G20, Beijing

ILO Director-General's remarks to the G20 Labour and Employment Ministerial Meeting

In his statement to the G20 Labour and Employment Ministerial Meeting held in Beijing in July 2016, ILO Director-General Guy Ryder warned that poor prospects for economic growth risk becoming entrenched.

Statement | Beijing, China | 12 July 2016
Thank you Minister, first for the opportunity to make some opening remarks on this important occasion and also for the excellent work you and your colleagues have done over the year in preparing for today’s meeting. Certainly China’s hospitality and professionalism during your G20 year will be remembered for many years to come.

At your request, the ILO, OECD, the World Bank and the IMF have prepared a brief background note on trends and challenges which we hope will be useful in starting off our discussions. I will make a presentation of it and the text is available in the room.

Slide 2

The chart before you shows that G20 GDP growth picked up after the 2008/9 crisis to average 3.8 per cent annually in the period up to 2015. But this was below the trend in the pre-crisis years. In 2015 growth fell off to 3.1 per cent and no improvement is expected for the next two years. Employment growth was 1.3 per cent per year before the crisis and is now averaging only 0.8 per cent.

International organizations have all expressed concern about the rising risk that persistent slow growth is having enduring adverse economic effects which would further weaken the outlook for jobs and wages.

Slide 3

Global economic weakness has gone hand-in-hand with persistently weak labour markets. Labour force participation is down across the G20, and unemployment has not yet fallen to pre-crisis levels.

There has also been a significant slowdown in the rate of growth of wages and inequality has risen in most G20 countries. Some countries have managed to swim against this tide but even where there have been positive developments they have not been as good as I am sure Ministers would have wished.

Overall, weakness in employment growth, falling labour income shares and weak wage growth have reduced global aggregate demand and contributed to a self-reinforcing cycle of diminished business expectations of market growth and thus low investment, further weakness in growth and demand and hence insufficient labour market recovery.

Slide 4

Turning to trends in job quality since the crisis, the level and distribution of earnings has been stable or worsening in most G20 countries.

Real wage growth was sluggish in advanced G20 countries but faster in emerging countries. Earnings inequality has increased, especially in many advanced G20 countries.

Labour market insecurity increased in most advanced G20 economies since the crisis. This is measured by looking at the risk of job loss and its economic cost for workers, taking into account the coverage and level of benefits provided by income support schemes.

The incidence of job strain and of very long working hours tend to be on a downward path in G20 countries suggesting that the quality of the working environment has improved somewhat.

Slide 5

The G20 target of reducing gender gaps in participation by 25% by 2025 was adopted in 2014 and it is probably too soon to measure the impact of that decision. However, since 2012, we can see some progress in reducing gender gaps. My OECD colleague Stephano Scarpetta will discuss this in a little while so I will just mention a couple of points.

First the average gender gap for countries with available data declined from 20.3% in 2012 to 19.6% in 2015. Only a few countries are already on track for 25 by 25, but it is early days, and recent policy initiatives are unlikely to be paying off as yet.

The country reports by G20 members do show a wide range of new measures aimed at promoting gender equality, such as easing family responsibilities borne by working women, counteracting multiple disadvantages, and narrowing pay gaps.

Slide 6

Under the Turkish Presidency, G20 countries agreed to reduce the number of youth at risk of being left behind by 15% by 2025.

Despite this priority, a substantial proportion of youth are either out of work or trapped in poor quality jobs and lacking relevant skills in most G20 economies.

While the Neither in Employment nor in Education and Training or NEET rate has fallen in some G20 countries (most notably in Germany, Indonesia, and Turkey), it has increased significantly in others as a result of the crisis (Italy, Spain and France are examples).

The magnitude of the problem also varies across countries, with NEET rates ranging from around 30% or higher in Turkey, India and South Africa to less than 10% in Japan and Germany.

In the emerging economies, the level of youth in informal employment ranges from just over a third in South Africa to over 60% in Mexico and even more in India.
Again on a positive note, country reports include many measures that address the G20 youth employment goal.

On the supply side many countries are working on measures to strengthen education and training systems to prepare all young people for the world of work. There are also many initiatives to provide effective support to unemployed young people, helping them to find work.

On the demand side, several countries have targeted the improvement of job opportunities.

This is important because if there is anything more frustrating to young people who are unemployed or stuck in a dead end job, it is completing a training course and still being unemployed or stuck in a dead end job.

Slide 7

G20 countries have clearly indicated their determination to improve occupational safety and health (OSH) throughout the world. Country reports indicate a wide range of actions to act on that commitment.
For many countries a key policy approach is the development of multi-year OSH strategies often through tripartite bodies.

A common policy theme is the development of legislation and regulations to clarify and to simplify legislation and regulations, particularly for SMEs. In addition, many countries’ laws and regulations have enhanced governments’ authority to collect data and businesses’ obligation to report data. Technical regulations in most countries have focused on hazards, particularly those that cause occupational disease.

Guidance, training and education necessary to effectively implement OSH legislation and regulations are also frequently reported, targeting businesses and workers. This often focuses on risk assessment and development of OSH management systems, especially for high hazard sectors.

Slide 8

Overall, your country reports give a picture of considerable policy activity across the G20 addressing both immediate concerns stemming from slow economic and employment growth as well as medium to long term changes in the structure of employment.

Looking to the medium and longer term, it is interesting and encouraging for the work of the G20 on employment that countries identify similar lists of challenges. These include:
  • demographic changes - ageing in some countries and a continued inflow of young workers on to the labour market in others;
  • technological change;
  • continuing globalization and intensifying competition;
  • various forms of mismatch between labour demand and supply; and
  • tackling persistent poverty and increasing inequalities.
The policy responses, although varied in design and scale, fall into six broad interconnected policy categories:
  • Measures to increase labour force participation in general, but often focussed on vulnerable and underrepresented groups;
  • Skill development and other active labour market policies;
  • Improving labour market efficiency including various types of measures to ease mobility between jobs and reduce spells of unemployment;
  • Accelerating transitions to formal from informal employment in emerging economies and improving job quality in both emerging and advanced economies;
  • Measures to increase the inclusivity of labour markets; and
  • Improving productivity and competitiveness often focussed on SMEs.

Slide 9

To conclude by looking ahead, I will suggest 5 points for your consideration.

First, Leaders meeting in Hangzhou at the G20 Summit in September will likely be very concerned about the rising risk of a slow growth trap. As I said at the beginning of these remarks, weakness in employment growth, falling labour income shares and weak wage growth are leading to reduced global aggregate demand and contributing to a self-reinforcing cycle of diminished business expectations of market growth and thus low investment, further weakening labour market recovery.

Second, to varying degrees, all G20 countries face difficulties in supporting the aspirations of large segments of their working population, especially youth. Social and political tensions, many of which originate in setbacks in the jobs outlook are rising in many parts of the world which also feeds back in a negative way to economic and employment growth.

Third, your draft Ministers’ Declaration on “Innovation and Inclusive Growth: Decent Work, Enhanced Employability and Adequate Job Opportunities” balances well immediate concerns stemming from slow economic and employment growth with medium tdiseaso long term structural challenges. This balance is very important.

The Declaration’s recommendations on combatting working poverty, ending discrimination, narrowing pay and working conditions gaps and enhancing participation of under-represented groups are particularly important for faster and more inclusive growth.

Fourth, implementation of the 2030 Agenda for Sustainable Development increases the importance of the work of labour and employment ministries in all countries, particularly regarding inclusive growth and decent work as was stressed at the recent International Labour Conference.

Fifth, and finally, your Declaration could be very useful to Leaders as they craft their own communiqué and Ministers may wish to suggest that it provides a strong bridge of practical policies that link together both the demand and supply sides of the labour market and of the economy as a whole. They thus can help to arrest and reverse any slide into a slow growth trap.

Thank you for your attention.

Employment Trends and Challenges - Key facts 2016