In the summer of 2011, the global economy entered a dangerous new phase as growth slowed in virtually all countries, the recovery stalled in advanced countries and new financial risks emerged, particularly in Europe. Meanwhile, over 200 million workers remained unemployed globally, 27 million more than when the 2008 crisis began. The ongoing crisis now threatens to push some 84 million workers into extreme poverty.
Slowing growth, rising unemployment, and growing poverty and inequality threaten the recovery, weaken long-term potential growth, and significantly raise the risk of social unrest and political instability. Along with the European debt crisis, unemployment now represents the largest single threat to recovery.
In the US alone, 25 million workers are currently unemployed or looking for full-time employment. One out of every five men of working-age in the US is currently not working: they are either unemployed or out of the labour force. The lack of jobs, together with stagnant wages, has left real earnings for men 28% below their 1969 level. And, household incomes have declined nearly 10% since the crisis began. Economic inequality is now at levels not seen since just before the Great Depression.
Ahead of the Cannes G20 Summit in November 2011, both the International Monetary Fund and the OECD significantly lowered their forecasts for global growth. They estimated that 21 million jobs must be created each year merely to return to pre-crisis employment rates by 2015. The current global growth is far too weak to deliver this rate of jobs growth.
Given the current jobs emergency, governments cannot implement draconian austerity measures at the expense of funding employment creation and social protection programmes. Every country must have a medium-term plan for fiscal balance, and some countries must take immediate action. But many countries have fiscal space to put our citizens back to work and reduce national debt burdens by bolstering growth.
The rise in unemployment caused by the crisis has hit young people particularly hard. Together with long-term unemployment, high youth unemployment threatens to permanently weaken countries’ long-term growth potential. Not only is stronger growth necessary for job creation, expanding employment is now necessary for sustaining the recovery and bolstering long-term growth.
Global unions are calling on world leaders—at the national level and in global forums—to react boldly to a faltering global recovery and send a strong message of confidence to working families by breaking the vicious cycle of job insecurity, depressed wages and eroding social protection.
At the Cannes G20 Summit, we asked leaders to adopt a four-point plan for jobs and recovery that not only sustains the recovery and stems the immediate jobs crisis, but shapes a post-crisis world that is economically stronger, more balanced, and more just and sustainable. In the first point of the plan, we called on leaders to fulfil their Pittsburgh commitment to “put quality jobs at the heart of the recovery” by establishing differentiated, but coordinated, employment targets for all G20 countries as part of the Mutual Assessment Process. This would involve co-ordinated fiscal support for workforce development and infrastructure investment, supported by accommodative monetary policies.
Secondly, we called on leaders to transform the structural policy agenda to strengthen labour market institutions, social partnership, collective bargaining, minimum labour standards, and income support for low-income workers to reduce poverty and inequality.
Thirdly, we asked that they move forward on the conclusions of the G20 labour ministerial to establish social protection floors in all countries. We recommended that the leaders do this along the lines proposed by the Social Protection Floor Advisory Group, chaired by Michelle Bachelet, with adequate funding that corresponds to levels of countries’ economic development.
Lastly, we appealed to leaders to rapidly implement reforms of the financial sector that were agreed but never effectively enacted, to restructure financial groups that are too big to fail, and to establish a global financial transaction tax to help finance the recovery as well as help pay for new social and environmental programmes.
To implement this plan, we called on leaders to transform the G20 Employment Task Force established by labour ministers into a workgroup on employment and social protection. This workgroup would help develop, monitor and co-ordinate structural labour market policies to ensure a job-rich recovery, arrest falling wage shares, and reduce poverty and inequality. The workgroup should be supported by the International Labour Organization and the OECD in consultation with social partners. Progress was made at the G20 Summit as leaders adopted the Cannes Action Plan for Growth and Jobs. But to restore the confidence of citizens, world leaders must act together and boldly address the global jobs emergency if they hope to build a stronger, more balanced, and more just and sustainable global economy.
The G20 Pittsburgh Summit Commitments
The G-20 Mutual Assessment Process
The Cannes Action Plan for Growth and Jobs
©OECD Yearbook 2012