Globalisation: recent trends, social impact and role of ILO

Raymond TorresDirector, International Institute for Labour Studies

ILO torresr@ilo.org

What is new about globalisation?

• Growing number of actors:

– BRICs represent 45% of labour supply, most of them were marginal participants in the world economy in the early 1990s

– Increased global awareness of social problems (role of civil society)

What is new?

• Financial globalisation: – Financial assets represent nearly 5 times

annual GDP of developed countries (it was at par with GDP in the early 1990s)

– Similar trends, but with a lag, in emerging economies and developing countries

• Increased technical possibilities to outsource production

What is the social impact?

• New growth and job creation opportunities:

– Since early 1990s, nearly all regions have enjoyed robust employment growth

– But significant cross-country differences

• The benefits have been unequally shared:

– Income of rich households has grown fast relative to middle-class and poor households, in over two thirds of countries

– Real wages have grown moderately, much less than productivity gains, in nearly all countries. Profit shares have increased

What is the social impact?

• The labour market is more unstable:

– Systemic financial crises were ten times more frequent in the 1990s than in the 1980s Instability of financial flows

– Firms respond more quickly to shocks (because of international competition and outsourcing possibilities)

– Rising incidence of “non-regular” employment

Labour demand has become more responsive to shocks

Trend in the conditional wage elasticity of labour demand, 1980-2002

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How to respond?

Aim is to enhance opportunities and ensure that they are equitably shared

• Comprehensive policy package: the Decent Work Agenda:

i) Policies should aim at promoting employment opportunities: good for the economy and society (employment is probably the most effective redistribution mechanism)

How to respond?

ii) Social protection, consistent with employment, should be available: shares costs of adjustment, supports re-employment and enhance support for change

iii) Fundamental principles and rights at work: key for a balanced development and an input to development (e.g. child labour)

iv) Social dialogue: a method to ensure that reforms are properly discussed and implemented, and a way to share the gains from reforms

How to respond?

• Possible obstacles to implementation of the DW agenda:

– Funding of the measures

– Technical difficulties of certain measures, need to tailor them to country circumstances

– Perception that there may be gainers and losers?

Two recent ILO initiatives

• 1998 Declaration on Fundamental Principles and Rights at Work and its follow up

• 2008 Declaration on Social Justice for a Fair Globalization and its follow up

Selected references

• ILO-WTO report entitled “Trade and Employment - Challenges for Policy Research”, 2007.

• Forthcoming report of the IILS, World of Work 2008. See IILS web site on www.ilo.org

• 1998 Declaration available on www.ilo.org

• 2008 Declaration available in the room.