http://www.populartechnology.net/2009/10/peer-reviewed-papers-supporting.html

    How about a good book ? Here you go…

    http://www.amazon.co.uk/Illusion-Climategate-Corruption-Science-Independent/dp/1906768358/ref=sr_1_1?s=books&ie=UTF8&qid=1371221577&sr=1-1&keywords=the+hockey+stick+illusion

    You can also check out some scientific blogs such as Wattsupwiththat, Bishophill, Climate Audit, Dr Roy Spencer etc etc. These deal with the real issues and the current evidence and thinking.

    Oh, and if you want a precis on how the UN and IPCC are connected and the roles they play in AGW then do a little rsearch.

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