ILO (International Labour Organization) Developing with jobs – II

2 Feb

Il documento 2/2/2015 (Summary of the World of Work Report 2014, Second Part)

(la prima parte è stata pubblicata il 29 genn. scorso)

121002104333hidden_jobs1To meet these challenges, it is essential, first and foremost, to boost a diversified productive capacity rather than just liberalizing trade …

The evidence presented in Chapter 5, including the case studies of countries that have successfully upgraded their productive capacity, shows that development requires a strategy to diversify the economic base and enhance the ability of sus­tainable enterprises to create quality jobs.

While manufacturing tends to be associated with faster economic growth and quality job creation, the report highlights successful experiences based on agri­cultural and rural development, efficient and equitable use of natural resources and services that connect with the rest of the economy. There is no single development path and the report documents success stories for countries at all levels of devel­opment. The natural resource constraints and environmental limits faced by all countries can be turned into an advantage by developing and emerging economies which seize the opportunity for technological “leapfrogging”. In this respect, the green economy offers new prospects for developing countries, which face fewer adjustment challenges than advanced economies with mature, carbon-intensive production structures.

In all cases, however, it is crucial to avoid a concentration of economic growth in a few export-oriented sectors with limited links to the rest of the economy. Economic diversification policies, measures to facilitate formalization and expan­sion of enterprises, and the enforcement of labour standards can all contribute to broad-based development and promotion of decent work.

Productive transformation needs to be underpinned by an enabling en­vironment for enterprises, including supportive macroeconomic policies. The ex­periences of several Asian and Latin American countries underline the potential of development strategies to foster production diversification in collaboration with the private sector and strengthen the environment for enterprises, while at the same time ensuring that there is sufficient aggregate demand, notably through countercyclical macroeconomic policies. They have also demonstrated success with well-calibrated capital controls to manage volatile capital flows and keep exchange rates both predictable and competitive.

These findings shed new light on the role of government in developing coun­tries. According to conventional wisdom, selective interventions and targeted sup­port would be a source of distortions and economic inefficiency. In reality, success depends on careful diversification strategies in the context of gradual trade liber­alization consistent with multilateral commitments.

 

… second, strengthen labour market institutions rather than neglecting labour standards …

Labour and social protection institutions are important ingredients of economic growth, quality jobs and human development. It is not possible to achieve economic diversification without active measures to tackle low product­ivity in agriculture and small and medium-sized enterprise, poor working condi­tion traps and high rates of informality. Sustained, strong growth is at risk if social inequality grows, or rent-seeking behaviour by owners of natural resources or land is allowed to continue unchecked.

Making such institutions more effective remains a serious challenge for many developing countries. Wage-setting mechanisms and labour regulations need to be properly designed and attention must be given to implementation capacity.

Despite these difficulties, there are many interesting recent innovations in this area. There is growing awareness of the role of minimum wages in fighting working poverty and inequalities, while promoting labour market participation. The report gives examples of how some developing countries have found innovative ways of setting and implementing minimum wages, including through social dialogue. Likewise, well-designed collective bargaining can have positive impacts on income distribution while also tackling informality and low-productivity traps. One major challenge is the decline in the coverage of collective bargaining – a trend also evi­dent in advanced economies.

The issue of employment protection, which has been the subject of lively debate but often without a systematic review of current practices, is carefully exam­ined in the report. Contrary to predictions, weaker regulations on employment have not facilitated transitions to formal employment. Instead, the report provides examples of countries, such as Argentina, that have tackled informality through pragmatic approaches, combining tax reform, social protection, faster registration processes for enterprises and better enforcement.

 

… third, extend well-designed social protection floors as drivers of inclusive development, not just as a narrowly targeted safety net for the poor …

There is evidence that social protection helps to reduce the incidence of poverty, inequalities and vulnerable employment. Well-designed social pro­tection enhances individual capabilities to access better jobs. For instance, Bolsa Família in Brazil, the Mahatma Gandhi National Rural Employment Guarantee Act in India and similar programmes in Cabo Verde have been successful in pro­viding supplementary incomes to households, allowing families to invest in pro­ductive activities as well as to improve their health and educational outcomes.

In addition, social protection can boost economic growth and quality job cre­ation. Much depends on the responsiveness of social protection to changing eco­nomic conditions. Countercyclical programmes in China and South Africa are interesting cases in point in this respect. In some countries, such as Ethiopia and Namibia, employment is an explicit target of social protection schemes.

Establishing an efficient funding base for social protection is crucial. The cre­ation of a tax on oil and gas exports in Bolivia was instrumental in ensuring sus­tainable financing of the non-contributory old-age pension.

Finally, it is important to combine social protection with a set of policies that promote a supportive environment for enterprises and job creation. This includes simplifying administrative procedures for the self-employed in order to facilitate formal entrepreneurship. Another successful measure has been the provision of additional incentives for benefits recipients, including jobseekers, to receive training and take on work, as illustrated by Brazil’s vocational training programmes offered to beneficiaries of income transfer programmes.

… and, finally, ensure balanced income developments to avoid harmful inequalities

The widening of income inequalities within countries is now a well-established fact. Analysis suggests that this trend is associated with a change in the distribu­tion of income, to the detriment of labour.

Developing countries have not been immune to these patterns (Chapter 8). Evidence suggests widening inequalities can be detrimental to economic growth, to the extent that the negative consumption effect associated with growing in­equalities outweighs any positive impacts in terms of higher returns from invest­ment and improved cost-competitiveness. Such a negative outcome is all the more likely because the competitiveness effects are dampened by the fact that the share of labour incomes falls in many countries – leading to a deficit of global aggre­gate demand and a race to the bottom in wages and standards. In addition to impacts on the economy, widening income inequalities may erode social cohesion and intensify social unrest, as has happened in some Arab and Asian countries.

The ability of developing countries to offset falling labour income shares through progressive taxation is more limited than in the case of advanced econ­omies. It is therefore essential to reinforce labour market institutions, which can improve the market distribution of incomes between labour and capital. This can be done by facilitating dialogue between employers and workers, enforcing labour laws and standards as well as implementing well-designed social protec­tion in order to ensure more balanced income distribution in developing coun­tries. There are important experiences in this area, such as in Argentina, Brazil and – recently – Tunisia.

 

(è stato omesso l’ultimo breve paragrafo)

 

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